USINAS SIDERÚRGICAS DE MINAS GERAIS S.A. USIMINAS …v4-usiminas.infoinvest.com.br/enu/5664/2018_04_03_Manual para... · the instruction of vote from a given CPF or CNPJ shall be

(Free Translation: For reference only – Original in Portuguese)

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USINAS SIDERÚRGICAS DE MINAS GERAIS S.A. – USIMINAS

CNPJ 60.894.730/0001-05

NIRE: 313.000.1360-0

Publicly-Held Company

MANUAL FOR THE PARTICIPATION OF THE SHAREHOLDERS AT THE

EXTRAORDINARY AND ANNUAL SHAREHOLDERS MEETING

APRIL 25th, 2018


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TABLE OF CONTENTS 1 – Message from Management p. 03 2 – Guidelines for Participation at the Shareholders’ Meeting 2.1 Participation in Person

2.1.1. Individual Shareholders p. 05 2.1.2. Legal Entities Shareholders p. 05 2.1.3. Shareholders Represented by a Power of Attorney p. 06 2.1.4. Foreign Shareholders p. 06

2.2 – Participation by remote e-voting system p. 06 3 – Call Notice p. 13 4 – Information on the matters contained in the Agenda p. 16 Exhibit 1.1 – Remote E-Vote for the Resolutions Object of the Extraordinary Shareholders’ Meeting p. 26 Exhibit 1.2 – Remote E-Vote for the Resolutions Object of the Annual Shareholders’ Meeting p. 31 Exhibit 2 – Material on the proposal of amicable solution for the Civil Liability Lawsuit filed against the former Chief Executive Officer of the Company p. 40 Exhibit 3 - Information Required by Article 9 of CVM Ruling 481/2009 p. 60 Exhibit 4 – Information Required by Article 9-1-II of CVM Ruling no 481/2007 and proposal of capital budget for the fiscal year of 2018 p. 245 Exhibit 5 – Information Required by Article 12 of CVM Ruling 481/2009 p. 254 Exhibit 6 – Information on the Candidates to the Board of Directors p. 276 Exhibit 7 – Information on the Candidates to the Fiscal Council p. 312


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1. MESSAGE FROM MANAGEMENT

Dear Shareholders,

With the purpose to facilitate your participation, we bring to your knowledge the Manual

for the Extraordinary and Annual Shareholders’ Meeting (“Shareholders’ Meeting”) of

Usiminas Siderúrgicas de Minas Gerais S.A. - USIMINAS (“Usiminas” or “Company”),

to be held on April 25, 2018, at 01:00 p.m.

On behalf of the Company´s Management, we invite you to be present at the

Shareholders Meeting to resolve on the following agenda:

At the Extraordinary Shareholders’ Meeting:

(1) Proposed amicable solution for the Civil Liability Lawsuit filed by the Company

against its former Chief Executive Officer, whose filing was approved at the

Annual Shareholders Meeting of 04.27.2017 (“Liability Lawsuit”), by means of

the Company renouncing the claim presented in the Liability Lawsuit, in

accordance with article 487, III, ‘c’, of the Brazilian Civil Procedure Code,

without any payment, reimbursement or indemnification from party to party,

each one of them bearing and paying (directly or indirectly) all the fees and

expenses of their own attorneys (including the expenses and contractual and

any attorneys´ fees (“honorários contratuais e sucumbenciais”) and their own

court costs and expenses (“custas e despesas processuais”)).

At the Annual Shareholders’ Meeting:

(1) Appreciation of the managements’ accounts and analysis, discussion

and vote on the financial statements and annual management report for the

year ended on December 31st, 2017;

(2) Allocation of net profit assessed in the fiscal year of 2017 and approval

of the capital budget for the fiscal year of 2018;

(3) Management’s proposal for the payment of dividends and definition of

the date of its respective payment;

(4) Determination of the total budget for the administrators’ compensation

for the period until the 2019 Ordinary Shareholders’ Meeting;


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(5) Election of the Members of the Board of Directors, effective and

alternates, for a term of office until the 2020 Annual Shareholders’ Meeting,

including resolution on the number of seats to be filled in in this election;

(6) Election of the Chairman of the Board of Directors; and

(7) Election of the members of the Fiscal Council (“Conselho Fiscal”),

effective and alternates, for a term of office until the 2019 Annual Shareholders’

Meeting, as well as the determination of their respective compensation.

We understand that the information made available herein allows for a positioning in

advance of our shareholders and facilitate the decision-making process. Our team of

Investors Relations is available to clarify eventual doubts or to guide you.


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2 – GUIDELINES FOR PARTICIPATION AT THE EXTRAORDINARY AND ANNUAL

SHAREHOLDERS’ MEETING

2.1. – PARTICIPATION IN PERSON

As provided in article 8, par. 2, of the Company´s Bylaws, we request that the

shareholders who want to participate at the Extraordinary and Annual Shareholders’

Meeting, in person or by means of attorneys-in-fact, send, until 01:00 p.m. of April 23,

2018, to the Company´s headquarters, located at Rua Professor José Vieira de

Mendonça, 3.011 – Bairro Engenho Nogueira – Belo Horizonte - MG, CEP 31310-260,

to the care of the Secretary of Governance, certified copy of the following documents:

2.1.1. INDIVIDUALS SHAREHOLDERS

▪ Identification card with photo; and

▪ Receipt of ownership of shares, containing the respective equity interest, issued

by the depositary of the shares on the five (5) days prior to the holding of the

Meeting, or statement of the deposit account containing the respective equity

interest, issued by the depositary in charge of the book entry shares.

2.1.2. LEGAL ENTITIES SHAREHOLDERS

▪ Last consolidated bylaws or articles of association and the corporate

documentation that evidences the legal representation of the shareholder (i.e.,

minutes of the election of the officers);

▪ Identification card with photo of the legal representative(s);

▪ Receipt of ownership of shares, containing the respective equity interest, issued

by the depositary of the shares on the five (5) days prior to the holding of the

Meeting; or statement of the deposit account containing the respective equity

interest, issued by the depositary of the book entry shares; and

▪ In the case of Investment Funds: (i) the last consolidated regulations of the

fund, (ii) bylaws or articles of association of the administrator or manager, as

the case may be, observing the voting policy of the fund and the corporate

documentation that evidences the legal representation of the administrator or

manager (minutes of the election of the officers, term(s) of investiture and/or

power of attorney), and (iii) identification card with photo of the legal

representative(s) of the administrator or manager.


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2.1.3. SHAREHOLDERS REPRESENTED BY A POWER OF ATTORNEY

▪ Besides the documents indicated above, the original power of attorney, which

must have been granted less than one (1) year before, considering that (i) the

individuals who are shareholders of the Company may only be represented at

the Shareholders’ Meeting by an attorney-in-fact who is a shareholder, manager

of the Company, lawyer or financial institution, as provided in article 126, §1, of

Brazilian Corporation Law; and (ii) the legal entities which are shareholders of

the Company may, as per the terms of CVM´s decision taken at the CVM

Proceeding RJ2014/3578, judged on 11.04.2014, be represented by an

attorney-in-fact appointed according to their respective articles of association or

bylaws and according to the rules of the Civil Code, without the need of such

person being a manager of the Company, shareholder or lawyer; and

▪ Identification card with photo of the attorney-in-fact.

The Company does not require the certification of the signature on the powers of

attorney.

2.1.4. FOREIGN SHAREHOLDERS

The foreign shareholders shall present the same documentation as the Brazilian

shareholders, being waived The Hague apostille, notarization and registration

procedures; being required, however, the sworn translation of the documents drawn up

in a foreign language.

The Company points out that, as provided in par. 2 of article 5 of CVM Ruling nº

481/2009, the shareholders may participate at the Shareholders’ Meeting, even if they

do not deliver previously the documents mentioned above, provided the documents are

presented at the Shareholders’ Meeting before the beginning of the discussions.

2.2. PARTICIPATION BY REMOTE E-VOTING

As provided in articles 21-A and following of CVM Ruling nº 481/2009, the

shareholders of the Company may forward, from the date hereof, their voting

instructions related to the matters of the Meeting by filling in and sending the

documents referred: Remote E-Vote for Resolutions Object of the Extraordinary


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Shareholders’ Meeting (“E-Vote for the AGE”) and Remote E-Vote for Resolutions

Object of the Annual Shareholders’ Meeting (“E-Vote for the AGO”), and jointly with the

E-Vote for the AGE “E-Votes”), contained in Exhibits 1.1 and 1.2 to this Manual and

which shall be available to be printed from the Company´s website and from CVM´s

website.

It must be noted that, besides it being a single Shareholders’ Meeting, due to

procedural matters, there shall be an E-Vote for the matter of the agenda of the

Extraordinary Shareholders’ Meeting (E-Vote for the AGE) and another E-Vote for the

matters to be discussed in the context of the Annual Shareholders’ Meeting (E-Vote for

the AGO).

In any case, the sending of any of the E-Votes (for the AGE or for the AGO), shall imply

the participation of the shareholder and the counting of the shares of its ownership for

the quorum of installation of the Shareholders’ Meeting, even in relation to the matters

for which the shareholder did not send the E-Vote.

To this effect, the E-Votes must be received up to seven (7) days prior to the date of

the Meeting, that is, up to 04.18.2018 (inclusive). Eventual E-Votes received after this

date shall not be considered.

The shareholder who opts to exercise its voting right by means of the E-Votes may do

so by one of the options described below:

2.2.1. By giving instructions to the Company´s bookkeeper

This option is destined, exclusively, to the holders of registered shares bookkept by

Banco Bradesco S.A. and that are not deposited with the central depositary agent:

The holder of the shares that are not deposited with the central depositary agent and

who opts to exercise its right of remote e-voting, by means of service providers may

transmit its voting instructions to the bookkeeping agent of the shares issued by

Usiminas, Banco Bradesco S.A., observing the rules determined by Banco Bradesco

S.A.

To this effect, the shareholders shall go to any of the Branches of Banco Bradesco

S.A., in up to seven (7) days prior to the date of the Meeting, during the banking hours,


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with the Remote E-Votes, printed, filled in, initialized and signed, as well as the

documents indicated in the table below, so that the information contained in the

Remote E-Votes is transferred to Bradesco´s system.

Pursuant to article 21-B of CVM Ruling nº 481/2009, the shareholder shall transmit the

filling instructions of the E-Votes to the depositary agent, up to seven (7) days prior to

the date of the holding of the Meeting, that is, up to 04.18.2018 (inclusive).

In case of doubts, the shareholders may contact Bradesco, through the following

channels:

PHONE: 0800 701 1616

e-mail: [email protected]

Bradesco informs that the data indicated above, aims at providing the

shareholder a channel to clarify eventual doubts related to the sending of the E-

Votes to the depositary of the book entry shares. However, Bradesco shall not

accept the E-Votes by electronic means; only being accepted the E-Votes

presented at any of the Bradesco’s branches, in the terms and conditions

provided in the Manual for the Meeting.

Documents to be presented,

together with the E-Votes, at the

Bradesco’s branch Individuals

Legal

Entities

Investment

Funds

Individual Registration Number with the

Tax Bureau (CPF) and Identity card

with photo of the shareholder or legal

representative* X X X

Updated and consolidated Articles of

Association or By-laws** - X X

Document evidencing the

representation powers - X X

Updated and consolidated regulations

of the Fund - - X

*Identification documents accepted: Identity card for Brazilians, Identity

card for foreigners, Driver’s license, Passport and Professional

registration card duly recognized.

**For investment funds, documents of the manager

and/or administrator, as per the voting policy.


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2.2.2. By giving instructions to their respective custodian agents

This option is destined, exclusively, to the holders of shares kept in custody at B3 S.A.

– Brasil, Bolsa, Balcão (“B3”). In this case, the remote E-voting shall be exercised by

the shareholders according to the procedures adopted by their respective custodian

agents.

The holder of the shares deposited with the Central Depositary of B3 and who opts to

exercise its right of remote E-voting through service providers shall transmit their voting

instructions to their respective custodian agents, observing the rules determined by

them, which, in turn, shall forward such vote manifestations to the Central Depositary of

the B3.

To this effect, the shareholders shall contact their respective custodian agents and

verify the procedures established by them for the issuance of the E-voting instructions

through the E-Votes, as well as the documents and information required for the

exercise of such option.

Pursuant to article 21-B of CVM Ruling nº 481/2009, the shareholder shall give

instructions of the E-Votes to its custodian agent up to seven (7) days prior to the date

of the Meeting, that is, until 04.18.2018 (inclusive), except if a different term, always

prior to the date thereof, is established by its custodian agent.

As determined by article 21-S of ruling CVM 481/2009, the Central Depositary of the

B3, when receiving the instructions of vote from the shareholders through their

respective custodian agents, shall disregard eventual diverging instruction in relation to

a same resolution which have been issued by the same Tax Bureau Registration

Number — CPF (individuals) or CNPJ (legal entities)

2.2.3. By forwarding the E-Votes Directly to the Company

The shareholders may, as an alternative to the procedures described in items 2.2.1

and 2.2.2 above, send their E-Votes directly to the Company.

To this effect, the shareholders shall print the E-Votes (contained in Exhibit 1.1 and 1.2

to this Manual and will be available at the Company´s website and at CVM´s website),


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fill it in, initialize all the pages and sign them. Following that, the shareholders shall

send the E-Votes, duly filled in, initialized and signed, to the following postal address:

Rua Professor José Vieira de Mendonça, 3.011 –Bairro Engenho Nogueira – Belo

Horizonte - MG, CEP 31310-260, to the care of the Secretary of Governance, together

with a certified copy of the documents indicated below:

Individuals

identification card with photo of the shareholder.

Legal entities

▪ last consolidated bylaws or articles of association and the corporate

documentation that evidences the legal representation of the shareholder (that

is, minutes of the election of the officers);

▪ identification card with photo of the legal representative(s).

Investment funds

last consolidated regulations of the fund;

bylaws or articles of association of its administrator or manager, as the case

may be, observing the voting policy of the fund and the corporate documents

that evidence the representation powers (minutes of the election of the officers,

term(s) of mandate and/or power of attorney);

▪ identification card with photo of the legal representative(s).

The Company does not require the authentication of the signature on the E-Votes

issued in Brazil and The Hague apostille, notarization or consularization of the ones

issued abroad, being required, however, the sworn translation of the documents drawn

up in a foreign language.

The E-Votes, together with the documents indicated above, must be received by the

Company, regardless of the date on which they are sent, up to seven (7) days prior to

the date of the Meeting, that is, up to 04.18.2018 (inclusive). Eventual E-Votes received

by the Company after the date thereof shall not be considered.

The shareholder may also, if he prefers, anticipate the forwarding of the documents to

the Company, by sending digital copies of the E-Votes and of the documents referred

above to the electronic address [email protected].


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Anyway, it is essential that the Company receives the original of the E-Votes and of the

certified copy of the other documents previously forwarded by e-mail by the

shareholder, up to seven (7) days prior to the date of the Meeting, that is, up to

04.18.2018, at the following address: Rua Professor José Vieira de Mendonça, 3.011 –

Bairro Engenho Nogueira – Belo Horizonte - MG, CEP 31310-260, to the care of the

Secretary of Governance.

In up to three (3) days from the receipt of the referred documents, the Company shall

inform the shareholder, through the electronic address indicated in item 2.1 of the E-

Votes, its receipt and its acceptance.

If the E-Votes are not duly filled in or accompanied by the supporting documents

indicated above, the E-Votes shall be disregarded and such information shall be sent to

the shareholder through the electronic address indicated in item 2.1 of the E-Votes,

informing the need of rectification or resubmission of the E-Votes or of the

accompanying documents (provided there is available time), describing the necessary

procedures and terms for the regularization of the E-Vote.

During the term for voting, the shareholder may send a new instruction of vote to the

Company, if it deems necessary, and the last instruction of vote presented shall be

considered in the voting map of the Company.

In case of discrepancies between the E-Votes received directly by the Company and

the vote instruction contained in the prior voting map of the bookkeeper for a holder of

the same CPF or CNPJ registration number, the voting instruction forwarded by the

bookkeeper shall prevail, according to the provisions of article 21-W, § 2, of CVM

Ruling nº 481/2009.


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2.2.4. General Information

The Company points out that:

once the remote E-voting term is over, that is, on 04.18.2018, the shareholder

shall not be able to amend the voting instructions already sent, except at the

Shareholders’ Meeting, in person or by a power of attorney, upon express

request, prior to the submission of the respective matter(s), to disregard the

voting instructions sent by the E-Votes.

for the purposes of the counting of the votes, the E-Votes sent by shareholders

which are not eligible to vote at the Meeting or in the respective resolution shall

not be considered;

for the purposes of the counting of the votes, it shall only be considered the

shares held by each shareholder at the date of the Meeting, regardless of the

date on which the respective E-Votes were sent, to the extent that, if a

shareholder sells shares, between the date on which the respective E-Votes

was sent and the date of the Meeting, the votes corresponding to the shares

sold shall be disregarded;

the instruction of vote from a given CPF or CNPJ shall be attributed to all the

shares held under such CPF or CNPJ, according to the statement of the deposit

account containing the respective equity interest, provided by the depositary in

charge of the book entry shares, on the date of the Meeting; and

as provided in article 21-X of CVM Ruling n° 481/2009, the remote voting

instructions shall be normally considered in the case of eventual postponement

of the Meeting or if it is necessary its holding on second call, provided that

eventual postponement or holding on second call does not exceed thirty (30)

days from the date initially provided for its holding on first call.


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3 - CALL NOTICE


CNPJ 60.894.730/0001-05

NIRE: 313.000.1360-0


CALL NOTICE

EXTRAORDINARY AND ANNUAL SHAREHOLDERS’ MEETING

Messrs. Shareholders are called to meet on April 25, 2018, on first call, at the

Extraordinary and Annual Shareholders’ Meeting (“Meeting”), at 01:00 p.m., at the

Company´s headquarters, located at Rua Professor José Vieira de Mendonça, 3.011,

Bairro Engenho Nogueira, Belo Horizonte/MG, to resolve the following matters:

At the Extraordinary Shareholders’ Meeting:

(1) Proposed amicable solution for the Civil Liability Lawsuit filed by the Company

against its former Chief Executive Officer, whose filing was approved at the Annual

Shareholders’ Meeting of 04.27.2017 (“Liability Lawsuit”), by means of the Company

renouncing the claim presented in the Liability Lawsuit, in accordance with article 487,

III, ‘c’, of the Brazilian Civil Procedure Code, without any payment, reimbursement or

indemnification from party to party, each one of them bearing and paying (directly or

indirectly) all the fees and expenses of their own attorneys (including the expenses and

contractual and any attorneys´ fees (“honorários contratuais e sucumbenciais”)) and

their own court costs and expenses (“custas e despesas processuais”).

At the Annual Shareholders’ Meeting:

(1) Appreciation of the managements’ accounts and analysis, discussion and vote

on the financial statements and annual management report for the year ended on

December 31st, 2017;

(2) Allocation of net profit assessed in the fiscal year of 2017 and approval of the

capital budget for the fiscal year of 2018;

(3) Management’s proposal for the payment of dividends and definition of the date

of its respective payment;

(4) Determination of the total budget for the administrators’ compensation for the

period until the 2019 Ordinary Shareholders’ Meeting;


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(5) Election of the Members of the Board of Directors, effective and alternates, for a

term of office until the 2020 Annual Shareholders’ Meeting, including resolution on the

number of seats to be filled in in this election;

(6) Election of the Chairman of the Board of Directors; and

(7) Election of the members of the Fiscal Council (“Conselho Fiscal”), effective and

alternates, for a term of office until the 2019 Annual Shareholders’ Meeting, as well as

the determination of their respective compensation.

To participate at the Shareholders’ Meeting, the shareholders shall present original or

certified copies of the following documents: (i) identification document with photo; (ii)

documents that evidence the legal representation of the individual shareholder; (iii) in

the case of the shareholders presented by attorney-in-fact, the corresponding power of

attorney shall meet the requirements set forth in the applicable law and regulations;

and (iv) proof of ownership of shares, containing the respective equity interest, issued

by the depositary in charge of the book entry shares, five (5) days prior to the Meeting;

or statement of the deposit account containing the respective equity interest, issued by

the depositary of the book entry shares.

For the better organization of the Shareholders’ Meeting, the Company requires that

the copies of the documents mentioned above be sent to the Company´s headquarters

with an advance of forty-eight (48) hours to the date of the Shareholders’ Meeting,

pursuant to article 8, § 2, of the Bylaws.

The shareholder may also exercise its voting right by means of the remote E-Vote. In

this case, up to April 18, 2018 (inclusive), the shareholder shall transmit its filling in

instructions, by sending the respective E-Vote: 1) to the bookkeeper of the shares

issued by the Company; 2) to the custodian agents who provide this service, for the

holders of shares deposited at the Central Depositary; or 3) directly to the Company.

For additional information, the shareholder shall observe CVM Ruling nº 481/2009 and

the procedures described in the remote E-voting made available by the Company, as

well as in the respective Manual for Participation at the Meeting.

Under the terms of CVM Ruling nº 165/1991, as amended by CVM Ruling nº 282/1998,

the minimum percentage to require the adoption of the multiple vote procedure for the

election of the members to the Board of Directors is of five percent (5%) of the voting

capital.


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The documents related to the matters of the Agenda are available to the shareholders

at the Company´s headquarters and on the website of CVM (www.cvm.gov.br), B3 S.A,

- Brasil, Bolsa, Balcão (www.b3.com.br) and of the Company (www.usiminas.com).

Belo Horizonte, March 24th, 2018.

Elias de Matos Brito

Chairman of the Board of Directors

http://www.b3.com.br/


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4 – DOCUMENTS AND INFORMATION NECESSARY FOR THE RESOLUTION OF

THE MATTERS OF THE AGENDA OF THE EXTRAORDINARY AND ANNUAL

SHAREHOLDERS’ MEETING TO BE HELD ON APRIL 25, 2018

According to CVM Ruling nº 481/2009, we present below the documents and

information related to the matters to be resolved at the Company´s Extraordinary and

Annual Shareholders’ Meeting, to be held on April 25, 2018, at 01:00 p.m., at the

Company´s headquarters, located at Rua Professor José Vieira de Mendonça, 3.011 –

Bairro Engenho Nogueira – Belo Horizonte - MG:

4.1. Proposal for amicable solution for the Civil Liability Lawsuit filed by the

Company against its former Chief Executive Officer, whose filing was approved

at the Annual Shareholders Meeting of 04.27.2017 (“Liability Lawsuit”), by means

of the Company renouncing the claim presented in the Liability Lawsuit, in

accordance with article 487, III, ‘c’, of the Brazilian Civil Procedure Code, without

any payment, reimbursement or indemnification from party to party, each one of

them bearing and paying (directly or indirectly) all the fees and expenses of their

own attorneys (including the expenses and contractual and any attorneys´ fees

(“honorários contratuais e sucumbenciais”) and their own court costs and

expenses (“custas e despesas processuais”)).

At the Annual Shareholders’ Meeting held on April 27, 2017, the filing of a liability

lawsuit against Mr. Rômel Erwin de Souza, former CEO of the Company, was

approved. The Liability Lawsuit is based on the fact that Mr. Rômel Erwin de Souza

individually entered into a Memorandum with Mineração Usiminas S.A. (“MUSA”),

establishing certain guidelines for the renegotiation of the supply agreement of iron ore

produced by MUSA to Usiminas (“Offtake Agreement”). The Liability Lawsuit was filed

by the Company on July 21, 2017 and runs at the 22nd Lower Civil Court of Belo

Horizonte/MG under No 5099839-08.201.8.13.0024.

After the filing of the Liability Lawsuit, Usiminas entered into an amendment to the

Offtake Agreement with MUSA, which basis were fixed in a Term Sheet approved by

the Board of Directors of the Company on August 24, 2017.

Under the terms of such amendment, the volume of iron ore that the Company would

be obliged to acquire from MUSA (take or pay) as from 2018 until the end of 2021 was

reduced from 4 million tons to 2,3 million tons annually without the payment of any


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compensation to MUSA by virtue of such reduction. As from 2022, Usiminas and

MUSA will define, together, the ore volumes that will be annually acquired by the

Company.

The amendment to the Offtake Agreement also sets forth the change in the pricing of

the ore in order to, among other aspects involved, exclude the logistic cost related to

the Cubatão facility, which has not been receiving iron ore from MUSA since the

beginning of 2016. This amendment also provides more objective clauses for the

payment of bonus and penalties, as well as the adoption of a standardized pattern of

quality assessment and granulometry of the ore supplied by MUSA in line with the

current market practice.

Additionally, Usiminas and MUSA also entered into an agreement (Settlement

Agreement) regulating certain conditions related to the supply of iron ore from MUSA to

Usiminas in the years of 2016 and 2017. According to such instrument, Usiminas was

waived from the payment of the difference between the volume of ore previously set

forth in the Offtake Agreement and the volume effectively acquired by the Company in

the years of 2016 and 2017.

In face of this context, Usiminas’s Board of Officers consulted the law firm Eizirik

Advogados about the convenience for the Company to, in light of the current status of

the lawsuit, amicably terminate the Liability Lawsuit.

In its Opinion, the law firm Eizirik Advogados manifested the understanding that, in

sum, “as due to the entering into of the amendments of the Offtake Agreement and the

Settlement Agreement the alleged losses arising from the MOU have become very

difficult, if not impossible, to prove in practice, the success chances in the Liability

Lawsuit became remote”, reason why, among others, it concluded that “the termination

of the Liability Lawsuit, pursuant to the terms above mentioned [i.e., “without any

payment, reimbursement or indemnification from party to party, each one bearing and

paying (directly or indirectly) all the fees and expenses of their own attorneys (including

the expenses and contractual and any attorneys´ fees (“honorários contratuais e

sucumbenciais”) and their own court costs and expenses (“custas e despesas

processuais”)), is the measure that best suits Usiminas’s interest”.

On February 21 and 23, 2018, Mr. Rômel Erwin de Souza sent to Usiminas e-mails

confirming in written that he agrees “that upon the renouncing from Usiminas of the


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rights and claims raised under the Liability Lawsuit, hypothesis in which, in this

scenario of amicable composition, I inform that I intend to, at the same time in which

Usiminas renounces it, renounce the claims, including moral and material damages

that I may have against Usiminas deriving from the Liability Lawsuit”, and he makes

himself “available to execute all necessary documents for the implementation of these

matters in due course”, as well as clarifying his intention that the “termination of the

Liability Lawsuit filed by Usiminas against me is performed so that each party bears the

fees of its own lawyers and with the expenses and court costs to which they had given

cause to”.

On February 23, 2018, Usiminas’s Board of Officers, considering (i) the manifestation

received from Mr. Rômel Erwin de Souza confirming his agreement as to the amicable

termination of the Liability Lawsuit without the payment, reimbursement or

indemnification from party to party; and (ii) the legal opinion of the law firm Eizirik

Advogados, which was approved by the Company’s legal department, recommended

the submission of the proposal of the amicable termination of the Liability Lawsuit to

the General Meeting.

On March 2, 2018, the company’s Board of Directors unanimously approved the

recommendation from the Board of Officers to the amicable terminate the Liability

Lawsuit, as well as the submission of this matter to the General Meeting.

Attached to this Manual are (Annex 2) the legal opinion elaborate by the law firm Eizirik

Advogados, the e-mails sent to the Company by Mr. Rômel Erwin de Souza and the

minutes of the Boards of Officers and Directors held, respectively on February 23, 2018

and March 2, 2018.

4.2. Take the managers accounts, examine, discuss and vote the financial

statements and the management´s annual report related to the fiscal year ended

on December 31, 2017.

According to article 9, head paragraph and § 1, of CVM Ruling nº 481/2009, we make

available to the shareholders, in Exhibit 3 to this Manual, the following documents:

I - Management report on the corporate businesses and the main administrative

facts of the fiscal year ended on 12.31.2017;

II- Independent Auditors’ Report;


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III- Copy of the Financial Statements;

IV- Opinion of the Fiscal Council;

V – Statement of the Officers on the Independent Auditors Report;

VI – Statement of the Officers on the Financial Statements;

VII – Managers’ comments on the financial situation of the Company, under the

terms of item 10 of the Reference Form;

VIII – Standardized Form of the Financial Statements– DFP; and

IX – Opinion of the Audit Committee.

4.3. Allocation of the net profit assessed in the fiscal year of 2017 and the

approval of the capital budget for the fiscal year of 2018.

The Company´s Management submits to the shareholders the proposal of allocation of

the results of the assessment of the net profit in the fiscal year ended on 12.31.2017, in

the total amount of R$233,015,976.48, that, deducted from the installment destined to

the legal reserve, in the terms of article 193 of Law n° 6.404/1976, in the amount of

R$11,650,798.82, reaches an adjusted net profit of R$221,365,177.66.

From the total amount of R$221,365,177.66, assessed as adjusted net profit for the

fiscal year ended on 12.31.2017, the amount equivalent to (i) R$55,341,294.41 shall be

distributed as mandatory dividend to the shareholders, according to article 24, par. 5°,

of the Bylaws, and (ii) R$166,023,883.24 should be withheld based on the capital

budget, as provided in article 196 of Law n° 6.404/1976 and in article 24, par. 6° of the

Bylaws, as proposed by the Company´s Management.

For better understanding of the proposal of allocation of the results, Exhibit 4 to the

present Manual contains the information required by Exhibit 9-1-II to CVM Ruling n°

481/2009, as well as the proposal of capital budget of the Company for the fiscal year

of 2018.

4.4. Management Proposal for payment of dividends and definition of the date of

their respective payment.

The amount of the dividends for distribution to the shareholders is of R$55,341,294.41,

equivalent to twenty-five percent (25%) of the adjusted net profit of the fiscal year

ended on December 31, 2017, being R$0.043210713 per common share and

R$0.047531784 per preferred share.


20

The Company´s Management proposes that the mandatory dividend be paid on

05.30.2018, to the holders of common and preferred shares issued by the Company on

the base date of 04.25.2018. Consequently, the shares issued by the Company shall

be traded as “ex dividends” as of 04.26.2018. The amount of the proposed dividend

shall not be subject to monetary adjustment or corresponding remuneration from the

date of declaration by the Shareholders’ Meeting up to the date of its effective

payment, as well as it shall be exempt of IRRF, according to article 10 of Law n°

9.249/1995.

4.5. Establishment of the Total Budget for the Administrators´ Compensation for

the period up to the Company´s Annual Shareholders’ Meeting of 2019

At a meeting held on 03.22.2018, the Board of Directors decided to propose to the

shareholders the establishment of the global compensation of the Management, for the

period up to the Annual Shareholders’ Meeting to be held in 2019, in the amount of up

to R$30,297,084.00. To this effect and in accordance to article 12 of CVM Ruling nº

481/2009, we make available to the shareholders, in Exhibit 5 to this Manual, the

information indicated in item 13 of the Reference Form.

The global amount of the compensation of the administrators approved by the Annual

Meeting held on 04.27.2017 was of R$19,766,417.00.

The table below shows the amount effectively paid by the Company to its

administrators since the Annual Shareholders’ Meeting of 04.27.2017:

Global Remuneration

Paid

Board of Directors R$ 3,816,333.33

Statutory Board R$ 9,967,841.08

Total R$ 13,784,174.41

The difference between the amounts approved and the amounts effectively paid is of

R$5,982,242.59. Such difference is justified mainly due to:


21

1. When determining the total budget for the Administrators´ Compensation in

2017, the composition of the Board of Officers was taken into account with: 1

CEO and 4 Vice-Presidents Officers, but only the following positions were

actually fulfilled: 1 CEO and 3 Vice-Presidents Officers, which reduced the

Board of Officer’s compensation cost.

2. In view of the fact that total budget for the Administrators´ Compensation was

approved for the period from May/2017 to April/2018, the amounts

corresponding to the officers’ compensation for the months of March and April

2018 are still pending payment.

The difference between the amounts proposed in the previous fiscal year and in the

present year is justified by for the following reasons:

• Adjustment in the Fees of Members of the Board of Officers, approved by the

Board of Directors in November / 2017;

• 1 additional Chair of Vice-President Officer, pursuant to the Shareholders'

Agreement to be executed by the members of the Company's controlling group,

pursuant to the Material Fact dated 08/02/2018;

• Change in ICP Targets of Members of the Board of Officers, from 6 to 12

fees/year in December/2017; and

• Reserves: 10% of the total budget of the Board of Directors and Board of

Officers, including funding for a possible Long-Term Incentive Program.

4.6. Election of the Members to the Board of Directors, effective and alternates,

for a mandate up to the Annual Shareholders’ Meeting of 2020, including the

deliberation on the number of vacancies to be filled in the Board of Directors

Considering the end of the mandate of two (2) years of the current Directors, elected at

the Annual Shareholders’ Meeting held on April 28, 2016, it is necessary the election of

new members to the Board of Directors, in compliance with the provision of article 132,

item III of the Brazilian Corporation Law, who shall exercise their term of office up to

the Annual Shareholders’ Meeting of 2020.

In view of the fact that the article 12 of the Company´s Bylaws establishes that the

Board of Directors shall be composed by up to fifteen (15) members, it shall be

incumbent on the Shareholders’ Meeting to, prior, to the election of the Directors,

define the number of positions to be filled in at this election.


22

The Company received from its controlling shareholders the proposal for the Board of

Directors to be composed, for the mandate to begin from the holding of the

Shareholders’ Meeting, of up to 8 members, of which 7 shall be elected by the

shareholders at the Shareholders’ Meeting and one (1) shall be appointed

representative of the employees of the Company, as provided in article 12, pars. 1 and

2 of the Bylaws.

The number of members informed above can be increased by decision to be taken by

the shareholders at the Meeting in the following events: (i) if there is request of

adoption of the multiple vote system that meets the applicable legal and regulatory

requirements (head paragraph and Paragraph One of Article 141 of the Brazilian

Corporation Law and CVM Ruling nº 165/1991); or (ii) if the minority shareholders

exercise the right to elect members to the Board of Directors through separate voting,

provided the requirements set forth in Paragraphs Four to Six of Article 141 of Law nº

6.404/76 are met.

It must be highlighted that, in the terms of CVM Ruling nº 165/1991, as amended by

CVM Ruling nº 282/1998, the minimum percentage to require the adoption of the

multiple vote process in the present election is of five percent (5%) of the voting capital.

The Company received, the following indications from the controlling shareholders for

the positions of members of the Board of Directors:

Candidate Position Shareholder Who

Indicates

Ruy Roberto Hirschheimer Effective Member of the

Board of Directors NSSMC Group

Kazuhiro Egawa Effective Member of the


Antonio Mendes Effective Member of the


Rita Rebelo Hora de Assis

Fonseca

Effective Member of the

Board of Directors Previdência Usiminas

Oscar Montero Martínez Effective Member of the

Board of Directors T/T Group


23

Guilherme Poggiali de

Almeida



Elias de Matos Brito Effective Member of the


Hironobu Nose Alternate Member of the


Hirohiko Maeke Alternate Member of the


Ichiro Sato Alternate Member of the


Gileno Antônio de Oliveira Alternate Member of the

Board of Directors Previdência Usiminas

Pablo Daniel Brizzio Alternate Member of the


Mario Giuseppe Antonio

Galli

Alternate Member of the


Fernando Duelo Van

Deusen



Additionally, the Company received from the minority shareholder Geração Futuro L

Par Fundo de Investimento em Ações the indication of (i) Messrs. Paulo Roberto

Evangelista de Lima (effective) and Guilherme Silva Roman (alternate) to compete for

the positions of members of the Board of Directors, for the vacancys provided by items

I and II of paragraph 4, and paragraph 5 of Article 141 of the Law 6404/76 (“Brazilian

Corporate Law”), destined for the election in separate by the minority holders of

common and/or preferred shares.

According to article 10 of CVM Ruling nº 481/2009 and of items 12.5 to 12.10 of the

Reference Form, the information on the candidates indicated above is contained in

Exhibit 6 to this Manual.

The Company informs that, in compliance with article 12, par. 1, of the Bylaws, the

election held on 01.29.2018, elected Mr. Luiz Carlos de Miranda Faria (effective) and

Mr. Edílio Ramos Veloso (alternate) to integrate the Board of Directors of the

Company, acting as representatives of the employees. The information on the

representatives chosen by the employees is contained in Exhibit 6 to this Manual.


24

4.7. Election of the Chairman of the Board of Directors.

According to article 12, par. 3º, of the Bylaws, the Shareholders’ Meeting shall appoint

one of the elected members to the Board of Directors to be its Chairman.

The Company received from its controlling shareholders the appointment of Mr. Ruy

Roberto Hirschheimer to hold the position of Chairman of the Board of Directors up to

the Annual Meeting of 2020.

4.8. Election of the members to the Fiscal Council, effective and alternates, for a

mandate up to the Company´s Annual Shareholders’ Meeting of 2019, as well as

establishment of their respective compensation.

The Company received, the following indications from the controlling shareholders to

the positions of members to the Fiscal Council:

Candidato Cargo Acionista que Indicou

Wanderley Rezende de

Souza


Fiscal Council NSSMC Group

Lúcio de Lima Pires Effective Member of the

Fiscal Council Previdência Usiminas

Paulo Frank Coelho da

Rocha


Fiscal Council T/T Group

Masato Ninomiya Alternate Member of the

Fiscal Council NSSMC Group

Ely Tadeu Parente da

Silva


Fiscal Council Previdência Usiminas

João Paulo Minetto Alternate Member of the

Fiscal Council T/T Group

Additionally, the Company received from the minority shareholder Geração Futuro L

Par Fundo de Investimento em Ações the indication of (i) Messrs. Aloisio Macário

Ferreira de Souza (effective) and Luiz Fernando Sachet (alternate) to compete for the

positions of members of the Fiscal Council (“Conselho Fiscal”), for the vacancy

provided by letter “a”, of paragraph 4, of Article 161 of the Law 6404/76 (“Brazilian


25

Corporate Law”), destined for the election in separate by the minority holders of

preferred shares.

According to article 10 of CVM Ruling nº 481/2009 and of items 12.5 to 12.10 of the

Reference Form, the information on the candidates related above is contained in

Exhibit 7 to this Manual.

The Company proposes that the monthly compensation for the members of the Fiscal

Council be established in the amount corresponding to ten percent (10%) of the

average amount of the compensation attributed to the Company´s Officers, pursuant to

article 163, par. 3, of the Brazilian Corporation Law.


26

EXHIBIT 1.1 –REMOTE E-VOTING FOR RESOLUTIONS OBJECT OF THE

EXTRAORDINARY SHAREHOLDERS’ MEETING


CNPJ 60.894.730/0001-05

NIRE: 313.000.1360-0


Extraordinary and Annual Shareholders’ Meeting to be held on April 25, 2018

REMOTE E-VOTE FOR RESOLUTIONS OBJECT OF THE EXTRAORDINARY


1. Name or corporate name of the shareholder (with no abbreviations)

2. CNPJ or CPF of the shareholder

2.1. E-mail address of the shareholder to receive communications from the Company related to the E-Vote

3. Guidelines to fill in the Remote E-Vote

Initially, if must be clarified that, for procedural reasons, it shall be adopted two

remote E-votes in the context of the Extraordinary and Annual Shareholders’ Meeting

to be held on April 25, 2018, one E-vote for matter of the agenda of the Extraordinary

Shareholders’ Meeting and another E-vote for the matters to be discussed at the

Annual Shareholders’ Meeting.

Anyway, sending any of the remote E-votes (either the E-vote related to the matter of

the agenda of the Extraordinary Shareholders’ Meeting or the E-vote related to the

matters to be discussed at the Annual Shareholders’ Meeting) shall imply the

participation of the shareholder and the counting of the shares of its ownership for

the quorum of installation of the Extraordinary and Annual Shareholders’ Meeting,

even in relation to the matters for which the shareholder did not send the E-vote.

If you opt to exercise the remote E-voting right, in relation to the matter of the agenda of the Extraordinary Shareholders’ Meeting, under the terms of articles 21-A and following of CVM Ruling nº 481/2009, the shareholder shall fill in this Remote E-Vote for Resolutions Object of the Extraordinary Shareholders’ Meeting (“E-Vote”), that shall only be considered valid and the votes expressed herein will be counted for the quorum of the Shareholders’ Meeting, if the following instructions are observed: (i) all pages need to be initialed; and (ii) the last page shall be signed by the shareholder or by its legal representative(s), as the case may be, and under the terms of the law in force.


27

It shall not be required the certification of the signatures on the E-Vote, nor The Hague apostille, notarization or consularization, being required, however, the sworn translation of the documents sent attached to the E-Vote that are drawn up in a foreign language. The term for the receipt of the E-Vote duly filled in, ends on 04.18.2018 (inclusive), according to the instructions below. It is important to point out that, for the E-Vote to be effective, 04.18.2018 shall be the last day for its RECEIPT through one of the 3 manners listed below, and not the last day on which it was posted. If the E-Vote is received after 04.18.2018, the votes shall not be counted.

4. Guidelines to deliver the Remote E-Vote

The shareholder who opts to exercise its voting right through the E-Vote shall do it through one of the three (3) options described below: I. For filling in instructions transmitted to the bookkeeping agent of the shares

issued by the Company This option is destined, exclusively, to the shareholders of registered shares bookkept by Banco Bradesco S.A. and that are not deposited in the central depositary agent: The holder of the shares that are not deposited with the central depositary agent and who opts to exercise its right of remote e-voting by means of service providers may transmit its voting instructions to the bookkeeping agent of the shares issued by Usiminas, Banco Bradesco S.A., observing the rules determined by Banco Bradesco S.A. To this effect, the shareholders must go to any of the Branches of Banco Bradesco S.A., in up to seven (7) days prior to the date of the Meeting, during the banking hours, with the Remote E-Vote, printed, filled in, initialized and signed, as well as the documents indicated in the table below, so that the information contained in the Remote E-Vote is transferred to Bradesco´s system.

Documents to be presented, together with the E-Vote, at the Bradesco’s branch Individuals

Legal Entities

Investment Funds

Individual Registration Number with the Tax Bureau and Identity card with photo of the shareholder or legal representative* X X X

Updated and consolidated Articles of Association or By-laws** Updated and consolidated Articles of Association or By-laws** - X X

Document evidencing the powers of representation** - X X

Updated and consolidated regulations of the Fund - - X

* Identification documents accepted: Identity card for Brazilians,


28

Pursuant to article 21-B of CVM Ruling nº 481/2009, the shareholder shall transmit the filling instructions of the E-Vote to the bookkeeping agent, up to seven (7) days prior to the date of the holding of the Meeting, that is, up to 04.18.2018 (inclusive).

II. By transmitting filling in instructions to their custodian agents

This option is destined, exclusively, to the shareholders, holders of shares under custody at B3 S.A. – Brasil, Bolsa, Balção (“B3”). In this case, the remote voting shall be exercised by the shareholders, according to the procedures adopted by their respective custodian agents. The holder of the shares deposited with the Central Depositary of B3 and who opts to exercise its right of remote E-voting through service providers shall provide its voting instructions to its respective custodian agents, observing the rules determined by them, which, in turn, shall forward such vote manifestations to the Central Depositary of the B3. To this effect, the shareholders shall contact their respective custodian agents and verify the procedures established by them for the issuance of the E-voting instructions through the E-Vote, as well as the documents and information required for the exercise of such option. Pursuant to article 21-B of CVM Ruling nº 481/2009, the shareholder shall transmit the filling in instructions of the E-Vote to its custodian agent up to seven (7) days prior to the date of the Meeting, that is, until 04.18.2018 (inclusive), except if a different term, always prior to the date thereof, is established by its custodian agent. As determined by Article 21-S of ruling CVM 481/2009, the Central Depositary of the B3, when receiving the instructions of vote from the shareholders through their respective custodian agents, shall disregard eventual diverging instruction in relation to a same resolution which have been issued by the same Tax Bureau Registration Number — CPF (individuals) or CNPJ (legal entities)

I. By sending directly to the Company This option can be used by any shareholder of the Company:

The shareholders may also, alternatively to the procedures described in items I and II above, send the E Votes directly to the Company. For such, the shareholders shall print their E Vote, fill it in, initialize all the pages and sign it. Subsequently, the shareholders shall send the E Vote, duly filled in, initialized and signed, to the following address: Rua Professor José Vieira de Mendonça, 3.011 – Bairro Engenho Nogueira – Belo Horizonte - MG, CEP 31310-260, to the care of the Secretary of Governance, together with a certified copy of the documents described below:

Identity card for foreigners, Driver´s license, Passport and Professional registration card duly recognized **For investment funds, documents of the manager and/or administrator, as per the voting policy.


29

Individuals

identification card with photo of the shareholder. Legal entities

▪ last consolidated bylaws or articles of association and the corporate documentation that evidences the legal representation of the shareholder (that is, minutes of the election of the officers);

▪ identification card with photo of the legal representative(s). Investment funds

last consolidated regulations of the fund; bylaws or articles of association of its administrator or manager, as the

case may be, observing the voting policy of the fund and the corporate documents that evidence the representation powers (minutes of the election of the officers, term(s) of mandate and/or power of attorney);

▪ identification card with photo of the legal representative(s). The shareholder may also, if it prefers, anticipate the forwarding of the documents to the Company, by sending digital copies of the E-Votes and of the documents referred above to the electronic address [email protected]. Anyway, it is essential that the Company receives the original of the E-Vote and the certified copy of the other documents previously forwarded by e-mail by the shareholder, up to seven (7) days prior to the date of the Meeting, that is, up to 04.18.2018, at the following address: Rua Professor José Vieira de Mendonça, 3.011 – Bairro Engenho Nogueira – Belo Horizonte - MG, CEP 31310-260, to the care of the Secretary of Governance. In up to three (3) days from the receipt of the referred documents, the Company shall inform the shareholder, through the electronic address indicated in item 2.1 of the E-Vote, its receipt and its acceptance. If the E-Vote is not duly filled in or accompanied by the supporting documents indicated above, the E-Vote shall be disregarded and such information shall be sent to the shareholder through the electronic address indicated in item 2.1 of the E-Vote, informing the need of rectification or resubmission of the E-Vote or of the accompanying documents (provided there is available time), describing the necessary procedures and terms for the regularization of the E-Voting. If there are divergencies between the E-Vote received directly by the Company

and the voting instruction contained in the voting map from the bookkeeper for a

same number of CPF (individuals) or CNPJ (legal entities), the voting instruction of

the bookkeeper shall prevail, according to the dispositions of article 21-W, par. 2,

of CVM Ruling nº 481/2009.

5. Postal and electronic address to send the E-Vote, if the shareholder wants

to deliver the document directly to the company

Postal Address: Rua Professor José Vieira de Mendonça, 3.011 – Bairro

Engenho Nogueira – Belo Horizonte - MG, ZIP Code 31310-260, to the care of

the Secretary of Governance

Electronic Address: [email protected]

(Note: The E-Vote sent by electronic means only has the purpose to


30

anticipate the content of the vote and does not dismiss the timely sending

and receipt of the physical copy of the E-Vote.)

6. Indication of the institution hired by the company to provide the

bookkeeping service of securities, with the name, physical and electronic

address, telephone and person for contact

Banco Bradesco S.A.

In case of doubts, the shareholders may contact Bradesco through the following

channels:

PHONE: 0800 701 1616


Bradesco informs that the data indicated above aims at providing the


Vote to the depositary of the book entry shares. However, Bradesco shall not


presented at any Bradesco’s branch, under the terms and conditions provided

for in item 4.1 of this E-Vote.

Resolutions/Matters Object of the Extraordinary Shareholders’ Meeting

Simple Resolution

7. amicable solution for the Civil Liability Lawsuit filed by the Company

against its former Chief Executive Officer, whose filing was approved at the

Annual Shareholders Meeting of 04.27.2017 (“Liability Lawsuit”), by means

of the Company renouncing the claim presented in the Liability Lawsuit, in

accordance with article 487, III, ‘c’, of the Brazilian Civil Procedure Code,

without any payment, reimbursement or indemnification from party to

party, each one of them bearing and paying (directly or indirectly) all the

fees and expenses of their own attorneys (including the expenses and

contractual and any attorneys´ fees (“honorários contratuais e

sucumbenciais”) and their own court costs and expenses (“custas e

despesas processuais”)) :

[ ] Approve [ ] Reject [ ] Abstain


31

EXHIBIT 1.2 – REMOTE E-VOTE FOR RESOLUTIONS OBJECT OF THE ANNUAL



CNPJ 60.894.730/0001-05

NIRE 313.000.1360-0


Extraordinary and Annual Shareholders’ Meeting to be held on 04.25.2018

REMOTE E-VOTE FOR RESOLUTIONS OBJECT OF THE ANNUAL


1. Name or corporate name of the shareholder (with no abbreviations)

2. CNPJ or CPF of the shareholder

2.1. E-mail address of the shareholder

to receive communications from the

Company related to the E-Vote

3. Guidelines to fill in the Remote E-Vote

Initially, if must be clarified that, for procedural reasons, it shall be adopted two remote

E-votes in the context of the Extraordinary and Annual Shareholders’ Meeting to be

held on April 25, 2018, one E-vote for matter of the agenda of the Extraordinary

Shareholders’ Meeting and another E-vote for the matters to be discussed at the

Annual Shareholders’ Meeting.

Anyway, sending any of the remote E-votes (either the E-vote related to the matter of

the agenda of the Extraordinary Shareholders’ Meeting or the E-vote related to the

matters to be discussed at the Annual Shareholders’ Meeting) shall imply the

participation of the shareholder and the counting of the shares of its ownership for the

quorum of installation of the Extraordinary and Annual Shareholders’ Meeting, even in

relation to the matters for which the shareholder did not send the E-vote.


32

If you opt to exercise the remote E-voting right, in relation to the matters of the agenda of the Annual Shareholders’ Meeting, under the terms of articles 21-A and following of CVM Ruling nº 481/2009, the shareholder shall fill in this Remote E-Vote for Resolutions Object of the Annual Shareholders’ Meeting (“E-Vote”), that shall only be considered valid and the votes expressed herein shall be counted for the quorum of the Shareholders’ Meeting, if the following instructions are observed: (i) all pages need to be initialed; and (ii) the last page shall be signed by the shareholder or by its legal representative(s), as the case may be, and under the terms of the law in force. It shall not be required the certification of the signatures on the E-Vote, nor The Hague apostille, notarization or consularization, being required, however, the sworn translation of the documents sent attached to the E-Vote that are drawn up in a foreign language. The term for the receipt of the E-Vote duly filled in, ends on 04.18.2018 (inclusive),

according to the instructions below.

It is important to point out that, for the E-Vote to be effective, 04.18.2018 shall be the last day for its RECEIPT through one of the 3 manners listed below, and not the last day on which it was posted. If the E-Vote is received after 04.18.2018, the votes shall not be counted.

4. Guidelines to deliver the Remote E-Vote

The shareholder who opts to exercise its voting right through the E-Vote shall do so through one of the three (3) options described below: III. For filling in instructions transmitted to the bookkeeping agent of the shares

issued by the Company

This option is destined, exclusively, to the shareholders of registered shares bookkept by Banco Bradesco S.A. and that are not deposited in the central depositary agent: The holder of the shares that are not deposited with the central depositary agent and who opts to exercise its right of remote E-voting by means of service providers may transmit its voting instructions to the bookkeeping agent of the shares issued by Usiminas, Banco Bradesco S.A., observing the rules determined by Banco Bradesco S.A. To this effect, the shareholders must go to any of the Branches of Banco Bradesco

S.A., in up to seven (7) days prior to the date of the Meeting, during the banking hours,

with the Remote E-Vote, printed, filled in, initialized and signed, as well as the

documents indicated in the table below, so that the information contained in the

Remote E-Vote is transferred to Bradesco´s system:

Documents to be presented, together with the E-Vote, at the Bradesco’s branch Individuals

Legal Entities

Investment Funds

Individual Registration Number with the Tax Bureau and Identity card with photo X X X


33

Pursuant to article 21-B of CVM Ruling nº 481/2009, the shareholder shall transmit the filling in instructions of the E-Vote to the bookkeeping agent, up to seven (7) days prior to the date of the holding of the Meeting, that is, up to 04.18.2018 (inclusive).

IV. By transmitting instructions to their custodian agents

This option is destined, exclusively, to the shareholders, holders of shares under custody at B3 S.A. – Brasil, Bolsa, Balção (“B3”). In this case, the remote voting shall be exercised by the shareholders according to the procedures adopted by their respective custodian agents. The holder of the shares deposited with the Central Depositary of B3 and who opts to exercise its right of remote E-voting through service providers shall provide their voting instructions to their respective custodian agents, observing the rules determined by them, which, in turn, shall forward such vote manifestations to the Central Depositary of the B3. To this effect, the shareholders shall contact their respective custodian agents and verify the procedures established by them for the issuance of the E-voting instructions through the E-Vote, as well as the documents and information required for the exercise of such option. Pursuant to article 21-B of CVM Ruling nº 481/2009, the shareholder shall transmit the filling in instructions of the E-Vote to its custodian agent up to seven (7) days prior to the date of the Meeting, that is, until 04.18.2018 (inclusive), except if a different term, always prior to the date thereof, is established by its custodian agent. As determined by Article 21-S of ruling CVM 481/2009, the Central Depositary of the B3, when receiving the instructions of vote from the shareholders through their respective custodian agents, shall disregard eventual diverging instruction in relation to a same resolution which have been issued by the same Tax Bureau Registration Number — CPF (individuals) or CNPJ (legal entities) .

of the shareholder or legal representative*

Updated and consolidated Articles of Association or By-laws** Updated and consolidated Articles of Association or By-laws** - X X

Document evidencing the powers of representation** - X X

Updated and consolidated regulations of the Fund - - X

* Identification documents accepted: Identity card for Brazilians, Identity card for foreigners, Driver´s license, Passport and Professional registration card duly recognized

**For investment funds, documents of the manager and/or administrator, as per the voting policy.


34

V. By sending directly to the Company

This option can be used by any shareholder of the Company:

The shareholders may also, alternatively to the procedures described in items I and II above, send the E Votes directly to the Company. The shareholders shall print their E Vote, fill it in, initialize all the pages and sign it. Subsequently, the shareholders shall send the E Vote, duly filled in, initialized and signed, to the following address: Rua Professor José Vieira de Mendonça, 3.011 – Bairro Engenho Nogueira – Belo Horizonte - MG, CEP 31310-260, to the care of the Secretary of Governance, together with a certified copy of the documents described below: Individuals

identification card with photo of the shareholder. Legal entities

▪ last consolidated bylaws or articles of association and the corporate documentation that evidences the legal representation of the shareholder (that is, minutes of the election of the officers);

▪ identification card with photo of the legal representative(s). Investment funds

last consolidated regulations of the fund; bylaws or articles of association of its administrator or manager, as the

case may be, observing the voting policy of the fund and the corporate documents that evidence the representation powers (minutes of the election of the officers, term(s) of mandate and/or power of attorney);

▪ identification card with photo of the legal representative(s). The shareholder may also, if it prefers, anticipate the forwarding of the documents to the Company, by sending digital copies of the E-Votes and of the documents referred above to the electronic address [email protected]. Anyway, it is essential that the Company receives the original of the E-Vote and the certified copy of the other documents previously forwarded by e-mail by the shareholder, up to seven (7) days prior to the date of the Meeting, that is, up to 04.18.2018, at the following address: Rua Professor José Vieira de Mendonça, 3.011 – Bairro Engenho Nogueira – Belo Horizonte - MG, CEP 31310-260, to the care of the Secretary of Governance. In up to three (3) days from the receipt of the referred documents, the Company shall inform the shareholder, through the electronic address indicated in item 2.1 of the E-Vote, its receipt and its acceptance. If the E-Vote is not duly filled in or accompanied by the supporting documents indicated above, the E-Vote shall be disregarded and such information shall be sent to the shareholder through the electronic address indicated in item 2.1 of the E-Vote, informing the need of rectification or resubmission of the E-Vote or of the accompanying documents (provided there is available time), describing the necessary procedures and terms for the regularization of the E-Voting.


35

If there are divergencies between the E-Vote received directly by the Company

and the voting instruction contained in the voting map from the bookkeeper for a

same number of CPF (individuals) or CNPJ (legal entities), the voting instruction

of the bookkeeper shall prevail, according to the dispositions of article 21-W, §2,

of CVM Ruling nº 481/2009.

5. Postal and electronic address to send the E-Vote, if the shareholder wants to

deliver the document directly to the company

Postal Address: Rua Professor José Vieira de Mendonça, 3.011 – Bairro

Engenho Nogueira – Belo Horizonte - MG, ZIP Code 31310-260, to the care of

the Secretary of Governance

Electronic Address: [email protected]

(Note: The E-Vote sent by electronic means only has the purpose to

anticipate the content of the vote and does not dismiss the timely sending

and receipt of the physical copy of the E-Vote.)

6. Indication of the institution hired by the company to provide the bookkeeping

service of securities, with the name, physical and electronic address, telephone

and person for contact

Banco Bradesco S.A.

In case of doubts, the shareholders may contact Bradesco through the following

channels:

PHONE: 0800 701 1616


Bradesco informs that the data indicated above aims at providing the


Vote to the depositary of the book entry shares. However, Bradesco shall not


presented at any Bradesco’s branch, under the terms and conditions provided

for in item 4.1 of the E-Vote.

Resolutions / Matters Purpose of the Annual Shareholders’ Meeting

Simple Resolution

7. Approve the managers accounts, the financial statements and the annual

management report related to the year ended on December 31, 2017:


Simple Resolution

8. Approve the proposal of allocation of net profit assessed in the fiscal year of

2017, with the (i) payment of the amount of R$55,341,294.41 as mandatory

dividend to the shareholders, and (ii) the withholding of R$166,023,883.24


36

based on the capital budget, as provided in article 196 of the Brazilian

Corporation Law and in article 24, par. 6 of the Bylaws:


Simple Resolution

9. Approve the Management’s proposal for the distribution of the mandatory

dividend in the amount of R$0.043210713 per common share and of

R$0.047531784 per preferred shares issued by the Company, to be paid on

05.30.2018, to the holders of the shares issued by the Company on the base

date of 04.25.2018:


Simple Resolution

10. Establishment of the annual global compensation for the Management for

the period up to the Company´s Annual Shareholders’ Meeting of 2019 in the

amount of up to R$30,297,084.00:


Simple Resolution

11. Establishment of number of members of the Board of Directors:

Composition of the Board of Directors by 8 members, 7 being elected by the

shareholders and one (1) appointed as representative of the employees of the

Company:


Simple Matter

12. Wishes to require the adoption of the multiple vote process for the election

of the members to the Board of Directors, pursuant to article 141 of Law nº

6.404/1976?

[ ] Yes [ ] No [ ] Abstain

Election of the Board of Directors by Sole Slate

12.1. Election of all the names composing the slate indicated by the

Controlling Group, which are, effective members - Ruy Roberto Hirschheimer,

Kazuhiro Egawa, Antonio Mendes, Oscar Montero Martínez, Guilherme

Poggiali de Almeida, Elias de Matos Brito, Rita Rebelo Hora de Assis Fonseca,

and respective alternates:


12.2. If one of the candidates composing the slate indicated by the Controlling

Group ceases to be part of the slate, the votes corresponding to their shares

may still be conferred to this slate?


37


12.3. Election of members to the Board of Directors, if the multiple voting

system is adopted:

In the event of the adoption of the process of election by multiple vote, the

corresponding votes to your shares may be distributed, in the following equal

percentages to the members of the slate you chose? [The equal distribution

shall consider the division of the percentage of 100% among the members of

the slate chosen, up to two decimal digits, no rounding effected The fractions

of shares assessed from the application of the resulting percentage shall not

be allocated to any candidate, being disregarded in the process of multiple

vote, event in which the shareholders shall not be able to vote with the totality

of their shares]


If you have answered no in relation to the previous question, the corresponding

votes to your shares shall be distributed in the following percentages (note: the

votes shall only be considered if the sum of the numbers inserted in the tables

below is equal to, at the most, 100%):

Ruy Roberto Hirschheimer - [ ] % of the votes to be attributed to the

candidate

Kazuhiro Egawa - [ ] % of the votes to be attributed to the candidate

Antonio Mendes - [ ] % of the votes to be attributed to the candidate

Oscar Montero Martínez - [ ] % of the votes to be attributed to the

candidate

Guilherme Poggiali de Almeida - [ ] % of the votes to be attributed to the

candidate

Elias de Matos Brito - [ ] % of the votes to be attributed to the candidate

Rita Rebelo Hora de Assis Fonseca - [ ] % of the votes to be attributed to

the candidate

Total – 100% of the votes


38

13. Request of election in separate of member to the board of directors by

minority shareholders, holders of shares with voting right. The shareholder

may only fill this field if it has left in blank fields 12.1 to 12.3 above and has

held uninterruptedly the shares with which it votes during the 3 months

immediately prior to the Annual Meeting.

Wishes to request the election in separate of members to the board of

directors, in terms of art. 141, par, 4, item I, of Law nº 6.404, of 1976?


13.1. Separate election of member of the Board of Directors by minority

shareholders, holders of common shares (article 141, paragraph 4, item I, of

the Brazilian Corporation Law) – The shareholder may only fill this field if he

has left in blank fields 12.1 to 12.3 above and is the uninterrupted holder of the

shares for which he votes during the 3 months immediately prior to the Annual

Meeting:

Candidates Messrs. Paulo Roberto Evangelista de Lima (effective) and

Guilherme Silva Roman (alternate):


If it is verified that, neither the holders of common shares nor the holders of

preferred shares without voting rights or with restricted votes have, respectively,

reached the quorum required in items I and II of paragraph 4 of art. 141 of Law No.

6,404 of 1976, do you want that your vote be aggregated to the votes of the

preferred shares in order to elect for the board of directors the candidate with the

highest number of votes among all those that, as part of this Remote E-Vote, to

stand for a separate election?


14. Request of election in separate of member to the Board of Directors by

minority shareholders, holders of preferred shares with no voting right or with

restricted vote. The shareholder may only fill this field if it has held

uninterruptedly the shares with which it votes during the 3 months

immediately prior to the Annual Meeting:

Wishes to request the election in separate of members to the board of directors, in

the terms of art. 141, par. 4, item I, of Law nº 6.404, of 1976


14.1. Separate election of member of the Board of Directors by minority

shareholders, holders of preferred shares (article 141, paragraph 4, item II, of

the Brazilian Corporation Law) – The shareholder may only fill this field if he is

the uninterrupted holder of the shares for which he votes during the 3 months

immediately prior to the Annual Meeting:

Candidates Messrs. Paulo Roberto Evangelista de Lima (effective) and


39

Guilherme Silva Roman (alternate):


If it is verified that, neither the holders of common shares nor the holders of preferred

shares without voting rights or with restricted votes have, respectively, reached the

quorum required in items I and II of paragraph 4 of art. 141 of Law No. 6,404 of

1976, do you want that your vote be aggregated to the votes of the preferred shares

in order to elect for the board of directors the candidate with the highest number of

votes among all those that, as part of this Remote E-Vote, to stand for a separate

election?


15. Election of the Chairman of the Board of Directors.

Election of Mr. Ruy Roberto Hirschheimer for the position of Chairman of the

Board of Directors up to the Annual Shareholders’ Meeting of 2020:


16. Election of the Fiscal Council by Sole Slate

Election of the effective and alternate members of the Fiscal Council appointed

by the Controlling Group effective members - Wanderley Rezende de Souza,

Paulo Frank Coelho da Rocha, Lúcio de Lima Pires and respective alternates:


17. Separate election of the member to the Fiscal Council by the minority

shareholders, holders of common shares

Candidate – Mr. Aloisio Macário Ferreira de Souza (effective) and Luiz

Fernando Sachet (alternate)


Simple Resolution

18. Establish the monthly remuneration of the members of the Fiscal Council

in the amount corresponding to ten percent (10%) of the average amount of the

compensation attributed to the Officers of the Company, in the terms of article

163, par. 3º, of Law nº 6.404/1976:



40

EXHIBIT 2 – MATERIAL ON THE PROPOSAL OF AMICABLE SOLUTION FOR THE

CIVIL LIABILITY LAWSUIT FILED AGAINST THE FORMER CHIEF EXECUTIVE

OFFICER OF THE COMPANY


41

Nelson Eizir ik

Antonio Carlos Verzola

Marcus de Freitas Henriques

Maria Lucia de Araujo Cintra

Renata Moritz Serpa Coelho

Andrea Braga

Luis Andre Azevedo

Alexandre Chede Travassos

Juliana Botini Hargreaves Vieira

Ana Carolina Weber

Adriana M. R. Ferreira

Luiza P. da Cunha P. de Oliveira

Camila Tinoco

Giovanna Rennó Duque eizir ik@eizir ik.com.br

Rio de Janeiro, 20 de fevereiro de 2018.

À Usinas Siderúrgicas de Minas Gerais S.A. – Usiminas Rua Professor José Vieira de Mendonça, 3011 Belo Horizonte – MG At: Dr. Bruno Lage de Araujo Paulino

Prezados Senhores,

Conforme solicitado, analisamos a questão formulada por V.Sas.,

referente à conveniência para a Usinas Siderúrgicas de Minas Gerais S.A. –

Usiminas (“Usiminas” ou “Companhia”) de, à luz do status atual do processo e

tendo revisto todos os materiais e alegações ali constantes até 19.02.2018,

encerrar amigavelmente a ação de responsabilidade ajuizada em face do Sr.

Rômel Erwin de Souza (“Sr. Rômel de Souza”), ex-Diretor Presidente da

Companhia, mediante renúncia à pretensão formulada na ação, conforme o

artigo 487, inciso III, alínea “c”, do Código de Processo Civil, sem qualquer

pagamento, reembolso ou indenização de parte a parte, cada uma destas

assumindo e pagando (direta ou indiretamente) todos os custos de seus

RIO DE JANEIRO

R. Santa Luzia, 651 – 34º andar

Rio de Janeiro RJ Cep 20021-903

Tel.: (21) 3906-8200 / 2240-4724

Fax: (21) 2262-7784

SÃO PAULO

R. Padre João Manuel, 923 – 13º andar

São Paulo SP Cep 01411-001

Tel.: (11) 3061-2552


42

respectivos advogados (incluindo despesas e honorários contratuais e

sucumbenciais) e respectivas custas e despesas processuais.

1 – Dos Fatos

Em 23.03.2017, o Conselho de Administração da Usiminas

reuniu-se extraordinariamente para apurar a conduta do Sr. Rômel de Souza, à

época Diretor Presidente da Companhia, no que se referia à celebração, por

este isoladamente, do documento denominado Memorandum of Understanding

(“MOU”) com a Mineração Usiminas S.A. (“MUSA”), controlada da Companhia.

O referido MOU tinha por objetivo estabelecer algumas premissas que

deveriam nortear a renegociação do Offtake Agreement, contrato que regula o

fornecimento de minério de ferro produzido pela MUSA para a Usiminas

(“Offtake Agreement”).

Na referida reunião, o Conselho de Administração da Companhia

entendeu, por maioria de votos dos seus membros, que a assinatura do MOU

pelo Sr. Rômel de Souza, sem a prévia autorização do Conselho de

Administração e sem estar acompanhado de outro Diretor, caracterizaria

violação ao Estatuto Social da Usiminas, razão pela qual foi aprovada a sua

destituição do cargo de Diretor Presidente.

Em 27.04.2017, foi realizada Assembleia Geral Ordinária ("AGO")

da Usiminas, na qual, entre outras matérias, foi colocada em deliberação

“proposta de autorização à Companhia para que ajuíze ação de

responsabilidade contra o Sr. Rômel Erwin de Souza”, conforme consta da ata

da AGO.


43

Por maioria dos votos dos acionistas presentes à AGO, foi

aprovada a proposta para autorizar a Companhia a propor ação de

responsabilidade contra o Sr. Rômel de Souza, com fulcro nos artigos 158,

inciso II e 159 da Lei das S.A..

A referida ação foi efetivamente ajuizada pela Companhia em

21.07.20171, conforme Fato Relevante divulgado na mesma data, e encontra-

se atualmente em curso na 22ª Vara Cível da Comarca de Belo Horizonte –

MG, sob o nº 5099839-08.2017.8.13.0024 (“Ação de Responsabilidade”).

Posteriormente à propositura da Ação de Responsabilidade, o

Conselho de Administração da Usiminas aprovou, por unanimidade, em

reunião realizada em 24.08.2017, a celebração de um Term Sheet vinculante

com a MUSA, estabelecendo determinadas alterações no Offtake Agreement,

em condições mais vantajosas para a Usiminas.

Adicionalmente, o Conselho de Administração também autorizou

a Diretoria da Companhia a celebrar o aditivo ao Offtake Agreement,

contemplando as alterações estabelecidas no referido Term Sheet, o qual foi

efetivamente assinado em 05.12.2017.

Conforme Comunicado ao Mercado divulgado em tal data, nos

termos do referido aditivo o volume de minério que a Companhia passou a

estar obrigada a adquirir da MUSA (take or pay), a partir de 2018 e ate o fim de

2021, foi reduzido de 4,0 milhões de toneladas para 2,3 milhões de toneladas

anuais, sem pagamento de qualquer compensação à MUSA. Ademais, a partir

1 O Sr. Rômel de Souza apresentou contestação em 06.10.2017, tendo a Usiminas apresentado réplica à

contestação em 21.11.2017.


44

de 2022 as partes definirão, de comum acordo, os volumes de minério a serem

adquiridos anualmente pela Companhia.

O aditivo ao Offtake Agreement também (i) alterou a forma de

precificação do minério, a fim de, entre outros aspectos, excluir o custo

logístico relativo à Usina de Cubatão, a qual não recebe minério de ferro da

MUSA desde o início de 2016; (ii) estabeleceu cláusulas mais objetivas para o

pagamento de bônus e penalidades; e (iii) adotou um critério padronizado de

medição de qualidade e granulometria do minério fornecido pela MUSA, em

linha com as práticas de mercado atuais.

Além do referido aditivo, a Usiminas e a MUSA também

celebraram, na mesma data, um acordo (“Settlement Agreement”), segundo o

qual a Usiminas ficou dispensada de pagar a diferença entre o volume de

minério anteriormente previsto no Offtake Agreement (4,0 milhões de toneladas

por ano) e o volume efetivamente adquirido pela Companhia nos anos de 2016

e 2017.

Em razão do exposto acima, a Usiminas requer que seja avaliada,

com base em todo o conteúdo atual do processo em referência, bem como nos

fatos acima relativos aos contratos firmados com a MUSA e seus efeitos para a

Companhia, a conveniência de encerrar a Ação de Responsabilidade,

conforme acima especificado.

2 – Da Ação de Responsabilidade Civil Contra os Administradores

A disciplina da responsabilidade civil tem por fim viabilizar a

reparação de prejuízos eventualmente provocados em razão da infração a um

dever jurídico imputável ao agente.


45

A Lei das S.A. dispensou tratamento específico às ações de

responsabilidade, estabelecendo no artigo 159 que “compete à companhia,

mediante prévia deliberação da assembleia geral, a ação de responsabilidade

civil contra o administrador, pelos prejuízos causados ao seu patrimônio”

(grifamos).

São 3 (três) os requisitos necessários para a procedência da ação

de responsabilidade civil contra o administrador: (i) a prática de ato ilícito, em

violação ao disposto no artigo 158 da Lei das S.A.; (ii) o prejuízo ao patrimônio

da companhia, sendo essencial a demonstração do dano, que não pode ser

apenas presumido ou hipotético, devendo ser certo e atual; e (iii) o nexo de

causalidade, sendo indispensável estabelecer a relação direta de causa e

efeito entre a conduta do administrador e o dano sofrido pela companhia.

Mesmo quando há indícios de que o administrador atuou de forma

ilegal, a companhia não é obrigada a mover a ação de responsabilidade, uma

vez que, por se tratar de decisão soberana, a assembleia geral deve pesar (i) a

gravidade do ilícito; (ii) os danos efetivamente causados; (iii) os custos e os

benefícios do ajuizamento da ação; e (iv) as reais possibilidades de êxito da

demanda.

Para a propositura da ação prevista no artigo 159 da Lei das S.A.,

é imprescindível a prévia autorização da assembleia geral, pois a decisão

assemblear constitui condição especial de procedibilidade da ação.

A ação pode ser intentada diretamente pela companhia contra o

administrador – ação social “ut universi” – ou por intermédio de seus acionistas

– ação “uti singuli”.


46

Em qualquer destas hipóteses, como o fundamento da ação de

responsabilidade é a recomposição dos prejuízos causados à companhia,

ela é que será sempre a beneficiária de seu resultado. Assim, mesmo quando a

ação de responsabilidade for movida pelo acionista, nas hipóteses autorizadas

pelo artigo 159 da Lei das S.A., este atua como substituto processual, isto é,

age em nome próprio, mas na defesa do interesse da sociedade, devendo ser

ressarcido das despesas incorridas no processo.

O pagamento dos custos ao acionista depende não apenas do

êxito da ação, mas também do efetivo recebimento pela companhia do valor da

condenação. Por isso, quando são baixas as possiblidades de obter um

resultado econômico satisfatório, muitas vezes, tanto a sociedade como os

acionistas decidem não ajuizar a ação de responsabilidade. Da mesma forma,

quando os prejuízos são ressarcidos independentemente de ação de

responsabilidade, essa não se justifica, pois perde o seu objeto.

Nada impede que a sociedade aceite receber extrajudicialmente a

indenização relativa aos danos sofridos ou que, mesmo após a eventual

deliberação sobre o ajuizamento da ação de responsabilidade, renuncie à sua

propositura, desde que haja aprovação expressa em assembleia geral, único

órgão competente para decidir a matéria. Da mesma forma, a companhia

poderá eventualmente desistir de ação de responsabilidade já proposta,

hipótese em que também deverá haver prévia autorização da assembleia geral.


47

3 – Resposta à Consulta

Conforme analisado no item anterior, a ação de responsabilidade

civil regulada no artigo 159 da Lei das S.A. tem por fim exclusivo a reparação

dos danos causados pelos administradores ao patrimônio da companhia.

Neste sentido, a Ação de Responsabilidade foi proposta com o

objetivo de obter a recomposição dos prejuízos que teriam, alegada ou

presumivelmente, sido sofridos pela Usiminas em razão da assinatura do MOU

individualmente pelo Sr. Rômel de Souza.

A propósito, ressalte-se que, conforme referido, a caracterização

de prejuízos efetivos e concretos que tenham sido sofridos pela sociedade

constitui elemento essencial para a procedência e êxito da ação de

responsabilidade em face do administrador.

Ou seja, ainda que eventualmente se decida, no âmbito da Ação

de Responsabilidade, que a assinatura do MOU pelo Sr. Rômel de Souza

tenha sido ilegal e violado o Estatuto Social da Usiminas, tal ação deverá ser

julgada improcedente caso não possam ser comprovados os efetivos danos

que o ato praticado pelo ex-Diretor Presidente tenha causado ao patrimônio da

Companhia.

Nos termos da petição inicial da Ação de Responsabilidade, tais

prejuízos decorreriam, dentre outros fatores, da circunstância de que as bases

estabelecidas no MOU teriam sido “extremamente prejudiciais aos interesses

da Companhia”.

No entanto, à época da aprovação da propositura da Ação de

Responsabilidade, ocorrida na AGO realizada em 27.04.2017, a Usiminas

ainda não havia assinado com a MUSA o Term Sheet vinculante, o qual


48

estabeleceu os termos e condições para a posterior celebração do aditamento

ao Offtake Agreement e do Settlement Agreement, em condições mais

vantajosas para a Companhia.

Com a assinatura do aditamento ao Offtake Agreement e do

Settlement Agreement com a MUSA, as chances de êxito da Usiminas na Ação

de Responsabilidade, em nosso entendimento, diminuíram consideravelmente.

Como em razão da celebração do aditamento ao Offtake

Agreement e do Settlement Agreement os alegados prejuízos decorrentes do

MOU tornaram-se de muito difícil, senão inviável, comprovação na prática,

passaram a ser remotas as possibilidades de sucesso na Ação de

Responsabilidade.

Adicionalmente, é importante salientar que a Ação de

Responsabilidade teria um trâmite longo, uma vez que, pela própria natureza

da ação, seria necessária a realização de perícias, o que também implicaria

mais custos para a Usiminas (sem boas perspectivas de recuperação,

conforme acima mencionado).

Tendo em vista que os argumentos que originalmente serviram de

base para a propositura da Ação de Responsabilidade atualmente se mostram

enfraquecidos, a eventual perda da ação por parte da Usiminas – cenário que,

em razão dos fatos concretos aqui analisados, é provável – importaria ainda na

condenação da Companhia ao pagamento de honorários de sucumbência ao

Sr. Rômel de Souza.


49

4 – Conclusão

Conforme analisado em detalhes acima, concluímos que as

chances de sucesso da referida demanda judicial tornaram-se remotas e o

encerramento da Ação de Responsabilidade, nos termos acima especificados,

constitui medida que melhor atende aos interesses da Usiminas.

Permanecemos à disposição de V.Sas. para quaisquer

esclarecimentos que porventura se façam necessários.

Atenciosamente,

Nelson Eizirik

Marcus de Freitas Henriques

Alexandre Chede Travassos


50

De: Romel Erwin Souza [mailto:[email protected]] Enviada em: sexta-feira, 23 de fevereiro de 2018 09:21 Para: Kazuhiro Egawa; MONTERO Oscar TERNIUM; Sergio Leite de Andrade; Bruno Lage de Araujo Paulino Assunto: Processo nº 5099838-08.2017130024 Para: Usinas Siderúrgicas de Minas Gerais S.A. - Usiminas Nippon Steel & Sumitomo Metal Corporation Ternium Investiments S.à r.l. Senhores Kazuhiro Egawa, Oscar Montero, Sergio Leite de Andrade, Bruno Paulino, Em complemento à minha comunicação lhes enviada no dia 24/02/18, confirmo minha intenção de que o encerramento da Ação de Responsabilidade ajuizada pela Usiminas contra mim, seja feito de forma que cada parte arque com os honorários de seus próprios advogados e com as despesas e custas a que tiverem dado causa. Atenciosamente, Rômel Erwin de Souza De: Romel Erwin Souza [mailto:[email protected]] Enviada em: quarta-feira, 21 de fevereiro de 2018 13:57 Para: Kazuhiro Egawa; MONTERO Oscar TERNIUM; Bruno Lage de Araujo Paulino; Sergio Leite de Andrade Assunto: Processo nº 5099838-08.2017.130024 Para: Usinas Siderúrgicas de Minas Gerais S.A.- Usiminas Nippon Steel & Sumitomo Metal Corporation Ternium Investiments S.à r.l. Senhores Kazuhiro Egawa, Oscar Montero, Sergio Leite de Andrade, Bruno Paulino Tomei conhecimento pela imprensa do Fato Relevante publicado pela Usiminas em 08/02/18, informando ao mercado o acordo firmado pelos acionistas co-controladores da Usiminas.Desde então, meus advogados têm sido contatados por advogados representando Usiminas e NSSMC indagando se eu estaria interessado em (i) suspender o andamento da Ação de Responsabilidade nº 5099838-08.2017.130024 ajuizada contra mim; e (ii)encerrar a referida disputa por meio da renuncia, por parte da Usiminas, aos direitos nela discutidos e aos pedidos nela formulados ( art. 487, III, c, do Código Civil )

mailto:[email protected]


51

Por esta comunicação, confirmo por escrito minha concordância (i) em imediatamente suspender o andamento da Ação de Responsabilidade pelo período improrrogável de 90 ( noventa ) dias, conforme solicitado, e ( ii )com a renuncia da Usiminas, dos direitos suscitados e pleitos formulados na Ação de Responsabilidade, hipótese na qual, neste cenário de composição amigável, informo que eu pretendo, ao mesmo tempo em que realizada a referida renuncia pela Usiminas, renunciar aos pleitos, incluindo danos morais e materiais, que eu possa ter contra a Usiminas derivados da Ação de Responsabilidade.Coloco me à disposição para oportunamente assinar os documentos necessários para a implementação destas questões, após a devida revisão pelos meus advogados. Esclareço apenas que a renuncia que pretendo oportunamente outorgar em favor da Usiminas na Ação de Responsabilidade abrange os atos praticados contra mim até esta data. Esta renuncia não deve ser interpretada de forma a me impedirdes pleitear meus direitos (incluindo pleitos de potenciais danos morais e/ou materiais ) contra qualquer empresa ou indivíduo que, a partir desta data teça considerações difamatórias ou desrespeitosas a meu respeito. Esta comunicação substitui e prevalece sobre o email por mim enviado em 19?02?18. Atenciosamente, Rômel Erwin de Souza


52

USINAS SIDERÚRGICAS DE MINAS GERAIS S/A - USIMINAS

CNPJ/MF 60.894.730/0001-05 NIRE 313.000.1360-0

Companhia Aberta

Ata da Reunião de Diretoria da Usinas Siderúrgicas de Minas Gerais S/A – USIMINAS. A Diretoria considera aprovada em 23 de fevereiro de 2018 a decisão tomada por meio de

mensagens eletrônicas. Participantes: Sergio Leite de Andrade, Diretor Presidente, Diretor Vice Presidente de Tecnologia e Qualidade e Diretor Vice Presidente Comercial; Tulio Cesar do Couto Chipoletti, Diretor

Vice-Presidente Industrial; Ronald Seckelmann, Diretor Vice-Presidente de Finanças e Relações com Investidores e Diretor Vice-Presidente de Subsidiárias; Takahiro Mori, Diretor Vice Presidente de Planejamento Corporativo; César Augusto Espíndola Bueno, Assessor Especial da Presidência. Bruno Lage de Araujo Paulino, Secretário.

Assuntos/Deliberações:

Itens para Deliberação I – Ação de Responsabilidade - A Diretoria, tendo em vista (i) a manifestação recebida do ex-Diretor Presidente Rômel Erwin de Souza; e, (ii) o parecer do escritório Eizirik Advogados, que foi aprovado pelo Departamento Jurídico da Companhia, recomendou, por unanimidade, que o Conselho de Administração submeta à Assembleia Geral, proposta de retirada da Ação

de Responsabilidade movida pela Companhia contra tal ex-Diretor Presidente, com a renúncia à pretensão formulada na ação, pela Usiminas, conforme artigo 487, inciso III, alínea “c” do Código de Processo Civil, sem qualquer pagamento, reembolso ou indenização por qualquer das partes da Ação de Responsabilidade para a outra, e cada parte da Ação de Responsabilidade arcando e pagando (direta ou indiretamente, incluindo pela aplicação de acordos de indenização ou arranjos similares tais como D&O, seguro e políticas, etc) por qualquer e todas as taxas e despesas de seus respectivos advogados (incluindo, sem

limitação, honorários contratuais e honorários de sucumbência) e suas respectivas custas e

despesas processuais. Encerramento - Nada mais havendo a tratar foi encerrada a reunião, sendo lavrada a respectiva ata no Livro próprio, com a assinatura dos Diretores presentes e do secretário. Belo Horizonte, 23 de fevereiro de 2018.

Sergio Leite de Andrade Diretor Presidente, Diretor Vice Presidente de Tecnologia e Qualidade e Diretor Vice-

Presidente Comercial

Ronald Seckelmann Diretor Vice-Presidente de Finanças e Relações com Investidores e Diretor Vice-Presidente de

Subsidiárias

Tulio Cesar do Couto Chipoletti

Diretor Vice-Presidente Industrial

Takahiro Mori

Diretor Vice-Presidente de Planejamento

Corporativo

Bruno Lage de Araujo Paulino

Secretário


53

USINAS SIDERÚRGICAS DE MINAS GERAIS S/A – USIMINAS CNPJ/MF 60.894.730/0001-05

NIRE 313.000.1360-0 Publicly Traded Company

Minutes of the Extraordinary Meeting of the Board of Directors of Usinas Siderúrgicas de Minas Gerais S/A - USIMINAS. On March 2nd, 2018, the Board of Directors considers adopted the decision transcribed on these minutes decided through electronic messages. Board Members Participants – Elias de Matos Brito, Chairman; Kazuhiro Egawa, Wanderley Rezende de Souza, Antonio Mendes, Oscar Montero Martinez, Simone Galante Alves, Rita Rebelo Horta de Assis Fonseca, Gesner José Oliveira Filho, Ricardo Antonio Weiss,

Francisco Augusto da Costa e Silva and Luiz Carlos de Miranda Faria. General Secretary– Bruno Lage de Araújo Paulino. It is registered herein that the Board Members presented statements of vote, which will be attached to these minutes and filed in the Board of Directors minutes book.

Agenda:

Items for Approval I – To deliberate on the Board of Officers´ recommendation to withdraw the

Liability Lawsuit in course against the former CEO and, if approved, to call an

Extraordinary Shareholders´ Meeting to be held on April 6th, 2018, at 1PM, to

deliberate on this matter - The Board unanimously approved the Board of Officers´

recommendation to withdraw the Liability Lawsuit in course against the former CEO, in

accordance with the material available at the Board Portal, provided however that such

deliberation should be resolved together with the 2018 Annual Shareholders’ Meeting

(“ASM”) to be held on April 25th, 2018, as an extraordinary deliberation item previous to the

ordinary items of the ASM’s agenda.

Adjournment – With no further business, the meeting was closed and the minutes were drawn up in own Book with the signature of the Board Members and the Secretary. Belo Horizonte, March 2nd, 2018.

Elias de Matos Brito Chairman

Wanderley Rezende de Souza Kazuhiro Egawa

Antonio Mendes Oscar Montero Martinez

Simone Galante Alves Rita Rebelo Horta de Assis Fonseca

Gesner José Oliveira Filho Ricardo Antonio Weiss

Francisco Augusto da Costa e Silva Luiz Carlos de Miranda Faria

Bruno Lage de Araújo Paulino Secretary


54

Statements of vote of the Board Members

De: Ricardo A Weiss [mailto:[email protected]]

Enviada em: terça-feira, 27 de fevereiro de 2018 18:22 Para: Presidencia Conselho Usiminas Cc: [email protected]; [email protected]; [email protected]; Cynthia Graff; [email protected]; [email protected]; [email protected]; [email protected]; DUELO Fernando TERNIUM; [email protected]; [email protected]; Gileno Antonio de Oliveira; [email protected]; Hirohiko Maeke

([email protected]); [email protected]; [email protected]; [email protected]; [email protected]; MONTERO Oscar TERNIUM; BRIZZIO Pablo Daniel TERNIUM; Rita Rebelo Horta De Assis Fonseca; [email protected]; [email protected]; [email protected]; Sergio Leite de Andrade; [email protected]; [email protected]; [email protected]; Fernanda De Mattos Paixao

Assunto: Re: Usiminas: Convocação Reunião Extaordinária do Conselho de Administração - 02.03.2018 / Notice Extraordinary Meeting of the Board of Directors - 3.2.2018

Prezado Elias e demais colegas conselheiros, Com base nas informações disponibilizadas no Portal, estou de acordo com recomendação da Diretoria.

Atenciosamente,

Ricardo A. Weiss De: Ricardo A Weiss [mailto:[email protected]] Enviada em: sexta-feira, 2 de março de 2018 14:22

Para: Elias Brito Cc: Presidencia Conselho Usiminas; [email protected]; [email protected]; [email protected]; Cynthia Graff; [email protected]; [email protected]; [email protected]; DUELO Fernando TERNIUM; [email protected]; [email protected]; Gileno Antonio de

Oliveira; [email protected]; Hirohiko Maeke

([email protected]); [email protected]; [email protected]; [email protected]; [email protected]; MONTERO Oscar TERNIUM; BRIZZIO Pablo Daniel TERNIUM; Rita Rebelo Horta De Assis Fonseca; [email protected]; [email protected]; [email protected]; Sergio Leite de Andrade; [email protected]; [email protected]; [email protected]; Fernanda De Mattos Paixao Assunto: Re: Usiminas: Convocação Reunião Extaordinária do Conselho de Administração -

02.03.2018 / Notice Extraordinary Meeting of the Board of Directors - 3.2.2018 Reitero a minha concordância a proposta da Diretoria, conforme e-mail meu anterior sobre o tema. E acompanho a solicitacao de unificar as datas da AGE e da AGO, submetendo o tema dia 25 de abril, na sequência proposta.

Atenciosamente,

Ricardo A. Weiss De: Luiz Carlos Miranda [mailto:[email protected]]

Enviada em: sexta-feira, 2 de março de 2018 15:05 Para: Presidencia Conselho Usiminas; Elias Brito Exato; Bruno Lage de Araujo Paulino Cc: [email protected]; [email protected]; [email protected]; Cynthia Graff; [email protected]; [email protected]; [email protected]; DUELO Fernando TERNIUM; [email protected]; [email protected]; Gileno Antonio de Oliveira;


55

[email protected]; Hirohiko Maeke

([email protected]); [email protected]; [email protected];

[email protected]; MONTERO Oscar TERNIUM; BRIZZIO Pablo Daniel TERNIUM; [email protected]; Rita Rebelo Horta De Assis Fonseca; [email protected]; [email protected]; [email protected]; Sergio Leite de Andrade; [email protected]; [email protected]; [email protected]; Fernanda De Mattos Paixao Assunto: Re: Usiminas: Convocação Reunião Extaordinária do Conselho de Administração -

02.03.2018 / Notice Extraordinary Meeting of the Board of Directors - 3.2.2018 Prezados; Analisando os documentos apresentados no Portal do Conselho, estou de acordo com a recomendação da Diretoria da companhia.

Devendo também ser apreciada na Assembléia Geral a ser realizada em dia 25 de abril de 2018. Atenciosamente;

Luiz Carlos Miranda

De: MONTERO Oscar TERNIUM Enviada em: sexta-feira, 2 de março de 2018 12:54 Para: Presidencia Conselho Usiminas; [email protected]; [email protected]; [email protected]; GRAF C. Cynthia I. TERNIUM[AR]; [email protected]; [email protected]; [email protected];

[email protected]; DUELO Fernando TERNIUM; [email protected]; [email protected]; Gileno Antonio de Oliveira; POGGIALI Guilherme; Hirohiko Maeke ([email protected]); [email protected]; [email protected]; GALLI Mario G. PRE; [email protected]; BRIZZIO Pablo Daniel TERNIUM; [email protected]; Rita Rebelo Horta De Assis Fonseca; [email protected]; [email protected];

[email protected]; Sergio Leite de Andrade; [email protected]; [email protected]; [email protected]

Cc: Fernanda De Mattos Paixao Assunto: RE: Usiminas: Convocação Reunião Extaordinária do Conselho de Administração - 02.03.2018 / Notice Extraordinary Meeting of the Board of Directors - 3.2.2018

Prezados senhores Conselheiros,

Segue meu voto para a reunião convocada para a data de hoje, relativamente aos seguintes itens da ordem do dia:

Itens para Aprovação 1. Deliberar sobre a recomendação da Diretoria Estatutária de retirada da Ação de Responsabilidade movida contra o ex-Diretor Presidente e, caso aprovada, convocar Assembleia Geral Extraordinária para 6 de abril de 2018, 13hs, para

deliberar sobre o tema

Voto pela aprovação da recomendação da Diretoria de retirar a Ação de Responsabilidade movida contra o ex-Diretor Presidente, o Sr. Romel de Souza, de acordo com os materiais apresentados no Portal do Conselho, desde que essa deliberação seja submetida à aprovação em conjunto com a Assembléia Geral Ordinaria (AGO) a ser realizada em 25 de abril de

2018, como um item extraordinário de deliberação anterior aos itens ordinários da agenda da AGO. Atenciosamente, Oscar Montero


56

De: Shun Sasaki [mailto:[email protected]] Enviada em: sexta-feira, 2 de março de 2018 13:05 Para: Presidencia Conselho Usiminas; [email protected]; [email protected]; [email protected]; Cynthia Graff; [email protected]; Kazuhiro Egawa; [email protected]; [email protected]; DUELO Fernando TERNIUM; [email protected]; [email protected]; Gileno Antonio de

Oliveira; [email protected]; Maeke; [email protected]; [email protected]; [email protected]; Hironobu Nose; MONTERO Oscar TERNIUM; BRIZZIO Pablo Daniel TERNIUM; [email protected]; Rita Rebelo Horta De Assis Fonseca; Samuel Tadayuki Kaji; [email protected]; Sergio Leite de Andrade; [email protected]; [email protected]; [email protected] Cc: Fernanda De Mattos Paixao

Assunto: RE: Usiminas: Convocação Reunião Extaordinária do Conselho de Administração - 02.03.2018 / Notice Extraordinary Meeting of the Board of Directors - 3.2.2018 REUNIÃO EXTRAORDINÁRIA DO CONSELHO DE ADMINISTRAÇÃO DA USINAS SIDERÚRGICAS DE MINAS GERAIS S.A. – USIMINAS REALIZADA EM 02 DE MARÇO DE 2018

Manifestação escrita dos membros do Conselho de Administração da Usinas Siderúrgicas de

Minas Gerais S.A. – Usiminas (“CA”) indicados pela Nippon Steel & Sumitomo Metal Corporation e pela Nippon Usiminas Co., Ltd. em relação ao item da ordem do dia da reunião extraordinária do CA realizada nesta data: Item para Aprovação 1. Deliberar sobre a recomendação da Diretoria Estatutária de retirada da Ação de

Responsabilidade movida contra o ex-Diretor Presidente e, caso aprovada, convocar Assembleia Geral Extraordinária para 6 de abril de 2018, 13hs, para deliberar sobre o tema Consistente com a resolução ordinária do Grupo de Controle, os signatários votam a favor da aprovação da recomendação unânime da Diretoria Estatutária em retirar a Ação de Responsabilidade contra o ex-Diretor Presidente, Sr. Romel de Souza, na forma e com os

detalhes delineados nos materiais, mas denotam que tal questão deve ser deliberada em conjunto com a Assembleia Ordinária de 2018 (“AGO”) em 25 de abril de 2018 como um

item de deliberação extraordinário anterior aos itens ordinários da ordem do dia da AGO. Atenciosamente, Kazuhiro Egawa e Antonio Mendes (enviado por S. Sasaki em seu nome)

De: Rita Rebelo Horta De Assis Fonseca Enviada em: sexta-feira, 2 de março de 2018 13:07 Para: Presidencia Conselho Usiminas; [email protected]; [email protected]; [email protected]; Cynthia Graff; [email protected]; [email protected]; [email protected];

[email protected]; DUELO Fernando TERNIUM; [email protected]; [email protected]; Gileno Antonio de Oliveira; [email protected]; Hirohiko Maeke ([email protected]); [email protected]; [email protected]; [email protected]; [email protected]; MONTERO Oscar TERNIUM; BRIZZIO Pablo Daniel TERNIUM; [email protected];

[email protected]; [email protected]; [email protected]; Sergio Leite de Andrade; [email protected]; [email protected]; [email protected] Cc: Fernanda De Mattos Paixao Assunto: RES: Usiminas: Convocação Reunião Extaordinária do Conselho de Administração - 02.03.2018 / Notice Extraordinary Meeting of the Board of Directors - 3.2.2018 Prioridade: Alta

Prezado Presidente e demais Conselheiros,


57

Em linha com a deliberação do Grupo de Controle, e considerando (i) o parecer do escritório

Eizirik Advogados, que conclui que o encerramento da ação de responsabilidade coaduna-se

com o melhor interesse da Usiminas (parecer este confirmado pelo Departamento Jurídico da própria Companhia); (ii) que o réu da referida ação manifestou a sua concordância com o encerramento do processo, sem pagamentos, reembolsos ou indenizações de parte a parte; e (iii) a recomendação da Diretoria no sentido de que seja retirada a ação, voto favoravelmente à medida proposta.

Com relação à data e convocação da Assembleia para deliberar sobre este tema, estou de acordo com a proposta de que a matéria seja submetida aos acionistas na mesma data da AGO, prevista para 25 de abril de 2018, nos termos dos votos dos Conselheiros Oscar Montero, K. Egawa e Antonio Mendes, como um item extraordinário de deliberação anterior aos itens ordinários da agenda da AGO.

At., Rita Fonseca

De: Wanderley Rezende [mailto:[email protected]] Enviada em: sexta-feira, 2 de março de 2018 12:08

Para: Presidencia Conselho Usiminas; [email protected]; [email protected]; [email protected]; Cynthia Graff; [email protected]; [email protected]; [email protected]; [email protected]; DUELO Fernando TERNIUM; [email protected]; [email protected]; Gileno Antonio de Oliveira; [email protected]; Hirohiko Maeke ([email protected]); [email protected];

[email protected]; [email protected]; [email protected]; MONTERO Oscar TERNIUM; BRIZZIO Pablo Daniel TERNIUM; [email protected]; Rita Rebelo Horta De Assis Fonseca; [email protected]; [email protected]; [email protected]; Sergio Leite de Andrade; [email protected]; [email protected] Cc: Fernanda De Mattos Paixao

Assunto: Re: Usiminas: Convocação Reunião Extaordinária do Conselho de Administração - 02.03.2018 / Notice Extraordinary Meeting of the Board of Directors - 3.2.2018

Prezados Srs. Conselheiros, Estou de acordo com a proposta e voto dos conselheiros Kazuhiro Egawa e Antonio Mendes.

Atenciosamente, Wanderley Rezende De: Simone Galante [mailto:[email protected]]

Enviada em: sexta-feira, 2 de março de 2018 13:01 Para: MONTERO Oscar TERNIUM; Presidencia Conselho Usiminas; [email protected]; [email protected]; [email protected]; GRAF C. Cynthia I. TERNIUM[AR]; [email protected]; [email protected]; [email protected]; [email protected]; DUELO Fernando TERNIUM; [email protected];

[email protected]; Gileno Antonio de Oliveira; POGGIALI Guilherme; Hirohiko Maeke ([email protected]); [email protected]; [email protected]; GALLI Mario G. PRE; [email protected]; BRIZZIO Pablo Daniel TERNIUM; [email protected]; Rita Rebelo Horta De Assis Fonseca; [email protected]; [email protected]; [email protected]; Sergio Leite de Andrade; [email protected]; [email protected]

Cc: Fernanda De Mattos Paixao Assunto: Re: Usiminas: Convocação Reunião Extaordinária do Conselho de Administração -


58

02.03.2018 / Notice Extraordinary Meeting of the Board of Directors - 3.2.2018

Prioridade: Alta

Prezados Conselheiros, Em relação à reunião convocada para a data de hoje:

"Itens para Aprovação

1. Deliberar sobre a recomendação da Diretoria Estatutária de retirada da Ação de Responsabilidade movida contra o ex-Diretor Presidente e, caso aprovada, convocar Assembleia Geral Extraordinária para 6 de abril de 2018, 13hs, para deliberar sobre o tema."

Voto no mesmo sentido do Conselheiro Oscar Montero Martinez, ou seja, pela aprovação da recomendação da Diretoria de retirar a Ação de Responsabilidade movida contra o ex-Diretor Presidente, o Sr. Romel de Souza, de acordo com os materiais apresentados no Portal do

Conselho, desde que essa deliberação seja submetida à aprovação em conjunto com a Assembléia Geral Ordinaria (AGO) a ser realizada em 25 de abril de 2018, como um item extraordinário de deliberação anterior aos itens ordinários da agenda da AGO.

Atenciosamente, Simone Galante Alves De: Gesner Oliveira [mailto:[email protected]]

Enviada em: sexta-feira, 2 de março de 2018 13:13 Para: Presidencia Conselho Usiminas; [email protected]; [email protected]; [email protected]; Cynthia Graff; [email protected]; [email protected]; [email protected]; [email protected]; DUELO Fernando TERNIUM; [email protected]; Gileno Antonio de Oliveira; [email protected]; Hirohiko Maeke

([email protected]); [email protected]; [email protected]; [email protected]; [email protected];

MONTERO Oscar TERNIUM; BRIZZIO Pablo Daniel TERNIUM; [email protected]; Rita Rebelo Horta De Assis Fonseca; [email protected]; [email protected]; [email protected]; Sergio Leite de Andrade; [email protected]; [email protected]; [email protected] Cc: Fernanda De Mattos Paixao

Assunto: Re: Usiminas: Convocação Reunião Extaordinária do Conselho de Administração - 02.03.2018 / Notice Extraordinary Meeting of the Board of Directors - 3.2.2018 Prezados Srs., Em atenção à pauta do dia, estou de acordo com a proposta da Diretoria Executiva, mediante submissão à Assembleia Geral de proposta de renúncia em ação de

responsabilidade movida contra o ex-Diretor Presidente da Companhia, conforme documentos disponíveis no Portal do Conselho. Também estou de acordo com a proposta ora circulada pelos demais conselheiros para que a matéria seja submetida aos acionistas na mesma data da AGO, prevista para 25 de abril de

2018, como um item extraordinário.

Atenciosamente, Gesner De: Elias Brito [mailto:[email protected]]

Enviada em: sexta-feira, 2 de março de 2018 14:15 Para: Presidencia Conselho Usiminas


59

Cc: [email protected]; [email protected]; [email protected];

Cynthia Graff; [email protected]; [email protected];

[email protected]; DUELO Fernando TERNIUM; [email protected]; [email protected]; Gileno Antonio de Oliveira; [email protected]; Hirohiko Maeke ([email protected]); [email protected]; [email protected]; [email protected]; [email protected]; MONTERO Oscar TERNIUM; BRIZZIO Pablo Daniel TERNIUM; [email protected]; Rita

Rebelo Horta De Assis Fonseca; [email protected]; [email protected]; [email protected]; Sergio Leite de Andrade; [email protected]; [email protected]; [email protected]; Fernanda De Mattos Paixao Assunto: Re: Usiminas: Convocação Reunião Extaordinária do Conselho de Administração - 02.03.2018 / Notice Extraordinary Meeting of the Board of Directors - 3.2.2018

Prezados, Em relação a ordem do dia da RCA de hoje, e tendo examinado o material encaminhado através do portal do conselho, voto favoravelmente à proposta da Diretoria Executiva de

submeter à Assembleia Geral proposta de renúncia em ação de responsabilidade movida contra o ex-Diretor Presidente da Companhia.

Também manifesto minha concordância com a proposta do grupo de controle no sentido de que a AGE para esse fim seja realizada a na mesma data da AGO, prevista para 25 de abril de 2018. Atenciosamente,

Elias Brito Presidente do Conselho de Administração - Usiminas Enviado do meu iPhone

De: Francisco Costa e Silva [mailto:[email protected]] Enviada em: sexta-feira, 2 de março de 2018 15:07

Para: Presidencia Conselho Usiminas Cc: [email protected]; [email protected]; Cynthia Graff; [email protected]; [email protected]; [email protected]; [email protected]; DUELO Fernando TERNIUM; Fernanda De Mattos Paixao; [email protected];

[email protected]; Gileno Antonio de Oliveira; [email protected]; [email protected]; [email protected]; Hirohiko Maeke ([email protected]); [email protected]; [email protected]; MONTERO Oscar TERNIUM; BRIZZIO Pablo Daniel TERNIUM; [email protected]; Rita Rebelo Horta De Assis Fonseca; [email protected]; [email protected]; [email protected]; Sergio Leite de Andrade; [email protected];

[email protected]; [email protected] Assunto: Re: Usiminas: Convocação Reunião Extaordinária do Conselho de Administração - 02.03.2018 / Notice Extraordinary Meeting of the Board of Directors - 3.2.2018 Prezados Conselheiros, Concordo com a proposta da Diretoria pelos seus próprios fundamentos.

Também estou de acordo com que Assembleia Geral Extraordinária para deliberar sobre o tema seja convocada para a mesma data prevista para a realização da AGO, ou seja, para o dia 25.04.2018. Atenciosamente, Francisco da Costa e Silva

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EXHIBIT 3 - INFORMATION REQUIRED BY ARTICLE 9 OF CVM RULING 481/2009

61

To the Shareholders,

Usinas Siderúrgicas de Minas Gerais S.A. - Usiminas Management submits to your

appreciation, the Report of the Administration and the Annual Financial Statements of

the Company and its controlled companies, with the independent auditors and the

Fiscal Council opinions, related to year ended at December 31st, 2017.

ANNUAL REPORT OF THE ADMINISTRATION 2017

1) ECONOMIC OUTLOOK

According the International Monetary Fund’s forecast, global growth is 3.5% in 2017 and

3.85% in 2018.

In Brazil, political uncertainty in regard to the approvals of reforms, especially the welfare

reform, remains as the main risk to the growth recovery scenario, but the perception of

improvement in economic activity has driven the expectation of growth of GDP to be

increased to 1% in 2017 and 2.7% in 2018, according to the Focus Report (Banco

Central), dated 01/02/18. Inflation reached a 2.95% increase in 2017.

During the year of 2017, the Company completed some important actions as the

adaptation of financial disbursements, the prioritization of operating cash generation, and

the strict management of working capital and capital investments.

Among the concluded actions in 2017, highlight events related to the process of debt

restructuring initiated in 2016, as follows:

Approval on March 3, 2017, of a capital reduction at the subsidiary Mineração

Usiminas in the amount of R$1,000,000, of which R$700,00 was delivered to

Usiminas on May 19, 2017;

Payment was made in the amount corresponding to 50% of the balance of

notes issued by subsidiary Usiminas Commercial Ltd. in pro-rata form, for the

purpose of partial amortization of Usiminas debts with each one of its creditors,

in the total amount of US$89.9 million.

Full payment of the Notes issued in 2008 was made in January 2018, in the

amount of US$400.0 million, of which approximately US$220.0 million returned

to the Company’s cash position by reason of a repurchase of part of the Notes

issued in 2013.

With these events, Usiminas has overcome an important stage of its financial

restructuring process with creditors, with the objective of generation of sustainable

results for the Company.

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2) CORPORATE GOVERNANCE

Usiminas maintained its corporative governance practices of transparency and respect to its shareholders. The structure of governance of the Usiminas counts on Internal Auditors, subordinate directly to the Board of Directors. It has the mission to monitor good practices - to evaluate the system of internal controls and risk management of the Company - giving support to Executive Board and Board of Directors decisions. The Usiminas´ Code of Conduct has the objective to guide its relationship with the internal and external public. This code is a reference for personal and professional behaviors of the Company´s employees, based in values and principles that support the Company actions.

Ownership structure and control group The Company's capital consists of 1,253,079,108 shares, of which 56.28% are common shares with voting rights. The Control Group owns 45.75% of the voting capital.

63

Management

Usiminas Statutory Board is composed by a president director and up to six vice presidents in the areas of Sales, Industrial, Finance and Investors’ Relation, Technology and Quality, Subsidiaries and Corporate Planning. The Board of Directors counts on eleven effective members and related alternate members and holds at least four annual meetings during the year, according to schedule previously established or extraordinary meetings whenever necessary to the Company’s interests. It has two advisory committees: the Audit Committee (statutory) and the Human Resources Committee. Usiminas also has an installed Fiscal Council, responsible for inspecting the Officers’ management acts. Management compensation Key management personnel compensation paid and payable, which includes Company’s Statutory Board, Board of Directors and Supervisory Board, is as follows:

Management compensation 2017 2016

Fees 11,067 12,007

Social charges 2,256 2,214

Retirement plan 45 256

Provision (reversal) of variable compensation

variável

3,687 (19,725)

Total 17,055 (5,248)

At December 31, 2017, the amount paid to key management personnel was R$13,156 (R$14,959 at December 31, 2016). On December 31, 2016, it was reversed to income the amount of R$19.725 related to the excess provision for fees and related charges, which totalized R$15,552 and R$4,173, respectively.

Independent auditors

The Company’s internal rule regarding to the contract of services not related to the

external audit of its independent auditors assures that no conflict of interests, loss of

independence or objectivity exist in the audit work. Such internal rule is based on the

following internationally accepted principles: (a) auditors may not audit their own work;

(b) auditors may not exercise a management function at their client; and (c) auditors

may not promote the interests of their clients.

PricewaterhouseCoopers was responsible for the external audit of Usiminas companies’

financial statements as at 12/31/2017, as well as the companies’ quarterly information

of 09/30/2017, 06/30/2017 e 03/31/2017.

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According to Instruction CVM 381/2003, independent auditors provided the following

services during the fiscal year ended December 31st, 2017:

Description R$ Thousand (including taxes)

% (**)

External audit (*) 1,909 -

Tax advisory 136 7.1%

Consulting in the human resources area 200 10.5%

Total 2,245

(*) Refers to the accounting and tax audit service.

(**) Percentage in relation to the external audit service fee.

These services were provided for periods below one year.

The independent auditors declared that it rendered the aforementioned services in strict

accordance with accounting standards addressing the independence of independent

auditors conducting audits and that they do not represent a situation that could

compromise the independence or objectivity required to perform the audit services

provided to Usiminas companies’.

3) CONSOLIDATED PERFORMANCE

Net revenue

In 2017, net revenue was R$10.7 billion, against R$8.5 billion in 2016, a 27.0%

increase due to high steel and iron ore sales volume, as well as the increase in

average price over the year.

R$ million - Consolidated 2017 2016Chg.

2017/2016

Steel Sales Volume (000 t) 4,026 3,652 10%

Iron Ore Sales Volume (000 t) 3,676 3,207 15%

Net Revenue 10,734 8,454 27%

COGS (9,099) (7,967) 14%

Gross Profit (Loss) 1,635 487 236%

Net Income (Loss) 315 (577) -

EBITDA (Instruction CVM 527) 2,056 995 107%

EBITDA Margin (Instruction CVM 527) 19% 12% + 7 p.p.

Adjusted EBITDA 2,186 660 231%

Adjusted EBITDA Margin 20% 8% + 13 p.p.

Investments (CAPEX) 216 225 -4%

Cash Position 2,314 2,257 3%

2017 2016

Domestic Market 86% 88%

Exports 14% 12%

Total 100% 100%

Net Revenue Breakdown

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Cost of Goods Sold (COGS)

In 2017, COGS was R$9.1 billion, against R$8.0 billion in 2016, a 14.2% increase. Gross margin in year 2017 was 15.2%, against 5.8% in 2016.

Operating Expense and Income

In 2017, sales expenses were R$251.0 million, against R$272.7 million in 2016, mainly due to lower provision for doubtful accounts by R$31.3 million, partially compensated by higher distribution costs associated with higher steel and iron ore exports in the period.

General and administrative expenses in 2017 were R$404.4 million, against R$354.2 million in 2016, an increase of 14.2%, due to higher expenses with own and third party personnel, as well as general expenses.

Net other operating expenses and income were R$250.8 million negative in 2017, against R$224.8 million negative in 2016, due to:

Asset impairment of R$74.9 million in the 4Q17, relative to the Goodwill resulting from the acquisition of its subsidiaries Rios Unidos and Modal, and the associate company Codeme, against a reversal of impairment at the Unit Mineração in the amount of R$358.3 in 2016; it is worthwhile mentioning that asset impairment does not affect Adjusted EBITDA;

Negative result of asset sale/write off in the amount of R$1.2 million in the 2017, against a positive result of R$71.5 million in 2016;

Higher provision for legal liabilities by R$73.1 million, which were R$138.1 million in 2017 against R$65.0 million in 2016.

These effects were partially offset by:

Receipt of revenue as a result of an arbitration process against Porto Sudeste in the amount of R$201.1 million, net of expenses in year 2017;

Result in the sale of surplus electrical energy of a positive R$14.0 million in 2017, against a negative R$132.8 million in 2016;

Tax credits of R$237.5 million in 2017, against R$176.3 million in 2016;

Lower expenses with non-absorbed equipment stoppage in the amount of R$403.8 million, of which R$349.1 million were relative to depreciation, against R$485.1 million in 2016, of which R$427.9 million were relative to depreciation;

Extraordinary event, non-recurring, referring to an expense for early termination of contract with a supplier of R$70.7 million in 2016. There was no event of this nature in 2017;

Higher revenue with the Reintegra Program, which was R$25.4 million in 2017, against R$0.8 million in 2016.

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Adjusted EBITDA

Adjusted EBITDA is calculated from net income (loss), reversing income tax and social contribution, financial result, depreciation, amortization and depletion, and equity in the results of Associate, Joint Subsidiary and Subsidiary Companies, not including impairment of assets. The adjusted EBITDA includes the proportional participation of 70% of Unigal and other joint subsidiary companies.

In 2017, Adjusted EBITDA was R$2.2 billion, against R$660.4 million in 2016, mainly due to better performance in the Steel, Mining and Steel Processing Units. Adjusted EBITDA margin in fiscal 2017 reached 20.4%, against 7.8% in 2016.

Financial Result

In 2017, net financial result were a negative R$462.9 million, against a negative R$30.1 million in 2016, mainly due to a 1.5% depreciation of the Real against the Dollar in 2017, compared with an appreciation of 16.5% in 2016. This resulted in exchange losses of R$21.6 million in 2017, against exchange gains of R$639.1 million in 2016. Additionally, in 2017, swap operation expenses of R$0.1 million were accounted, against expenses of R$302.1 million in 2016, in function of debt renegotiation of the Company, initiated in 2016, where some contracts, targets of renegotiation, were concluded and substituted by new debt instruments, thus contributing to the increase in these expenses.

Equity in the Results

The result at equity of associate and subsidiary companies was R$154.9 million in 2017, against R$142.9 million in 2016, mainly due to Unigal’s and MRS Logística’s performance.

Net Profit (Loss)

In 2017, the Company presented a net profit of R$315.1 million, against a net loss of R$576.8 million in 2016, a significant improvement of R$891.9 million.

2017 2016

Net Income (Loss) 315,080 (576,843)

Income Tax / Social Contribution 105,870 325,095

Financial Result 462,920 30,156

Depreciation, Amortization 1,171,851 1,216,491

2,055,721 994,899

Joint Subsidiary Companies proportional EBITDA 212,194 151,343

Impairment of Assets 72,764 (343,006)

2,185,783 660,375 Adjusted EBITDA

Consolidated (R$ thousand)

Equity in the Results of Associate and Subsidiary

Companies

EBITDA - Instruction CVM - 527

(154,896) (142,861)

EBITDA Breakdown

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Working Capital

In 2017, working capital was R$2.8 billion, against R$2.5 billion in 2016, an increase of R$311.0 million, mainly due to the increase in Accounts Receivable, in Other Assets and in Inventories, partially compensated by the increase in Other Liabilities and in the balance to Suppliers. The following is worthy of mention:

Increase in the balance of Accounts Receivable by R$376.0 million, due to higher sales volume in the period in the Steel Unit by R$260.0 million and in the Mining Unit by R$123.0 million;

Increase in finished products inventories by R$159.0 million, mainly due to the increase in production costs;

Increase of R$154.0 million in Other Liabilities, mainly related to the increase in the balance of forfaiting operations by R$118.0 million and of the balance of customer advances by R$46.0 million;

Investments (CAPEX)

In 2017, CAPEX totaled R$216.2 million, against R$225.2 million in 2016, a 4.0% decrease. The main investments made were with sustaining CAPEX. Of the total investments made in 2017, approximately 81% was made to the Steel Unit, 10% to the Mining, 5% to Steel Processing and 4% to Capital Goods Units.

Indebtedness

Gross consolidated debt was R$6.7 billion on 12/31/2017, a R$285.6 million decrease compared to that on 12/31/2016, mainly due to debt amortization and to depreciation of 1.5% of the Real against the Dollar in the year, which directly impacted the parcel of dollar-denominated debt, accounting for 26% of total debt.

On 12/31/2017, debt composition by maturity was 15% short term and 85% long term.

The following chart demonstrates the consolidated debt indexes on 12/31/17:

827

320 77 331

610

877 875 875 874

108

1,487

645

15

76

143

207 207 207 207

26

2,314

965

92

407

754

1,085 1,082 1,082 1,082

134

Local Currency Foreign Currency

Duration: R$: 48 months

US$: 37 months

68

4) Capital Markets

Performance in the B3

Usiminas’ common shares (USIM3) closed the 2017 quoted at R$10.83 (R$8.26 in

2016) and its preferred shares (USIM5) at R$9.10 (4.10 in 2016).

Foreign Stock Markets

OTC - Nova York

Usiminas has American Depositary Receipts (ADRs) traded on the over-the-counter

market: USDMY is backed by common shares and USNZY, by Class A preferred shares.

On 12/31/17, USNZY ADRs, which have higher liquidity, were quoted at US$2.77

(US$1.25), presenting an appreciation of 122% in the year.

Latibex – Madri

Usiminas’ shares are traded on the LATIBEX – the Madrid Stock Exchange: XUSI as preferred shares and XUSIO as common shares. On 12/31/17, XUSI closed quoted at €2.27 (€1.20 in 2016). On 12/31/17 XUSIO shares closed quoted at €2.61 (€2.50 in 2016).

Investor relations During the year, several meetings with investors and market analysts were held among which, public presentation Apimec (Association of Analysts and Investment Professionals of the Capital Market) and conferences in Brazil and abroad. Usiminas attended several national and international conferences and roadshows, directly performing before the foreign investors. To serve the analysts and investors, the Company has also promoted visits to its main industrial units (Ipatinga, Cubatão and Mineração Usiminas).

5) SOCIAL PERFORMANCE

People management In 2017, Usiminas invested in training for the development of professionals in all companies of the group. Participating audience was vast: from the Apprentice and Internship Program, young people who are now entering the job market, the Trilha de Desenvolvimento da Liderança (Leadership Development Trail) program, aimed at Usiminas managers, and Liderança (Leadership) program, focused on the Supervisors positions. In the year 2017 there were more than 825 thousand hours in training, equivalent to 69 hours of training per employee. This represents more than three times the national average.

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In addition, in 2017, the Company achieved zero fatality, after 23 years, during the 365 days there was no fatal accident in the company's operations. Also on the safety field, during the 44th edition of the Worldsteel Association's annual conference, which represents steel producers from 67 leading countries in the industry, the project Mãos Seguras (Safe Hands) was awarded in the category Occupational Safety, for the Safety and Health Excellence Recognition.

Community and environment

In 2017, Fundação São Francisco Xavier (São Francisco Xavier Foundation), the social organ of Usiminas in the health and education areas, expanded its services and has just assumed the administration of the Dr. Luiz Camargo da Fonseca e Silva Hospital in Cubatão, in the Baixada Santista, SP. The hospital, which has been closed since June 2016, was reopened on 12/01/17, and is now providing to the community maternity ward, surgery center and ICU, among other medium complexity services. In 2018, the hospital will also offer high complexity services: hyperbaric medicine, haemodialysis and chemotherapy.

As regards of culture, the Instituto Cultural Usiminas (Usiminas Cultural Institute) invested R$6.4 million in a total of 47 projects in 2017, through law incentive programs to the culture, sport and social projects. At Ipatinga, over 150 thousand people were benefited through the attractions offered by the institute and the Zélia Olguin theater. The Ação Educativa (Educational Action) program, project carried out by Usiminas Cultural Institute, benefited more than 28 thousand people through its actions in 2017. There were 422 events in public and private schools, universities, special needs groups, child care centers, third age groups and other social institutions to participate in the activities offered by the Institute in its educational program.

Since its release, the Caminhos do Vale (Valley Path) program, which destines steel

aggregate for the paving of rural roads, recovered over 900km of roads, restored 935

springs and benefited around 850 thousand people in the region of Vale do Aço. In

2017, during the 44th edition of the Worldsteel Association's annual conference, which

represents steel producers from 67 leading countries in the industry, the project was

awarded in the category “Excellence in sustainability”, for the Steelie Award, reaffirming

the success of the initiative.

www.pwc.com.br

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Usinas Siderúrgicas de Minas Gerais S.A. - USIMINAS Parent company and consolidated financial statements at December 31, 2017 and independent auditor's report

(A free translation of the original in Portuguese)

71

Independent auditor’s report To the Board of Directors and Stockholders Usinas Siderúrgicas de Minas Gerais S.A. Opinion

We have audited the accompanying parent company financial statements of Usinas Siderúrgicas de Minas Gerais S.A. ("Company" or "Usiminas"), which comprise the balance sheet as at December 31, 2017 and the statements of operations, comprehensive income (loss), changes in equity and cash flows for the year then ended, as well as the accompanying consolidated financial statements of Usinas Siderúrgicas de Minas Gerais S.A. and its subsidiaries ("Consolidated"), which comprise the consolidated balance sheet as at December 31, 2017 and the consolidated statements of operations, comprehensive income (loss), changes in equity and cash flows for the year then ended, and notes to the financial statements, including a summary of significant accounting policies. In our opinion, the parent company and consolidated financial statements referred to above present fairly, in all material respects, the financial position of Usinas Siderúrgicas de Minas Gerais S.A. and of Usinas Siderúrgicas de Minas Gerais S.A. and its subsidiaries as at December 31, 2017, and the parent company financial performance and cash flows for the year then ended, as well as the consolidated financial performance and cash flows for the year then ended, in accordance with accounting practices adopted in Brazil and with the International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB). Basis for opinion

We conducted our audit in accordance with Brazilian and International Standards on Auditing. Our responsibilities under those standards are further described in the Auditor's responsibilities for the audit of the parent company and consolidated financial statements section of our report. We are independent of the Company and its subsidiaries in accordance with the ethical requirements established in the Code of Professional Ethics and Professional Standards issued by the Brazilian Federal Accounting Council, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

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Key audit matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial statements of the current year. These matters were addressed in the context of our audit of the parent company and consolidated financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

Why it is a key audit matter How the matter was addressed in the audit

Recoverable value of property, plant and equipment and intangible assets (Notes 3.13, 16 and 17) and on the realization of deferred taxes (Notes 3.16 and 13)

The Company and its subsidiaries have significant balances of property, plant and equipment and intangible assets for which a provision for impairment may be necessary whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. The Company and its subsidiaries also have deferred income tax and social contribution assets mainly referring to the income tax and social contribution losses and also related to temporary differences arising from provisions for impairment of assets, actuarial liability and lawsuits, among others. These deferred tax balances were recognized based on a study with projections of future taxable profit. The annual assessment of recoverability involves the use of critical judgments that are not always objective, on the part of management, in relation to the projections of results, taxable profits and discounted cash flows, which depend on future economic events. Using different assumptions may significantly change the estimated realization of these assets and require the recording of and additional impairment, thus affecting the financial statements.

We carried out the audit procedures below, among others: With the support of our internal valuation specialists, we analyzed the logical and arithmetic coherence of the cash flow projections. We also tested the consistency of the information and assumptions used to project the cash flows, by comparing them with: (i) budgets approved by the Board of Directors; (ii) market assumptions and data; and (iii) prior-year projections with the effective subsequent results. We carried out sensitivity analysis and recalculated the projections taking into account different intervals and scenarios concerning growth and discount rates, in addition to reading the disclosures made. As regards the work related to deferred taxes, we further tested, with the support of our specialists, the calculation bases of income tax and social contribution losses, as well as the temporary differences, comparing them with the corresponding tax records. Our audit procedures showed that the judgments applied and assumptions used by management to evaluate the recoverability of these assets were

Matters

Why it is a key audit

matter

How the matter was addressed

73


reasonable, and that the disclosures were consistent with the data and information obtained.

Compliance with covenants (Notes 5.3, 5.4, and 20)

On September 12, 2016, Usiminas concluded its debt restructuring with its creditors. As a result of the renegotiation, among other aspects, a longer term was granted for the payment of the debts and grace period for the beginning of the payment of the principal, and changes were made in the criteria for measurement of the financial covenants. Additionally, certain conditions were agreed for Usiminas to receive R$ 700 million of the resources maintained in the cash of its subsidiary Mineração Usiminas S.A. up to June 30, 2017 and the realization of an exchange offering of at least 50% of the Eurobonds outstanding in the market, originally issued in 2008 to at most June 30, 2017. If not complied with, these conditions would also require the anticipated maturity of the debt (“non-financial covenants”). Finally, it was also established the cash sweep mechanism, obliging the Company to distribute the cash surplus exceeding the limits established; it will be checked every June 30 and December 31 of each year. Due to the complexity of these additional conditions (“non-financial covenants”), which, to a certain extent, also depended on external factors out of the absolute control of the Company, as well as due to the significance of the potential impacts of non-compliance with the financial position of the Company, we focused our work on continuously monitoring the compliance with those obligations.

Our audit procedures comprised the reading of all documentation related to the agreements and related renegotiations. Based on it, we checked the minutes of the Extraordinary General Meeting that approved the capital decrease of Mineração Usiminas S.A. with the transfer to the Company of the resources held in its cash, and the banking transfer of the resources. As regards the exchange offering, our procedures comprised the checking of the documentation of discharge by the creditors of the obligation of an exchange offering and the inspection of the payment vouchers to them of the amount corresponding to 50% of the main outstanding balance of the Eurobonds principal, on a pro rata basis, as a partial amortization of the debts of the Company with each creditor. We also verified the cash balances at June 30 and December 31, 2017 based on the requirement of the cash sweep mechanism, as to the Company's need to distribute the surplus. Finally, we considered the adequacy of the disclosures made in the financial statements that are consistent with the information that we analyzed in our audit procedures.

74


Provision for contingencies (Notes 3.14 and 24)

The Company and its subsidiaries are parties in legal and administrative labor, tax, and civil proceedings arising from the normal course of its business. The recognition of the provision and the classification of the likelihood of positive outcome in the proceedings involve considering the merits of the cases as well as complex aspects of the proceedings, in accordance with the effective legislation, thus requiring that Management apply significant judgment, which is periodically reassessed according to the progress of the proceedings, at the different judicial courts, and to the applicable case law.

Our audit procedures included, among others, understanding and testing the significant internal controls over the identification and assessment of the proceedings and the quantification of the risks for the purposes of recording the provision for contingencies or its disclosure in the notes to the financial statements when the related estimates indicate a probable or possible likelihood of loss, respectively. We also performed confirmation procedures with the law firms that are working in the legal and administrative proceedings in order to obtain data related to the assessment of the likely outcome, , to the totality of the information, and to the adequacy of the amount of the provision recorded or the amount disclosed. Furthermore, we had the support of our tax specialists when analyzing the reasonableness of the likelihoods of loss for the most relevant proceedings, especially those of a tax nature. Finally, we read the information disclosed in the explanatory notes. We consider that the criteria and assumptions adopted by the Company's management, as well as the disclosures made, are consistent with the assessment of the lawyers.


Post-employment benefits (Notes 3.17 and 26)

The Company and its subsidiaries sponsor supplementary retirement plans that are managed by Previdência Usiminas. The Company also has obligations with post-retirement healthcare plan benefits related to employees of the subsidiary Companhia Siderúrgica

Our audit procedures included, among others, the detailed testing of personal information of active participants and assisted individuals of the retirement supplementation and healthcare plans, as registered in the database used to calculate the actuarial liability.

75

Paulista -Cosipa who retired up to April 30, 2002 and still maintain the right to the benefit. The actuarial calculations that serve as basis for the determination of these obligations are prepared by an independent actuary contracted by the Company's management. They consider actuarial assumptions and registration information of the participants of the retirement and healthcare plans. We consider this subject as a key audit matter because of the significance of the amount of the present obligation with the plans as well as the considerable judgment required regarding the actuarial assumptions applied to determine it.

With the support of our actuary calculation specialists, we analyzed the logical coherence and arithmetic consistency of the template used when estimating the present value of actuarial obligations. We also discussed the key assumptions applied to calculate the actuarial liabilities, such as salary growth projections, mortality and disability tables, medical costs, and discount rate. We also reviewed the reconciliation, prepared by management, of the actuarial report with the balances disclosed in the financial statements and the explanatory notes. Furthermore, we assessed the technical competence of the independent external actuary who was responsible for preparing the actuarial calculations. Concerning the assets of the retirement supplementation plans, we performed detailed testing that comprised the obtaining of third-party confirmation regarding the custody of the plan collateral assets and the fair value estimating test. We considered that the criteria and assumptions that Company adopted when establishing the post-employment benefit obligations, as well as the disclosures made in the explanatory notes to the financial statements, are reasonable, in all material respects, in the context of the financial statements.

Other matters

Statements of value added The parent company and consolidated statements of value added for the year ended December 31, 2017, prepared under the responsibility of the Company's management and presented as supplementary information for IFRS purposes, were submitted to audit procedures performed in conjunction with the audit of the Company's financial statements. For the purposes of forming our opinion, we evaluated whether these statements were reconciled with the financial statements and accounting records, as applicable, and if their form and content were in accordance with the criteria defined in Technical Pronouncement CPC 09 of the Brazilian Accounting Pronouncements Committee - "Statement of Value Added". In our opinion, these statements of value added were properly prepared, in all material respects, in accordance with the criteria established in the Technical Pronouncement, and are consistent with the parent company and consolidated financial statements taken as a whole.

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Audit of prior-year information The audit of the financial statements for the year ended December 31, 2016 was conducted by other

independent auditors, who issued an unqualified audit report dated February 16, 2017 with an emphasis

paragraph that described certain conditions requiring the anticipated maturity of significant debts of the

Company, which should be settled up to June 30, 2017.

Other information accompanying the parent company and consolidated financial statements and the auditor's report

The Company's management is responsible for the other information that comprises the Management Report. Our opinion on the parent company and consolidated financial statements does not cover the Annual Management Report, and we do not express any form of audit conclusion thereon. In connection with the audit of the parent company and consolidated financial statements, our responsibility is to read the Management Report and, in doing so, consider whether this report is materially inconsistent with the parent company and consolidated financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If, based on the work we have performed, we conclude that there is a material misstatement in the Management Report, we are required to communicate the matter to those charged with governance. We have nothing to report in this regard. Responsibilities of management and those charged with governance for the parent company and consolidated financial statements

Management is responsible for the preparation and fair presentation of the parent company and consolidated financial statements in accordance with accounting practices adopted in Brazil and with the IFRS as issued by the IASB, and for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. In preparing the parent company and consolidated financial statements, management is responsible for assessing the Company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so. Those charged with governance are responsible for overseeing the financial reporting process of the Company and its subsidiaries. Auditor's responsibilities for the audit of the parent company and consolidated financial statements

Our objectives are to obtain reasonable assurance about whether the parent company and consolidated financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with Brazilian and International Standards on Auditing will always detect a material misstatement when it exists. Misstatements can arise from fraud or

77

error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements. As part of an audit in accordance with Brazilian and International Standards on Auditing, we exercise professional judgment and maintain professional skepticism throughout the audit. We also: • Identify and assess the risks of material misstatement of the parent company and consolidated

financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud could involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

• Obtain an understanding of internal control relevant to the audit in order to design audit procedures

that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the internal control of the Company and its subsidiaries.

• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting

estimates and related disclosures made by management.

• Conclude on the appropriateness of management's use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the ability of the Company to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor's report to the related disclosures in the parent company and consolidated financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor's report. However, future events or conditions may cause the Company to cease to continue as a going concern.

• Evaluate the overall presentation, structure and content of the parent company and consolidated

financial statements, including the disclosures, and whether these financial statements represent the underlying transactions and events in a manner that achieves fair presentation.

• Obtain sufficient appropriate audit evidence regarding the financial information of the entities or

business activities within the Group to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion.

We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit. We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.

78

From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor's report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication. Belo Horizonte, February 8, 2018 PricewaterhouseCoopers Auditores Independentes CRC 2SP000160/O-5 “F” MG Fábio Abreu de Paula Contador CRC 1MG075204/O-

79

Usinas

Siderúrgicas

de Minas

Gerais S.A. -

USIMINAS

Financial Statements December 31, 2017

80

Table of contents

Independent auditor report on individual and consolidated financial statements

Balance sheets 1 Statements of operations 3 Statements of comprehensive income (loss) 4 Statements of changes in equity 5 Cash flow statements 7 Statements of value added 9 Notes to financial statements 11

1 Operations 11 2 Approval of financial statements 12 3 Summary of significant accounting practices 13 3.1 Basis of preparation and declaration of conformity 13 3.2 Basis of consolidation and investments in subsidiaries 14 3.3 Presentation of segment reporting 15 3.4 Foreign currency translation 15 3.5 Cash and cash equivalents and Marketable securities 16 3.6 Financial assets 16 3.7 Financial liabilities 18 3.8 Derivative financial instruments and hedging activities 19 3.9 Inventories 19 3.10 Judicial deposits 19 3.11 Property, plant and equipment 19 3.12 Intangible assets 20 3.13 Impairment of nonfinancial assets 21 3.14 Provision for litigation 21 3.15 Provision for environmental restoration 21 3.16 Current and deferred income and social contribution taxes 21 3.17 Employee benefits 22 3.18 Revenue recognition 23 3.19 Distribution of dividends and interest on equity 24 3.20 New pronouncements, revisions and interpretations of standards not yet in force at December 31, 2017 25 4 Significant accounting judgments, estimates and assumptions 27 4.1 Judgments 27 4.2 Estimates and assumptions 27 5 Financial risk management objectives and policies 29 5.1 Financial risk factors 29 5.2 Policy to use derivative financial instruments 29 5.3 Financial risk management policy 30 5.4 Capital management 36 5.5 Fair value estimate 37 6 Derivative financial instruments 41 7 Financial instruments by category 43 8 Cash and cash equivalents 44 9 Marketable securities 45 10 Trade accounts receivable 46 11 Inventories 48 12 Taxes recoverable 49 13 Income and social contribution taxes 50 14 Judicial deposits 55 15 Investments 56

81

16 Property, plant and equipment 61

17 Impairment of non-financial assets 65

18 Intangible assets 67

19 Trade accounts payable, contractors and freight 71

20 Loans and financing 71

20.1 Conditions and covenants of debt renegotiation 72

20.2 Composition of borrowings 73

20.3 Schedule of borrowings in non-current liabilities 75

20.4 Changes in borrowings 75

20.5 Other significant information on borrowings 76

21 Debentures 77

22 Taxes payable 78

23 Taxes in installments 78

24 Provision for contingencies 80

25 Provision for environmental restoration 87

26 Retirement benefit obligations 88

26.1 Supplementary retirement plans 89

26.2 Debts contracted – minimum requirements 90

26.3 Actuarial calculation of retirement plans 91

26.4 Experience adjustments 94

26.5 Actuarial assumptions and sensitivity analyses 94

26.6 Health insurance plan benefits to retirees 95

26.7 Retirement plan assets 96

27 Equity 96

28 Segment reporting 99

29 Revenue 102

30 Expenses by nature 103

31 Expenses and employee benefits 104

32 Operating income (expenses) 104

33 Financial income (expenses) 106

34 Earnings (losses) per share 107

35 Commitments 108

36 Transactions with related parties 109

37 Insurance coverage 114

38 Stock option plan 114

39 Pledged Assets 117

40 Non-cash investment and financing transactions 118

41 Subsequent events 118

Usinas Siderúrgicas de Minas Gerais S.A. - USIMINAS Balance sheets

In thousands of reais

82

Company Consolidated

Restated Restated

Note 12/31/2017 12/31/2016 12/31/2017 12/31/2016

Assets

Current assets

Cash and cash equivalents 8 3,122 362,293 1,770,573 719,870

Marketable securities 9 775,677 176,422 543,715 1,537,584

Trade accounts receivable 10 1,127,029 890,216 1,555,494 1,179,212

Inventories 11 2,296,407 2,204,776 2,763,496 2,604,306

Taxes recoverable 12 121,176 66,087 176,851 125,191 Prepaid Income and Social Contribution Taxes

106,227 65,770

185,614 113,409

Dividends receivable 36 175,009 55,327 139,078 2,463

Derivative financial instruments 6 12 - 12 44,669

Other receivables 130,663 112,040 119,922 93,774

Total current assets 4,735,322 3,932,931 7,254,755 6,420,478

Noncurrent assets

Long-term assets

Accounts receivable from customers 10 84,452 - 131,458 -

Deferred income and social contribution taxes 13 1,954,760 2,021,565 3,046,112 3,120,368

Receivables from affiliates 36 53,943 59,780 3,147 3,842

Judicial deposits 14 516,871 529,015 675,600 660,229

Derivative financial instruments 6 1,184 - 1,184 100,670

Prepaid Income and Social Contribution Taxes - - - 68,172

Taxes recoverable 12 30,922 32,055 54,881 96,070

Other receivables 142,996 115,342 203,480 215,932

2,785,128 2,757,757 4,115,862 4,265,283

Investments 15 4,388,803 5,939,932 1,054,052 1,126,176

Property, plant and equipment 16 11,192,811 11,883,058 12,882,618 13,748,890

Intangible assets 18 186,666 186,855 677,190 693,918

Total noncurrent assets 18,553,408 20,767,602 18,729,722 19,834,267

Total assets 23,288,730 24,700,533 25,984,477 26,254,745

Usinas Siderúrgicas de Minas Gerais S.A. - USIMINAS Balance sheets


See accompanying notes.

83


Restated Restated

Note 12/31/2017 12/31/2016 12/31/2017 12/31/2016

Liabilities and equity

Liabilities

Current liabilities Trade accounts payable, contractors and freight 19

875,399 860,835

976,917 846,377

Loans and financing 20 334,468 59,818 927,946 62,157

Debentures 21 62,031 5,551 62,031 5,551

Advances from customers 19,781 7,287 81,394 35,806

Accounts payable 475,251 356,970 475,251 356,970

Salaries and social charges 146,822 153,160 188,735 197,076

Taxes payable 22 72,593 41,281 95,089 58,447

Taxes in installments 23 7,626 7,205 20,494 8,529 Income and social contribution taxes payable 13

- -

1,434 7,538

Dividends and Interest on Equity (IOE) payable 27

55,479 139

75,644 22,001

Derivative financial instruments 6 - 48,577 - 48,577

Other accounts payable 83,591 62,510 141,485 103,215

Total current liabilities 2,133,041 1,603,333 3,046,420 1,752,244

Noncurrent liabilities

Loans and financing 20 4,741,430 6,480,469 4,758,468 5,864,416

Debentures 21 887,334 992,184 887,334 992,184

Payables to affiliates 36 79,935 76,118 143,170 153,269

Taxes in installments 23 - - - 9,050

Provision for litigation 24 481,924 422,405 668,964 607,863

Provision for environmental restoration 25 - - 158,333 143,042

Post-employment benefits 26 1,050,324 1,338,419 1,050,324 1,342,727

Derivative financial instruments 6 - 102,413 - 102,413

Other accounts payable 139,947 149,452 87,500 95,903

Total noncurrent liabilities 7,380,894 9,561,460 7,754,093 9,310,867

Total liabilities 9,513,935 11,164,793 10,800,513 11,063,111

Equity 27

Share Capital 13,200,295 13,200,295 13,200,295 13,200,295

Capital reserve 311,747 309,445 311,747 309,445

Retained Earnings 202,207 - 202,207 -

Equity adjustments 60,546 26,000 60,546 26,000

Equity of controlling interests 13,774,795 13,535,740 13,774,795 13,535,740

Non-controlling interests - - 1,409,169 1,655,894

Total equity 13,774,795 13,535,740 15,183,964 15,191,634

Total liabilities and equity 23,288,730 24,700,533 25,984,477 26,254,745

Usinas Siderúrgicas de Minas Gerais S.A. - USIMINAS Statements of operations

In thousands of reais, unless otherwise stated


84


Years ended Years ended

Note 12/31/2017 12/31/2016 12/31/2017 12/31/2016

Revenue 29

9,977,529 7,515,554 10,734,118 8,454,200

Cost of sales 30 (8,676,104) (7,200,317) (9,099,024) (7,966,878)

Gross profit (loss) 1,301,425 315,237 1,635,094 487,322

Operating income (expenses)

Selling expenses 32 (155,940) (177,543) (250,950) (272,731) General and administrative expenses 32 (301,419) (251,834) (404,393) (354,218) Other operating income (expenses), net 32 (290,325) (430,674) (250,777) (224,826) Interests held in subsidiaries, jointly-controlled subsidiaries and affiliates 15

260,214 (8,151) 154,896 142,861

(487,470) (868,202) (751,224) (708,914) Operating income (loss) 813,955 (552,965) 883,870 (221,592)

Financial income (expense) 33 (540,308) 51,832 (462,920) (30,156) Income (loss) before income and social contribution taxes

273,647 (501,133) 420,950 (251,748)

Income and social contribution taxes 13

Current - - (59,038) (17,951) Deferred (40,632) (168,819) (46,832) (307,144)

(40,632) (168,819) (105,870) (325,095)

Net income (loss) for the year 233,015 (669,952) 315,080 (576,843)

Attributable to: Controlling interests 233,015 (669,952) 233,015 (669,952) Non-controlling interests - - 82,065 93,109

Basic and diluted earnings (loss) per common share 34 R$ 0.18 R$ (0.60) R$ 0.18 R$ (0.60) Basic and diluted earnings (loss) per preferred share 34 R$ 0.20 R$ (0.60) R$ 0.20 R$ (0.60)

Usinas Siderúrgicas de Minas Gerais S.A. - USIMINAS

Statements of comprehensive income (loss)



85



Note 12/31/2017 12/31/2016 12/31/2017 12/31/2016

Net income (loss) for the year 233,015 (669,952) 315,080 (576,843) Other components of comprehensive income (loss)

Actuarial loss on retirement benefits 26 59,692 (267,831) 60,444 (268,065)

Total other comprehensive loss 59,692 (267,831) 60,444 (268,065)

Total comprehensive loss for the year 292,707 (937,783) 375,524 (844,908)

Attributable to: Controlling interests 292,707 (937,783) 292,707 (937,783) Non-controlling interests - - 82,817 92,875

The items of the statement of comprehensive income (loss) are stated net of taxes, The tax effects of each component of comprehensive income (loss) are presented in Note 13.


Statements of changes in equity



86

Attributed to controlling shareholders

Capital reservesl Income reserves

Note Capital

Exceeding amount on

subscription of shares

Exceeding amount on

sale of treasury shares

Treasury shares

Special goodwill reserve

Stock options granted

and recognize

d

Legal reserve

Reserve for

investments and working

capital

Equity adjustmen

ts

Retained earnings

(accumulated losses) Total

Non-controlling interests Total equity

At December 31, 2016 13,200,295 105,295 3,339

(104,762) 278,729

26,844 - - 26,000

- 13,535,740 1,655,894 15,191,634

Comprehensive income (loss) for the period

Net income (loss) for the year - - -

- - - - - -

233,015 233,015 82,065 315,080

Actuarial losses on retirement benefits 26 - - -

- - - - - 59,692

- 59,692 752 60,444 Total comprehensive income (loss) for the period

- - -

- - - - - 59,692

233,015 292,707 82,817 375,524

Capital reduction - - - - - - - - - - - (300,000) (300,000) Allocation of net income (loss) for the year 27

Proposed dividends and interest on own capital - - -

- - - - - - (55,341) (55,341) (23,807) (79,148)

Constitution of reserves - - -

- - - 11,651 190,556 - (202,207) - - -

Stock option plan 38 - - -

- - (5,757) - - - 6,708 951 - 951

Disposal of treasury shares - - 6,086

1,973 - - - - - - 8,059 - 8,059

Adjustment from IAS 29 on property, plant and equipment - - -

- - - - - (11,764)

17,825 6,061 - 6,061

Changes in Investments in Subsidiaries that do not Result in Loss or Acquisition of Control 15 - - -

- - - - - (13,382)

- (13,382) (5,735) (19,117)

At December 31, 2017 13,200,295 105,295 9,425

(102,789) 278,729

21,087 11,651 190,556 60,546

- 13,774,795 1,409,169 15,183,964


Statements of changes in equity



87

Capital reserves Income

reserves

Note Capital

Exceeding amount on

subscription of shares

Exceeding amount on

sale of treasury shares

Treasury shares

Special goodwill reserve

Stock options granted

and recognized

Legal reserve

Equity adjustments

Retained earnings

(accumulated losses) Total

Non-controlling interests Total equity

At December 31, 2015 12,150,000 105,295 3,339 (104,762) 293,594 29,725 620,039 311,748 - 13,408,978 1,584,879 14,993,857

Comprehensive income (loss) for the period

Net income (loss) for the year - - - - - - - - (669,952) (669,952) 93,109 (576,843) Actuarial losses on retirement benefits 26 - - -

- - - - (275,375)

7,544 (267,831) (234) (268,065)

Total comprehensive income (loss) for the period - - -

- - - - (275,375)

(662,408) (937,783) 92,875 (844,908)

Capital increase 1,050,295 - - - - - - - - 1,050,295 - 1,050,295 Allocation of net income (loss) for the year

Absorption of loss - - - - (14,865) - (620,039) - 634,904 - - - Dividends - - - - - - - - - - (21,860) (21,860) Stock option plan 38 - - - - - (2,881) - - 6,600 3,719 - 3,719 Adjustment from IAS 29 on property, plant and equipment - - -

- -

- - (13,797)

20,904 7,107 - 7,107

Changes in Investments in Subsidiaries that do not Result in Loss or Acquisition of Control - - -

- -

- - 3,424

- 3,424 - 3,424

At December 31, 2016 13,200,295 105,295 3,339 (104,762) 278,729 26,844 - 26,000 - 13,535,740 1,655,894 15,191,634


Cash flow statements



88



Restated Restated

Note 12/31/2017 12/31/2016 12/31/2017 12/31/2016

Cash flows from operating activities Net income (loss) for the year 233,015 (669,952) 315,080 (576,843)

Adjustments to reconcile income (loss) Charges and monetary/exchange gains/losses, net 236,675 (223,086) 200,702 33,433 Interest expenses 646,967 463,910 636,934 451,913 Depreciation, amortization and depletion 966,188 1,011,828 1,171,851 1,216,491 Gain (loss) on the disposal of PP&E/investment 1,255 25,056 1,183 25,331 Impairment losses 17 73,010 7,277 74,892 (343,006) Interests held in subsidiaries, jointly-controlled subsidiaries and affiliates 15

(260,214) 8,151 (154,896) (142,861)

Deferred income and social contribution taxes 13 40,632 168,819 46,832 307,144 Set up (reversal) of provisions 174,324 30,867 236,683 66,120 Actuarial gains (losses) 26 28,502 (1,821) 29,096 (1,480) Stock grant plan 38 951 (2,881) 951 (2,881)

(Increase) decrease in assets

Trade accounts receivable (341,847) 143,061 (536,710) 199,287 Inventories (198,645) 79,312 (268,659) 163,648 Taxes recoverable (51,921) 52,842 4,654 24,583 Receivables from affiliates 5,837 (13,930) 695 570 Judicial deposits 2,929 (40,704) (19,082) (72,282) Other (46,211) (23,009) (13,629) 82,118

Increase (decrease) in liabilities

Trade accounts payable, contractors and freight 14,564 91,014 130,540 25,806 Advances from customers 12,494 (8,628) 45,588 (4,993) Payables to affiliates 3,817 (12,053) (10,099) (9,688) Accounts payable 118,281 (597,191) 118,281 (399,729) Taxes payable 31,312 (25,222) 36,642 (27,100) Other (107,777) (145,703) (150,656) (198,974)

Income and social contribution taxes paid - - (25,262) (16,569) Interest paid (797,350) (908,814) (764,250) (897,242) Actuarial liabilities paid (230,257) (213,108) (230,332) (213,108)

Net cash provided by (used in) operating activities 556,531 (803,965) 877,029 (310,312)

Cash flows from investing activities

Marketable securities 9 186,883 (175,980) 993,869 (313,399) Purchases of property, plant and equipment 16 (169,627) (163,250) (208,471) (207,035) Proceeds from the disposal of property, plant and equipment 8,149 5,363 8,647 5,532 Share capital repayments from subsidiaries 700,000 166,249 - - Purchases of software 18 (6,196) (14,077) (7,699) (15,724) Dividends received 61,368 137,950 26,500 96,701

Net cash provided by (used in) investing activities 780,577 (43,745) 812,846 (433,925)


Cash flow statements



89



Restated Restated

Note 12/31/2017 12/31/2016 12/31/2017 12/31/2016

Cash flows from financing activities Credit assignments obtained - - - 43,832 Credit assignments repayments - - - (241,294)

Payment of loans and financing and debentures (1,557,934) (140,531) (309,780) (185,431) Payment of taxes in installments 23 - (323) (4,342) (1,601) Swap transactions settlement (145,776) (4,261) (6,976) 12,240 Receipt by share issuance - 1,050,295 - 1,050,295 Reduction of capital in subsidiary - participation of non-controlling shareholders

- - (300,000) -

Dividends and interest on equity paid 27 - (1) (25,505) (3)

Net cash used in financing activities (1,703,710) 905,179 (646,603) 678,038

Exchange gain/loss on cash and cash equivalents 7,431 (14,203) 7,431 (14,203) Net increase (decrease) in cash and cash equivalents (359,171) 43,266 1,050,703 (80,402)

Cash and cash equivalents at beginning of year 8 362,293 319,027 719,870 800,272 Cash and cash equivalents at end of year 8 3,122 362,293 1,770,573 719,870

Net increase (decrease) in cash and cash equivalents (359,171) 43,266 1,050,703 (80,402)

Usinas Siderúrgicas de Minas Gerais S.A. - USIMINAS Statements of value added



90



Note 12/31/2017 12/31/2016 12/31/2017 12/31/2016

Revenues

Sales of goods, products and services 12,360,999 9,446,553 14,000,424 11,101,311

Set up of allowance for doubtful accounts

30

(16,757)

(49,923) (24,313) (62,513)

Other revenues 364,228 130,897 385,579 157,971

12,708,470 9,527,527 14,361,690 11,196,769

Inputs acquired from third parties Cost of goods and products sold and services rendered

(8,625,482) (6,913,511) (9,324,115) (7,579,841)

Materials, electricity, third-party services and other expenses (722,493) (737,804) (769,050) (641,389)

(9,347,975) (7,651,315) (10,093,165) (8,221,230)

Gross value added 3,360,495 1,876,212 4,268,525 2,975,539

Depreciation, amortization and depletion 30 (966,188) (1,011,828) (1,171,851) (1,216,491)

Net value added produced by the Company 2,394,307 864,384 3,096,674 1,759,048

Value added received in transfer Interests held in subsidiaries, jointly-controlled

subsidiaries and affiliates

15 260,214 (8,151) 154,896 142,861

Financial income 33 448,629 446,099 561.238 671,218

Exchange rates gains and losses, net 33 (65,677) 726,054 (21,601) 639,098

Actuarial gains and losses 26 (28,502) 1,821 (29,096) 1,480

614,664 1,165,823 665,437 1,454,657

Value added to be distributed 3,008,971 2,030,207 3,762,111 3,213,705

Usinas Siderúrgicas de Minas Gerais S.A. - USIMINAS Statements of value added



91

Company Consolidated Years ended Years ended 12/31/2017 12/31/2016 12/31/2017 12/31/2016

Personnel and related charges

Payroll and related charges 579,901 501,487 864,471 954,488

Unemployment Compensation Fund (FGTS) 72,364 69,485 88,643 92,097

Key management personnel compensation 17,055 17,597 22,779 23,262

Employees’ profit sharing 14,514 - 22,484 10,605

Retirement plans 5,569 19,202 6,024 20,275

689,403 607,771 1,004,401 1,100,727

Taxes, fees and contributions

Federal (1) 415,700 596,961 579,835 926,114

State 687,530 312,875 787,682 334,652

Municipal 56,132 61,229 67,875 87,581

Tax incentives 3,931 1,002 4,681 1,002

1,163,293 972,067 1,440,073 1,349,349

Debt remuneration

Interest 929,670 960,482 1,002,428 1,038,349

Other (6,410) 159,839 129 302,123

923,260 1,120,321 1,002,557 1,340,472

Equity remuneration

Retained profits (losses) 233,015 (669,952) 233,015 (669,952)

Non-controlling interests in retained profits - - 82,065 93,109

233,015 (669,952) 315,080 (576,843)

Value added distributed 3,008,971 2,030,207 3,762,111 3,213,705

(i) Social security charges are classified in "Federal taxes".


Notes to the Financial Statements as of December 31, 2017

In thousand of Reais, unless otherwise stated


92

1 Operations

Usinas Siderúrgicas de Minas Gerais S.A. - USIMINAS Usinas Siderúrgicas de Minas Gerais S.A. - USIMINAS (“USIMINAS”, “Usiminas”, “Parent company” or “Company”), headquartered in the city of Belo Horizonte, state of Minas Gerais, is a publicly-held company and its shares are traded on the São Paulo Futures, Commodities and Securities Exchange - BM&FBovespa S.A. ("BM&FBovespa") under the tickers USIM3, USIM5 and USIM6. The Company and its subsidiaries, jointly-controlled subsidiaries and associates (“Usiminas”) operate in the steel industry and related activities, such as iron ore extraction, steel transformation, production of capital goods and logistics. It currently has two steel mills with nominal production capacity of 9.5 million metric tons per annum of flat-rolled products, located in the cities of Ipatinga, state of Minas Gerais and Cubatão, state of São Paulo, in addition to iron ore reserves, service and distribution centers, maritime ports, cargo terminals, strategically located in several Brazilian cities. In order to expand its activities, the Company holds direct or indirect investments in subsidiaries, jointly-controlled entities and associated companies, which are presented below:

(a) Subsidiaries

Companies (%) Holding (%)

Voting capital

Headquartered in Core business

Mineração Usiminas S.A. (MUSA)

70 70 Belo Horizonte/MG Extraction and processing of iron ore as pellet feed, sinter feed and granulated iron ore.

Rios Unidos Logística e Transporte de Aço Ltda.

100 100 Itaquaquecetuba/SP Provision of services related to road freight transportation

Soluções em Aço Usiminas S.A.

68.88 68.88 Belo Horizonte/MG Develop steel product solutions and operate as a distribution center.

Usiminas Commercial Ltd.

100 100 Cayman Islands/Caribbean Fund raising in the foreign market

Usiminas Europa A/S

100 100 Copenhagen/Denmark

Operates as a trading company,

intermediating exports of the Company’s

products, and also fostering foreign trade.

Usiminas International Ltd.

100 100 Principality of Luxembourg Holds the Company’s foreign

investments.

Usiminas Mecânica S.A. (UMSA)

99.99 100 Belo Horizonte/MG Manufacture of equipment and installations for several industries.

Usiminas Participações e Logística S.A. (UPL) (i) (ii)

100 100 São Paulo/SP Investment in MRS Logistica S.A.

(i) Company’s direct holding of 16.7% and indirect holding through MUSA of 83.3%.

(ii) Company’s direct holding and indirect holding through MUSA in voting capital of 50.10% and 49.90%,

respectively.


93

(b) Joint ventures


Voting capital


Unigal Ltda. 70 70 Belo Horizonte/MG Transformation of cold-rolled coils into galvanized coils through a hot-dip galvanizing process.

Modal Terminal de Granéis Ltda.

50 50 Itaúna/MG

Operation of highway and railroad cargo terminals, storage and handling of ore and steel products, and highway cargo transport.

Usiroll - Usiminas Court Tecnologia de Acabamento Superficial Ltda.

50 50 Ipatinga/MG Provision of services, specially rectification of cylinders and rolls for the steel industry.

(c) Investments in associates


Voting capital


Codeme Engenharia S.A.

30.77 30.77 Betim/MG Manufacture and assembly of steel construction.

MRS Logística S.A. (i) 0.28 0.50 Rio de Janeiro/RJ Provision of railroad transport and logistics services.

Terminal de Cargas Paraopeba

22.22 22.22 Sarzedo/MG Storage, handling and transportation of cargo and operation of terminals.

Terminal de Cargas Sarzedo

22.22 22.22 Sarzedo/MG Storage, handling and transportation of cargo and operation of terminals.

(i) The Company's indirect holding in MRS Logística S.A. through UPL is disclosed in Note 15 (b).

2 Approval of the financial statements The issue of these financial statements was authorized by the Board of Directors on February 8, 2018.


94

3 Summary of significant accounting policies

The main accounting policies applied in the preparation of these financial statements are set out below. Accounting policies applied in transactions considered immaterial were not included in the financial statements. The accounting policies, which have been consistently applied in the current year, are consistent with those of the prior year presented and common to the parent company, subsidiaries, associates and jointly-controlled subsidiaries, and the financial statements of the subsidiaries were adjusted, as applicable, to meet this criterion.

3.1 Basis of preparation and statement of compliance The financial statements have been prepared under the historical cost convention, as modified to reflect the measurement of financial assets and financial liabilities (including derivative instruments) at fair value through profit or loss. The preparation of the financial statements requires the use of certain critical accounting estimates. It also requires management to exercise its judgment in the process of applying the Company's accounting policies. The areas involving a higher degree of judgment or complexity, or areas where assumptions and estimates are significant to the financial statements, are disclosed in Note 4. The parent company and consolidated financial statements have been prepared in accordance with International Financial Reporting Standards (“IFRS”) issued by the International Accounting Standards Board (IASB), and the accounting practices adopted in Brazil, issued by the Brazilian Accounting Pronouncements Committee (CPC) and approved by the Brazilian Securities Commission (CVM), and disclose all (and only) the applicable significant information related to the financial statements, which is consistent with the information utilized by management in the performance of its duties. The presentation of the parent company and consolidated statements of value added is required by the Brazilian corporate legislation and the accounting practices adopted in Brazil for listed companies, The Statement of Value Added was prepared in accordance with the criteria defined in Technical Pronouncement CPC 09 - "Statement of Value Added" while it is not required by IFRS. Therefore, the presentation of such statement is considered supplementary information, and not part of the set of financial statements.


95

3.2 Basis of consolidation and investments in subsidiaries (a) Subsidiaries

Subsidiaries are all entities over which the Company has the power to determine the financial and operating policies, generally accompanying a shareholding of more than one half of the voting rights. They are fully consolidated from the date on which control is transferred to Usiminas and are deconsolidated from the date that control ceases. Balances and unrealized gains and other transactions between Group companies are eliminated. Unrealized losses are also eliminated, unless the transaction provides evidence of impairment of the asset transferred.

(b) Joint ventures and associates

The Company classifies its investments as follows:

Associated companies are the entities over which the Company has significant influence, but not the control or joint control, through the participation in decisions relating to their financial and operating policies.

Jointly-controlled subsidiaries are the entities over which the Company shares control with one or more parties.

Investments in associates and jointly-controlled subsidiaries are accounted for using the equity method and are initially recognized at cost. The reporting dates of the associates and jointly-controlled subsidiaries are the same as those of USIMINAS. However, except for (direct and indirect) associates Codeme, Metform and Terminal Sarzedo, and for the jointly-controlled subsidiary Modal, the Company used, for equity accounting purposes, pursuant to CPC18 and IAS 28, financial statements prepared at November 30, 2017. The Company's share of its associates' and jointly-controlled subsidiaries' profit or loss is recognized in the statement of income and its share of reserve movements is recognized in the Company's reserves. When the Company's share of losses in an associate or jointly-controlled subsidiary equals or exceeds the carrying amount of the investment, including any other unsecured receivables, the Company does not recognize further losses, unless it has incurred obligations or made payments on behalf of the associate or jointly-controlled subsidiary. Unrealized gains on transactions between the Company and its associates and jointly-controlled subsidiaries are eliminated to the extent of its interest. Unrealized losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred. Accounting policies of associates and jointly-controlled subsidiaries have been changed where necessary to ensure consistency with the policies adopted by the Company.


96

If the ownership interest in an associate is reduced but significant influence is retained, only a proportionate share of the amounts previously recognized in other comprehensive income is reclassified to profit or loss where appropriate. Dilution gains and losses arising on investments in associates are recognized in the statement of income.

(c) Transactions with non-controlling interests

Usiminas treats transactions with non-controlling interests as transactions with equity owners

of Usiminas. For purchases from non-controlling interests, the difference between any consideration paid and the proportion acquired of the carrying value of net assets of the subsidiary is recorded in equity. Gains or losses on disposals to non-controlling interests are also recorded in equity, in "Carrying value adjustments".

3.3 Segment reporting

Operating segments were reported in a manner consistent with the internal reporting provided to the chief operating decision-maker. Usiminas is organized in four operating segments: Steelworks, Mining and Logistics, Steel Transformation and Capital Goods. The bodies responsible for the major operating decision-making, allocation of funds and performance assessment of operating segments include the Executive Board and the Board of Directors. The Company's Board of Directors is also responsible, where applicable, for the strategic decision-making of Usiminas.

3.4 Foreign currency translation

(a) Functional and presentation currency

Items included in the financial statements are measured using the currency of the primary economic environment in which the Company operates ("the functional currency"). The parent company and consolidated financial statements are presented in Brazilian reais (R$), which is the Company's functional currency, and also Usiminas’ presentation currency.

(b) Transactions and balances

Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions or valuation. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognized in the statement of income, except when designated for hedge accounting and, therefore, deferred in equity as cash flow hedges and net investment hedges. Foreign exchange gains and losses relating to assets and liabilities are presented in the statements of income in Finance result.


97

3.5 Cash and cash equivalents and marketable securities

(a) Cash and cash equivalents

Cash and cash equivalents includes cash on hand, bank deposits, and other short-term highly liquid investments, redeemable in three months or less and with immaterial risk of change in value, with the objective of meeting short-term commitments.

(b) Marketable securities

Highly liquid investments, redeemable in three months or less, which are not intended by management to meet short-term commitments are classified as marketable securities.

3.6 Financial assets 3.6.1 Classification

Usiminas classifies its financial assets, upon initial recognition, in the following categories: at fair value through profit or loss and loans and receivables.

(a) Financial assets at fair value through profit or loss Financial assets at fair value through profit or loss are financial assets held for trading. A financial asset is classified in this category if it is acquired principally for the purpose of selling in the short-term. Assets in this category are classified as current assets. Derivatives are also categorized as held for trading unless they are designated as hedges.


98

(b) Loans and receivables Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. Loans and receivables from Group companies comprise cash and cash equivalents, trade receivables, receivables from related parties and other receivables, except for certain short-term investments. Usiminas constitutes a provision for impairment of trade receivables for delinquent amounts that are at a legal level and for those for which no new settlement agreement has been established, as well as for those cases in which there is no expected realization of the asset.

3.6.2 Recognition and measurement Purchases and sales of financial assets are recognized on the trade date. Investments are initially recognized at fair value plus transaction costs for all financial assets not carried at fair value through profit or loss. Financial assets carried at fair value through profit or loss are initially recognized at fair value, and transaction costs are expensed in the statement of income in the period in which they arise. The fair values of investments with publicly-available quotations are based on current bid prices. For financial assets without an active market, Usiminas determines fair value through valuation techniques. These include the use of recent arm's length transactions, reference to other instruments that are substantially the same, discounted cash flow analysis, and option pricing models, prioritizing market inputs and minimizing the use of entity-specific inputs.

3.6.3 Impairment of financial assets

Assets carried at amortized cost Usiminas assesses, at the end of each reporting period, whether there is objective evidence that a financial asset or a group of financial assets is impaired. The criteria that the Company uses to determine whether there is objective evidence of impairment loss include: • significant financial difficulty of the issuer or borrower; • a breach of contract, such as a default or delinquency in interest or principal payments; • probability that the debtor will enter bankruptcy or financial reorganization; and • the disappearance of an active market for that financial asset because of financial difficulties.


99

3.6.4 Derecognition of financial assets

A financial asset (or, when applicable, a part of a financial asset or a part of a group of similar financial assets) is derecognized specially when: • the rights to receive cash flows from the asset have expired; and • the Company has transferred its rights to receive cash flows from the asset or has agreed

to pay the full amount of the cash flows received, with no significant delay, to a third party as a result of a “transfer” agreement; and (a) the Company has transferred substantially all the risks and benefits of the asset, or (b) the Company has not transferred or substantially retained all risks and benefits related to the asset, but transferred control over the asset.

When the Company has transferred its rights to receive cash flows from an asset or has entered into a transfer agreement and has not substantially transferred or retained all the risks and benefits related to an asset, an asset is recognized to the extent of the continuous involvement of the Company with the asset.

3.7 Financial liabilities

3.7.1 Recognition and measurement

A financial liability is classified as measured at fair value through profit or loss if it is classified as held for trading or designated as such upon initial recognition. Transaction costs are recognized in profit or loss as incurred. These financial liabilities are measured at fair value and any changes in fair value, including gains on interest and dividends, are recognized in the statement of income for the year. Financial liabilities are initially recognized at fair value and, as for borrowings, debentures and accounts payable, the cost of the transaction directly related is added to it. The Company's financial liabilities include trade and other payables, borrowings, debentures and derivative financial instruments.

3.7.2 Subsequent measurement

After initial recognition, borrowings, debentures, trade and other payables are subsequently measured at amortized cost, using the effective interest method.

3.7.3 Borrowing costs

Borrowing costs related to the acquisition, construction or manufacture of an asset that requires a significant amount of time to be ready for its intended use or sale are capitalized as part of the cost of these assets. Borrowing costs comprise interest and other costs incurred by the Company in connection with the borrowing of funds.


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3.7.4 Derecognition of financial assets A financial liability is derecognized when the obligation is revoked, canceled or expires. When an existing financial liability is substituted for another lender with substantially different terms, or the terms of an existing liability are altered significantly, this substitution or alteration is treated as a derecognition of the original liability and recognition of a new liability, and the difference in the corresponding accounting values is recognized in the statement of income.

3.8 Derivative financial instruments and hedging activities

Derivatives are initially recognized at fair value on the date a derivative contract is entered into and are subsequently remeasured at their fair value through profit or loss.

3.9 Inventories

Inventories are stated at the lower of average purchase or production cost, (weighted moving average) and net realizable value. Imports in transit are stated at the accumulated cost of each import.

3.10 Judicial deposits

Judicial deposits are those that are made in a bank account linked to legal proceedings, in Brazilian currency and monetarily restated, with the purpose of ensuring the settlement of potential future liabilities.

3.11 Property, plant and equipment

Property, plant and equipment are recorded at cost of acquisition, formation or construction, less depreciation and, when applicable, impairment losses. Upon replacement, the key components of certain property, plant and equipment items are recorded as individual and separate assets and depreciated considering the specific economic useful life of each component. The replaced component is written off. Repair and maintenance costs are allocated to results of operations during the period in which they are incurred. Depreciation of property, plant and equipment is calculated using the straight-line method to allocate their cost to their residual values over their estimated useful lives.


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The assets' residual values and useful lives are reviewed, and adjusted if appropriate, at the end of each reporting period. An asset's carrying amount is adjusted immediately when it is greater than its estimated recoverable amount.

The Company has parts and spare parts for the maintenance of property, plant and equipment items, which have an estimated useful life of more than 12 months. Therefore, the balance of inventories of these parts and spare parts is classified in property, plant and equipment.

3.12 Intangible assets

(a) Goodwill

Goodwill represents the excess of the cost of an acquisition over the fair value of the assets and liabilities of the acquired entity. Goodwill is tested annually for impairment and carried at cost less accumulated impairment losses. Impairment losses on goodwill are not reversed. Gains and losses on the disposal of an entity include the carrying amount of goodwill relating to the entity sold. Goodwill is allocated to cash-generating units for the purpose of impairment testing. The allocation is made to those cash-generating units or group of cash-generating units that are expected to benefit from the business combination in which the goodwill arose identified according to operating segment.

(b) Mineral rights Mineral rights are recorded at purchase fair value and reduced by depletion.

Mineral rights arising from the acquisition of companies are recognized at fair value considering the allocation of assets and liabilities acquired.

Mineral rights are depleted in accordance with the operation of the mines.

(c) Software Software licenses purchased are capitalized and amortized on a straight-line basis over their estimated useful lives at the rates described in Note 18.


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3.13 Impairment of non-financial assets Assets that have an indefinite useful life, for example goodwill, are not subject to amortization and are tested annually for impairment. Assets with defined useful lives are reviewed to identify evidence of impairment at the balance sheet date and also whenever events or changes in circumstances indicate that the book value may not be recoverable. If there is an indication of impairment, the assets are tested for impairment. An impairment loss is recognized for the

amount by which the asset's carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset's fair value less costs to sell and its value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (Cash-generating units (CGU's)). An impairment loss is recognized for the amount by which the asset's carrying amount exceeds its recoverable amount.

3.14 Provision for litigation

Provisions for litigation related to labor, tax and civil lawsuits are recognized when there is a legal or informal present obligation as a result of past events, it is probable that assets will be surrendered to settle the obligation, and a reliable estimate of the amount can be made.

3.15 Provision for environmental recovery The provision for environmental recovery, when related to an asset construction or acquisition, is recorded as part of the cost of that asset and takes into consideration management's estimates of the subsidiary Mineração Usiminas S.A. regarding future expenditures discounted to present value. Provisions are measured at the present value of the expenditures expected to be required to settle the obligation using a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the obligation. The increase in the provision due to the time elapsed is recognized as interest expense.

3.16 Current and deferred income tax and social contribution

Income taxes are recognized in the statement of income, except to the extent that they relate to items recognized directly in equity. In such cases, the taxes are also recognized in comprehensive income or directly in equity.

Deferred taxes are calculated on income tax (IRPJ) and social contribution (CSLL) losses and the temporary differences between the tax bases of assets and liabilities and their carrying amounts in the financial statements.


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Deferred tax assets and liabilities are presented net in the balance sheet when there is a legally enforceable right and the intention to offset them upon the calculation of current taxes, generally when related to the same legal entity and the same tax authority.

3.17 Employee benefits (a) Supplementary retirement plan

The Company and its subsidiaries participate in retirement plans, managed by Previdência Usiminas, to grant to their employees supplementary retirement and pension benefits. The liability recognized in the balance sheet in respect of defined benefit pension plans is the present value of the defined benefit obligation at the balance sheet date minus the market value of plan assets, adjusted for: (i) actuarial gains and losses; (ii) rules for limiting the value of the asset determined; and (iii) minimum requirements. The defined benefit obligation is calculated annually by independent actuaries using the projected unit credit method. The present value of the defined benefit obligation is determined by discounting the future cash outflows using market interest rates that are denominated in the currency in which the benefits will be paid, and that have terms to maturity approximating to the terms of the related pension liability. Actuarial gains and losses are charged or credited directly in other comprehensive income in the period in which they occur. For the defined contribution plan (Cosiprev), the Company pays contributions to a private pension entity on compulsory, contractual or voluntary bases. The contributions are recognized as finance costs in the period in which they are due.

(b) Post-retirement healthcare benefit plan Post-retirement health plan benefits were offered to the employees who retired from the subsidiary Companhia Siderúrgica Paulista - Cosipa up to April 30, 2002. Expected costs of these benefits were accumulated during the period of the employment relationship, using an accounting methodology similar to that used for the defined benefit retirement plans. In addition, the Company records the obligations arising from the legislation, which assures employees who contributed to the health plan the right to be maintained as beneficiary when they retire, provided that they assume full payment of contributions. The maintenance term after retirement is one year for each contribution year and if the contribution occurred for at least 10 years, this term is indefinite. These obligations are valued annually by independent actuaries.


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(c) Profit-sharing

Usiminas provides for profit sharing based on the attainment of operating and financial targets agreed with its employees. These amounts are recorded under "Cost of sales", "Selling expenses" and "General and administrative expenses", in accordance with the function of each employee.

(d) Share-based payments The Company has a share-based compensation plan, to be settled with preferred shares held in treasury, under which management members and other executives appointed by the Board of Directors can purchase Company’s shares. The fair value of the employee services received in exchange for the grant of the options is recognized as an expense. When the options are exercised, the proceeds received net of any directly attributable transaction costs are credited to share capital (nominal value).

3.18 Revenue recognition

Revenue is shown net of taxes, returns, rebates and discounts and, for consolidation purposes, after eliminating sales between Group companies. Revenue is measured at the fair value of the consideration received or receivable, to the extent it is probable that future economic benefits will flow to the entity, and the amounts of revenue and costs can be reliably measured. Also, specific criteria must be met for each of the Company's activities as described below:

(a) Sales of products

Usiminas manufactures and sells various products and raw materials, such as flat steels, iron ore, stamped steel parts for the automobile industry and products for the construction and capital goods industry. The Company's criterion of revenue recognition, therefore, is the date on which the product is delivered to the purchaser.

(b) Sales of services

Usiminas provides technology transfer services in the steel industry, project management and services in the civil construction and capital goods industry, road transportation of flat steel, hot-dip galvanizing services and texturing and chrome plating of cylinders.

Revenue from services rendered is recognized based on the stage of execution of the services at the balance sheet date.


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(c) Revenue from orders in transit Revenue from orders in transit is recognized under the percentage of completion (POC) method. The revenue is calculated and recorded based on the application, to the updated sales price, of the percentage represented by the ratio of costs incurred to the updated total budgeted cost, adjusted by a provision for recognition of losses on orders in transit, when applicable. The amounts billed which exceed the physical progress of each project are recognized as services billed to be performed, in current liabilities. The differences between the actual final cost and the total budgeted cost, updated and periodically reviewed, have been kept within parameters considered reasonable by management. The manufacturing to order agreements have warranty clauses that cover the equipment after delivery for variable periods of time. Any costs incurred are absorbed directly in the results of operations. Revenues from orders in transit are solely part of operations conducted by subsidiary Usiminas Mecânica S.A., and in addition to this type of revenue, this entity also sells services. Usiminas Mecânica’s revenues comprise the amounts stated in Note 28 as capital goods.

(d) Interest income Interest income is recognized on the accrual basis, using the effective interest method.

3.19 Distribution of dividends and interest on capital The distribution of dividends and interest on capital to the Company's stockholders is recognized as a liability in Usiminas' financial statements at year-end based on its bylaws. Amounts above the minimum mandatory limit established by Law are only provisioned when approved at a General Stockholders’ Meeting. The tax benefit of interest on capital is recognized in the statement of income.


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3.20 Pronouncements issued but not yet effective at December 31, 2017 The following new standards were issued by IASB but are not effective for the year ended December 31, 2017. The early adoption of the standards, even though encouraged by IASB, has not been implemented in Brazil by the Brazilian Accounting Pronouncements Committee (CPC).

(i) IFRS 9 / CPC 48 - Financial instruments IFRS 9 replaces the orientation included in IAS 39 (CPC 38) Financial Instruments: Recognition and Measurement. IFRS 9 includes new models for the classification and measurement of financial instruments and the measurement of expected losses on financial and contractual assets, as well as new requirements related to hedge accounting. The new standard maintains existing guidance on the recognition and derecognition of financial instruments in IAS 39. IFRS 9 is effective for annual periods beginning on or after January 1, 2018. The effective impact of the adoption of IFRS 9 on the parent company and consolidated financial statements in 2018 cannot be reliably estimated, as it will depend on existing financial instruments and the economic conditions in 2018, as well as on future accounting decisions and judgments. However, Management performed a preliminary assessment of the potential impact of the adoption of IFRS 9 based on its position at December 31, 2017 and the hedge relationships identified in 2017 under IAS 39 and concluded that there will be no significant impacts. Management also evaluated the new impairment model for financial assets and reached the same conclusion that there will be no significant impacts, since the Company has already been working with a hybrid model of expected and incurred losses.

(ii) IFRS 15 / CPC 47 - Revenue from contracts with customers IFRS 15 introduces a comprehensive structure for determining if and when a revenue is recognized, and how revenue is measured. IFRS 15 replaces current revenue recognition standards, including CPC 30 (IAS 18) Revenue, CPC 17 (IAS 11) Construction Contracts and CPC 30 Interpretation A (IFRIC 13) Customer Loyalty Programs. IFRS 15 is effective for annual periods beginning on or after January 1, 2018. The Company's management analyzed its operations based on a five-step model defined by this new standard, namely: identification of the contract with the customer, identification of performance obligations, determination of the transaction price, transaction price allocation and recognition of revenue. Based on this analysis, Management concluded that there will be no significant impacts on the parent company and consolidated financial statements. Note 3.18 describes the different types of revenue of Usiminas and how each of these revenues is to be recognized.


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With respect to the sale of products (Note 3.18 (a)), revenues will continue to be recognized when products are delivered at the customer's location, such being considered as the time the customer accepts the goods and the risks and benefits of ownership are transferred . Revenue is recognized at this time provided that revenue and costs can be reliably measured, receipt of the consideration is probable and there is no continuous involvement of management with the products. With respect to the sale of services (Note 3.18 (b)), revenues will continue to be recognized based on the services effectively performed up to the balance sheet date, since the fair value and sales prices of individual services are relatively similar. As regards the orders in transit of the subsidiary Usiminas Mecânica (Note 3.18 (c)), revenues will continue to be recognized using the percentage of completion (POC) method, since the assets manufactured by the Company are customer specific and do not have alternative use in the market, and there is a provision in all contracts with customers that ensures the right to payment for the work performed to date.

(iii) IFRS 16 - Leases IFRS 16 introduces a single lease accounting model in the balance sheet for lessees. A lessee recognizes a right-of-use asset representing its right to use the underlying leased asset and a lease liability representing its obligation to make lease payments. Optional exemptions are available for short-term leases and low-value items. The lessor's accounting remains similar to the current standard, that is, a lessor continues to classify its leases as finance leases or operating leases. IFRS 16 replaces existing leasing standards, including CPC 06 (IAS 17) Leases and ICPC 03 (IFRIC 4, SIC 15 and SIC 27) Complementary Aspects of Lease Transactions. The standard is effective for annual periods beginning on or after January 1, 2019. As described in Note 35(c), the Company has R$960,000 in commitments with operating leases. However, the Company has not yet determined to what extent these commitments will result in the recognition of an asset and a liability for future payments and how this will affect the Company's profit and classification of cash flows.


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4 Significant accounting judgments, estimates and assumptions

4.1 Judgments The preparation of the Company's financial statements requires management to make certain judgments and estimates and adopt assumptions that impact the stated amounts of revenue, expenses, assets and liabilities and their related disclosures, as well as the disclosure of contingent liabilities. In the process of applying Usiminas’ accounting policies, management made the following judgments, which have the most significant effects on the amounts recognized in the financial statements:

(a) Segregation of interest and monetary variation related to financial investments and local borrowings The Company segregates the Extended Consumer Price Index (IPCA) for borrowings, debentures and financial investments, whose contracted indices are CDI and TJLP. Thus, the IPCA portion is segregated from interest on borrowings, debentures and income from financial investments, and included in "Monetary effects” within Finance result (Note 33).

(b) Classification of investment control The Company classifies its investments in accordance with CPC 18 (R2) - Investment in Associates, Subsidiaries and Joint Ventures and with CPC 19 (R2) - Joint Ventures and whose adoption is subject to a judgment in determining the control and the significant influence of investments.

4.2 Estimates and assumptions The estimates and assumptions that relate to sources of uncertainty in estimates of the future and other important sources of uncertainties in estimates at the balance sheet date, having a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year, are addressed below.

(a) Impairment of non-financial assets Usiminas tests annually whether goodwill and other long-term assets have suffered any impairment. The recoverable amounts of cash-generating units (CGUs) have been determined based on value-in-use calculations. These calculations require the use of estimates (Note 17). For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (Cash-generating units (CGU's)).


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(b) Income tax and social contribution Usiminas is subject to income taxes in some countries in which it operates. Significant judgment is required in determining the provision for income taxes in these countries. There are many transactions and calculations for which the ultimate tax determination is uncertain. Usiminas also recognize liabilities for anticipated tax audit issues based on estimates of whether additional taxes will be due. Management reviews, on a regular basis, the recoverability of deferred tax assets considering the historical profit generated and the estimated future taxable income, based on technical feasibility studies.

(c) Fair value of derivatives and other financial instruments The fair value of derivatives and other financial instruments that are not traded in an active market is determined by using valuation techniques. Usiminas exercises judgment to select from a variety of methods and make assumptions that are mainly based on market conditions existing at the end of each reporting period.

(d) Revenue recognition The subsidiary Usiminas Mecânica S.A. utilizes the Percentage-of-Completion (POC) method to account for orders in transit sold at fixed prices. Use of the POC method requires management to estimate the services performed to date as a proportion of the total services to be performed.

(e) Pension benefits The present value of the retirement plan obligations depends on a number of factors that are determined on an actuarial basis. The assumptions used in determining the net cost (income) for retirement plans include the discount rate. Usiminas determines the appropriate discount rate at the end of each year, so as to determine the present value of estimated future cash outflows. Other key assumptions for retirement plan obligations are based in part on current market conditions. Additional information is disclosed in Note 26.

(f) Provision for litigation

Usiminas is a party to several judicial and administrative proceedings (Note 24). Provisions are recorded for all proceedings that represent probable losses. The probability of loss is assessed based on available evidence, which include the opinions of internal and external legal consultants.


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(g) Provision for environmental recovery As part of its mining activities, the Company recognizes a provision for obligations concerning environmental recovery in the consolidated accounts. When determining the value of the provision, assumptions and estimates are made in relation to the discount rates, the expected cost for rehabilitation and the expected time of the costs.

(h) Useful lives of property, plant and equipment

Depreciation of property, plant and equipment is calculated using the straight-line method over the useful lives of the assets. Useful life is estimated based on appraisals of Usiminas’ engineers and external consultants, and are reviewed on an annual basis.

5 Financial risk management objectives and policy 5.1 Financial risk factors

The activities of Usiminas expose it to a variety of financial risks: credit risk, liquidity risk and market risk (including currency risk, cash flow risk or fair value interest rate risk, commodity price risk and steel price risk). Financial risk management is carried out by the Finance Director of the Company, according to guidance established by the Finance Committee and the Board of Directors. This team evaluates, monitors and seeks to hedge any financial risks in close co-operation with the other units, including but not limited to operating units and the Supply and Planning departments of Usiminas.

5.2 Policy for utilization of financial instruments

The purpose of the policy for the management of financial assets and liabilities is to: (i) maintain the intended liquidity, (ii) define the concentration level of operations, and (iii) control the level of exposure to financial market risks. Usiminas carries out derivative transactions always with the objective of hedging its financial assets and liabilities and reducing the volatility of its cash flows, monitoring foreign exchange exposure, any mismatch between currencies, commodity prices, among other factors. Usiminas does not have financial instrument contracts subject to margin calls.


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5.3 Financial risk management policy (a) Credit risk

Credit risk arises from cash and cash equivalents, derivative financial instruments and deposits and investments with banks, as well as credit exposures to customers, including outstanding receivables. The sales policy of Usiminas is subject to the credit standards established by management, which seek to mitigate problems arising from customer defaults. Additionally, the Credit Committee, composed of experts from the finance and sales areas, evaluates and monitors customer risk. This purpose is achieved by a detailed analysis and selection of customers based on their payment capacity, debt ratio, balance sheet and through diversification of trade receivables (dilution of risk). The Company also records a provision for impairment of trade receivables (Note 10).

As to financial and other investments, the Usiminas' policy is to operate with highly-rated financial institutions. Only securities and notes of entities rated by the international rating agencies as "A" or higher are accepted.

(b) Liquidity risk The responsible and conservative policy for the management of the financial assets and liabilities involves a detailed analysis of the counterparties´ financial statements, equity and rating, to assist the Company in maintaining its liquidity, defining the concentration level of operations, controlling the level of exposure to financial market risks and diluting liquidity risk. Cash flow forecasting is based on the budget approved by the Board of Directors and subsequent updates. This forecasting takes into consideration, besides all the operating plans, the financing plans required to support the expected investments and the maturity schedules of debt, besides monitoring the compliance with covenants and internal leverage recommendations. The Treasury Department monitors the forecasts of the Company's direct cash flow daily to ensure it has sufficient cash to cover operational and investment needs and to meet its obligations.


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The cash held by Usiminas is managed by the Finance Director of the Company, which invests it in Bank Deposit Certificates (CDB) and Repurchase Agreements, choosing instruments with appropriate maturities and proper liquidity (Note 8). The table below presents the main Usiminas' non-derivative financial liabilities and net-settled derivative financial liabilities which are realized by relevant maturity groupings based on the remaining period from the balance sheet date to the contractual maturity date. Derivative financial liabilities are included in the analysis if their contractual maturities are essential for an understanding of the timing of the cash flows. The amounts disclosed in the table are the contractual undiscounted cash flows.

Parent

company

Less than 1

year Between 1 and

2 years Between 2

and 5 years Over 5 years

At December 31, 2017

Trade payables, contractors and freight 875,399 - - -

Borrowings 775,145 522,780 3,030,861 3,357,987

Debentures 152,444 105,601 588,916 639,112

Notes payable - Forfaiting 475,251 - - -

Derivative financial instruments (12) (248) (515) (420)



Borrowings 837,663 2,004,550 3,251,385 5,856,849

Debentures 160,056 159,409 649,037 1,131,844


Derivative financial instruments (46,766) (98,881) (476) 46

Consolidated

Less than 1

year Between 1 and

2 years Between 2

and 5 years Over 5 years



Borrowings 781,840 528,325 3,041,749 3,358,018

Debentures 152,444 105,601 588,916 639,112

Bonds 609,881 - - -


Derivative financial instruments (12) (248) (515) (420)



Borrowings 787,984 781,428 3,255,448 5,856,979

Debentures 160,056 159,409 649,037 1,131,844

Bonds 38,557 130,664 - -

Finance lease liabilities 63 - - -


Derivative financial instruments (2,190) (525) (476) 46


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As the amounts included in the table are the contractual undiscounted cash flows, they will not reconcile to the amounts disclosed on the balance sheet for borrowings, debentures, derivative financial instruments and other liabilities.

(c) Foreign exchange risk (i) Foreign exchange exposure

Usiminas operates internationally and is exposed to foreign exchange risk arising from exposures in certain currencies, primarily with respect to the US dollar and, to a lesser extent, yen and euro. Foreign exchange risk arises from recognized assets and liabilities and net investments in foreign operations. As a preventive measure and to mitigate the effects of foreign currency variations, management has been adopting the policy of carrying out swap transactions and, additionally, holding foreign currency denominated assets, as follows: Parent

company Consolidated

12/31/2017 12/31/2016 12/31/2017 12/31/2016

Assets in foreign currency

Cash and cash equivalents 939 8,362 1,478,473 103,130

Marketable securities 775,665 - 8,428 8,146

Trade receivables 182,137 86,504 297,966 87,334

Advances to suppliers 4,042 11,505 5,404 12,684

962,783 106,371 1,790,271 211,294

Liabilities in foreign currency

Borrowings (1,157,250) (2,418,093) (1,747,954) (1,779,065)

Trade payables, contractors and freight (201,202) (163,191) (219,628) (167,613)

Advances from customers (12,385) (3,430) (13,699) (4,607)

Other payables (18,163) (16,790) (18,159) (16,786)

(1,389,000) (2,601,504) (1,999,440) (1,968,071)

Exposure (426,217) (2,495,133) (209,169) (1,756,777)

Derivative financial instruments (notional)

- (104,420) - -

Total currency exposure (426,217) (2,599,553) (209,169) (1,756,777)


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The borrowings and debentures are denominated in the following currencies: Parent


12/31/2017

12/31/2016 12/31/2017 12/31/2016

Brazilian real 4,868,013 5,119,929 4,887,825 5,145,243

U.S. dollar 1,157,250 1,193,485 1,747,954 1,775,892

Yen - 1,224,608 - 3,173

Total borrowings and debentures 6,025,263

7,538,022 6,635,779 6,924,308

The impact related to exchange rate volatility (sensitivity analysis) is presented in Note 5.3(c).

(ii) Sensitivity analysis - foreign exchange risk arising from assets and liabilities denominated in foreign currency The Company prepares a sensitivity analysis of outstanding assets and liabilities denominated in foreign currency at the end of the period, considering the foreign exchange rate at December 31, 2017 for the probable scenario. Scenario I considered a depreciation of the Brazilian real by 5% when compared to the current scenario. Scenarios II and III were stressed based on factors of 25% and 50%, respectively, on the amount of the foreign currency at December 31, 2017. The currencies used in the sensitivity analysis and their related scenarios are shown below:

12/31/2017

Currency

Foreign exchange rate at the end of

the year

Scenario I Scenario II Scenario III

US$ 3.3080 3.4734 4.1350 4.9620

EUR 3.9693 4.1678 4.9616 5.9540

YEN 0.02940 0.0309 0.0368 0.0441

Effects on the finance result, considering Scenarios I, II and III, are shown below: Consolidated

12/31/2017

Currency Scenario I Scenario II Scenario III

US$ (10,588) (52,942) (105,884)

EUR 121 604 1,209

YEN 9 45 91

Derivative financial instruments linked to currency exposure were included in the sensitivity analysis of assets and liabilities in foreign currency, based on the objective of these instruments, which is to reduce the impact of fluctuations in foreign currency. These derivative financial instruments are summarized in Note 6.


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(d) Cash flow or fair value interest rate risk (i) Composition of borrowings by type of interest rate

The interest rate risk arises from financial investments and borrowings.

According to Usiminas financial policy, derivative transactions are intended to mitigate the risk by replacing floating rates with fixed rates, or interest rates based on international indices with interest rates based on local currency indices, according to the guidance of the Finance Committee. The composition of borrowings and debentures contracted, by type of interest rate, in current and non-current liabilities is presented as follows:

Parent


12/31/2017 % 12/31/2016 % 12/31/2017 % 12/31/2016 %

Borrowings

Fixed 25,735 1 1,259,745 17 636,251 9 642,964 9

TJLP 359,896 6 377,351 5 359,896 5 379,880 6

LIBOR 1,032,430 17 1,065,773 14 1,032,430 16 1,065,773 15

CDI 3,549,410 58 3,735,303 50 3,549,410 54 3,735,406 54

Other 108,427 2 102,115 1 108,427 2 102,550 1

5,075,898 84 6,540,287 87 5,686,414 86 5,926,573 85

Debentures

CDI 949,365 16 997,735 13 949,365 14 997,735 15

6,025,263 100 7,538,022 100 6,635,779 100 6,924,308 100


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The Company transacts derivative financial instruments for the management of risks related to volatility in interest rates of borrowings denominated in foreign currency. This includes locking in the London Interbank Offered Rate (LIBOR) in certain instances, local and foreign currency. Overseas, borrowings are supported by contracts with the International Swaps and Derivatives Association, Inc. (ISDA), and local transactions are supported by the Master Derivative Contract (CGD).

(ii) Sensitivity analysis of changes in interest rates

The Company prepares sensitivity analysis of outstanding assets and liabilities indexed to interest rates at the end of the period, considering the rates prevailing at December 31, 2017 for the probable scenario. Scenario I considers a 5% increase on the average interest rate applicable to the floating portion of its current debt. Scenarios II and III were stressed based on factors of 25% and 50%, respectively, on the amounts of these rates at December 31, 2017. The rates used and their related scenarios are shown below:

12/31/2017

Index

Rates at the end of the

year

Scenario I Scenario II Scenario III

CDI 6.9% 7.2% 8.6% 10.3%

TJLP 7.0% 7.4% 8.8% 10.5%

LIBOR 2.1% 2.2% 2.6% 3.2%

Effects on the finance result, considering Scenarios I, II and III, are shown below: Consolidated

12/31/2017

Index Scenario I Scenario II Scenario III

CDI (12,906) (64,529) (129,058)

TJLP (1,260) (6,298) (12,596)

LIBOR (1,088) (5,438) (10,876)

The specific interest rates to which the Company is exposed, which are related to borrowings and debentures, are presented in Note 20 to the financial statements at December 31, 2017, and mainly comprise London Interbank Offered Rate (LIBOR) and Interbank Deposit Certificate (CDI). Derivative financial instruments linked to interest rates were included in the sensitivity analysis of changes in interest rates, based on the objective of these instruments, which is to minimize the impact of fluctuations in interest rates.


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5.4 Capital management

The objectives for managing capital are to safeguard the ability to continue as going concern in order to provide returns for stockholders and benefits for other stakeholders and to maintain an optimal capital structure at optimum costs. In order to maintain or adjust the capital structure, the Company may adjust the amount of dividends paid to stockholders, return capital to stockholders or, also, issue new shares or sell assets to reduce, for example, debt. Consistent with others in the industry, Usiminas monitors capital on the basis of the gearing ratio. These ratios are calculated as net debt divided by adjusted EBITDA. Net debt is computed based on total borrowings and taxes payable in installments (including current and non-current transactions as shown in the consolidated balance sheet) less cash and cash equivalents and marketable securities. Usiminas strategy is to maintain the gearing ratio within indices that are lower than those established in the borrowing contracts (covenants). Adjusted EBITDA is calculated by adding to profit (loss) for the year the income tax and social contribution, share of profit (loss) of subsidiaries, jointly-controlled subsidiaries and associates, finance result, depreciation, amortization and depletion, in addition to gains and impairment losses. Also, below is presented the calculation of the gearing ratio considering net debt as a percentage of total capital. Total capital is calculated as equity as shown in the consolidated balance sheet plus net debt.

Parent


12/31/2017 12/31/2016 12/31/2017 12/31/2016

Total borrowings, debentures and taxes payable in installments 6,032,889 7,545,227 6,656,273 6,941,887

Less: cash and cash equivalents and marketable securities (778,799) (538,715) (2,314,288) (2,257,454)

Net debt 5,254,090 7,006,512 4,341,985 4,684,433

Total equity 13,774,795 13,535,740 15,183,964 15,191,634

Total capital 19,028,885 20,542,252 19,525,949 19,876,067

Gearing ratio 28% 34% 22% 24%


118

5.5 Fair value estimate

Due to its short-term maturity, the balance of trade receivables less provision for impairment of trade receivables approximate their fair value. The fair value of financial liabilities for disclosure purposes is estimated by discounting the future contractual cash flows at the current market interest rate that is available to Usiminas for similar financial instruments. For swap transactions, receivables and payables are calculated by the Company in an independent manner, using mark-to-market methodology based on rates practiced and consistent with those disclosed in the websites of the Brazilian Futures and Commodities Exchange (BM&F), Broadcast and Bloomberg.. If there are no trades for the Company's portfolio maturities, the interpolation methodology is used to calculate the rates related to specific maturities. In both cases, the present value of cash flows is calculated. The difference between the amounts payable and receivable is the fair value of the transaction.

(a) Financial instruments measured at fair value in the balance sheet Financial instruments recorded at fair value shall be classified and disclosed in accordance with the levels described below:

Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities (unobservable prices).

Level 2: Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (prices) or indirectly (derived from prices); and

Level 3: Inputs for the asset or liability that are not based on observable market data (unobservable inputs).

The fair value of financial instruments that are not traded in an active market is determined by using valuation techniques. These valuation methodologies maximize the use of observable market data where it is available and rely as little as possible on entity-specific estimates. These instruments comprise investments in CDB and derivative financial instruments (swap) (Note 7).


119

The table below presents assets and liabilities measured at fair value through profit or loss:

(i) Parent company

12/31/2017 12/31/2016

Level 2 Level 2

Assets

Cash and cash equivalents

- CDB and repurchase agreements 1,076 339,000

Marketable securities 12 176,422

Derivative financial instruments 1,196 -

Total assets 2,284 515,422

12/31/2017 12/31/2016

Level 2 Level 2

Liabilities

Derivative financial instruments - 150,990

Total liabilities - 150,990


120

(ii) Consolidated

12/31/2017 12/31/2016

Level 2 Level 2

Assets

Cash and cash equivalents

- CDB and repurchase agreements 276,255 592,286

Marketable securities 543,715 1,537,584

Derivative financial instruments 1,196 145,339

Total assets 821,166 2,275,209

12/31/2017 12/31/2016

Level 2 Level 2

Liabilities

Derivative financial instruments - 150,990

Total liabilities - 150,990

At December 31, 2017 and 2016, Usiminas had no financial instruments the fair value of which has been measured based on Level 1 and 3. Specific valuation techniques used to value financial instruments include:

Quoted market prices or dealer quotes for similar instruments.

The fair value of interest rate swaps is calculated as the present value of the estimated future cash flows based on observable market yield curves.


121

(b) Fair value of borrowings and debentures For capital market transactions, such as debentures and bonds, the fair value reflects the value adopted in the market. The difference between the book value and market value is calculated in accordance with the rates disclosed in the websites of the Futures and Commodities Exchange (BM&F), Broadcast and Bloomberg, and can be summarized as follows:

Parent

company

12/31/2017 12/31/2016

Equity value

Market value

Equity value

Market value

Bank loans - foreign currency 1,157,250 1,157,250 1,193,485 1,193,485

Bank loans – local currency 3,918,648 3,918,648 4,122,194 4,122,194

Debentures - local currency 949,365 957,172 997,735 1,007,520

Bonds – foreign currency - - 1,224,608 1,224,608

6,025,263 6,033,070 7,538,022 7,547,807

Consolidated

12/31/2017 12/31/2016

Equity value

Market value

Equity value

Market value

Bank loans - foreign currency 1,157,250 1,157,250 1,193,920 1,193,920

Bank loans – local currency 3,938,460 3,938,460 4,147,508 4,147,508

Debentures - local currency 949,365 957,172 997,735 1,007,520

Bonds 590,704 612,479 585,145 578,530

6,635,779 6,665,361 6,924,308 6,927,478

The market values of borrowings and debentures do not significantly differ from their book values, since they were contracted and recorded considering rates and conditions adopted in the market for operations of similar nature, risk and terms.

(c) Other financial assets and liabilities

The fair values of other financial assets and liabilities do not significantly differ from their book values, inasmuch as they were negotiated and are recorded at rates and conditions practiced in the market for transactions of similar nature, risk and term.


122

6 Derivative financial instruments Usiminas carries out swap transactions with the objective of hedging against and specially managing risks inherent to volatility of foreign currencies and interest rates. These transactions aim at reducing currency exposure and the volatility of interest rates on its borrowings. The Company does not transact financial instruments for speculative purposes. The Company does not settle its transactions prior to their respective original maturities and does not prepay its derivative financial instruments. The transactions with derivative financial instruments may be summarized as follows:

(a) Parent company

(b) Consolidated

Profit/Loss for

the period

12/31/2017 12/31/2016 12/31/2017

Asset position Liability position Asset position Liability position Asset position Liability position

Asset

(liability)

position

Asset

(liability)

position

Gain (loss)

RATE AND FOREIGN EXCHANGE HEDGES (SWAP)

Merrill Lynch Sep/10 to Mar/17 Libor + 0.83% p.a. 3.05% p.a. USD 85,713 USD 85,713 USD 85,713 USD 85,713 - (275) 11

Santander Jan/08 to Jan/18 Yen + 4.1165% p.a. U.S. dollar + 7.34% p.a. JPY 42,952,000 USD 400,000 JPY 42,952,000 USD 400,000 - (149,581) 4,266

Bradesco Apr/15 to Apr/25 TR + 9.8000% p.a. 95.00% of the CDI R$ 59,000 R$ 59,000 R$ 59,000 R$ 59,000 1,196 (1,134) 2,133

Financial gain/loss in the period 6,410

Book balance (net asset position - liability position) 1,196 (150,990)

Maturity range

MM/YY

FAIR (MARKET) VALUE -

BOOK VALUEINDEX NOTIONAL AMOUNT (contracted amount)

12/31/2017 12/31/2017 12/31/2016

Profit/Loss for

the period

12/31/2017 12/31/2016 12/31/2017

Asset position Liability position Asset position Liability position Asset position Liability position

Asset

(liability)

position

Asset

(liability)

position

Gain (loss)

RATE AND FOREIGN EXCHANGE HEDGES (SWAP)

Merrill Lynch Sep/10 to Mar/17 Libor + 0.83% p.a. 3.05% p.a. USD 85,713 USD 85,713 USD 85,713 USD 85,713 - (275) 11

Santander Jan/08 to Jan/18 Yen + 4.1165% p.a. U.S. dollar + 7.34% p.a. JPY 42,952,000 USD 400,000 JPY 42,952,000 USD 400,000 - (149,581) 4,266

Santander Jan/08 to Jan/18 U.S. dollar + 7.25 p.a. Yen + 4.1165 % p.a. USD 400,000 JPY 42,952,000 USD 400,000 JPY 42,952,000 - 145,339 (6,539)

Bradesco Apr/15 to Apr/25 TR + 9.8000% p.a. 95.00% of the CDI R$ 59,000 R$ 59,000 R$ 59,000 R$ 59,000 1,196 (1,134) 2,133

Financial gain/loss in the period (129)

1,196 (5,651) Book balance (net asset position - liability position)

Maturity range

MM/YY

FAIR (MARKET) VALUE -

BOOK VALUEINDEX NOTIONAL AMOUNT (contracted amount)

12/31/2017 12/31/2017 12/31/2016


123

The book balances of the derivative financial instruments are described below:

Parent


12/31/2017 12/31/2016 12/31/2017 12/31/2016

Current assets 12 - 12 44,669

Non-current assets 1,184 - 1,184 100,670

Current liabilities - (48,577) - (48,577)

Non-current liabilities - (102,413) - (102,413)

1,196 (150,990) 1,196 (5,651)

Parent


12/31/2017 12/31/2016 12/31/2017 12/31/2016

In finance result 6,410 (159,839) (129) (302,123)

6,410 (159,839) (129) (302,123)


124

7 Financial instruments by category

(a) Parent company

12/31/2017 12/31/2016

Loans and

receivables

Assets measured at

fair value through profit

or loss Held to

maturity Total Loans and

receivables

Assets measured at

fair value through profit

or loss Total

Assets

Banks 2,046 - - 2,046 23,293 - 23,293

Financial investments - 1,076 - 1,076 - 339,000 339,000

Marketable securities - 12 775,665 775,677 - 176,422 176,422

Trade receivables 1,127,029 - - 1,127,029 890,216 - 890,216

Financial instruments - swap - 1,196 - 1,196 - - -

Other asset financial instruments (excluding prepayments) 431,547 - -

431,547 241,694 -

241,694

1,560,622 2,284 775,665 2,338,571 1,155,203 515,422 1,670,625

12/31/2017 12/31/2016

Other

financial liabilities

Liabilities at fair value

through profit or loss

Other

financial liabilities Total

Liabilities

Borrowings and debentures 6,025,263 - 7,538,022 7,538,022

Financial instruments - swap - 150,990 - 150,990

Trade payables, contractors and freight 875,399 - 860,835 860,835

Notes payable - Forfaiting 475,251 - 356,970 356,970

7,375,913 150,990 8,755,827 8,906,817

(b) Consolidated

12/31/2017 12/31/2016

Loans and

receivables

Assets measured at

fair value through

profit or loss Total Loans and

receivables

Assets measured at

fair value through

profit or loss Total

Assets

Banks 107,699 - 107,699 127,584 - 127,584

Financial investments 1,386,619 276,255 1,662,874 - 592,286 592,286

Marketable securities - 543,715 543,715 - 1,537,584 1,537,584

Trade receivables 1,555,494 - 1,555,494 1,179,212 - 1,179,212

Financial instruments - swap - 1,196 1,196 - 145,339 145,339

Other asset financial instruments (excluding prepayments) 461,681 -

461,681 269,626 -

269,626

3,511,493 821,166 4,332,659 1,576,422 2,275,209 3,851,631


125

12/31/2017 12/31/2016

Other

financial liabilities

Liabilities at fair value

through profit or loss

Other

financial liabilities Total

Liabilities

Borrowings and debentures 6,635,779 - 6,924,204 6,924,204

Finance lease liabilities - - 104 104

Financial instruments - swap - 150,990 - 150,990

Trade payables, contractors and freight 976,917 - 846,377 846,377

Notes payable - Forfaiting 475,251 - 356,970 356,970

Other liability financial instruments - - 12 12

8,087,947 150,990 8,127,667 8,278,657

8 Cash and cash equivalents

Parent


12/31/2017 12/31/2016 12/31/2017 12/31/2016

Bank accounts 1,107 14,931 15,845 24,454

Bank accounts abroad 939 8,362 91,854 103,130 Bank Deposit Certificates (CDB) and repurchase agreements 1,076 339,000 276,255 592,286

Time deposits abroad - - 1,386,619 -

3,122 362,293 1,770,573 719,870

Financial investments in Bank Deposit Certificates (CDB) and repurchase agreements have immediate liquidity, and earn in average 100.07% (December 31, 2016 - 99.98%) of the CDI rate in the Parent company and 100.41% (December 31, 2016 – 100.94%) of the CDI rate in Consolidated. The amount of R$1,386,619 presented in the consolidated accounts refers to the investment in time deposits made by the foreign subsidiary Usiminas Commercial related to the prepayment by Usiminas on December 15, 2017 related to Eurobonds issued in 2008 by the subsidiary and that had been loaned to the Company. The foreign subsidiary Usiminas Commercial paid the full amount of Eurobonds to their respective creditors on January 18, 2018, as described in Note 41, Events after the reporting period. Of this amount, R$775,665 was reversed to the Company's cash. At December 31, 2017, Usiminas does not have overdraft accounts.


126

9 Marketable securities

Parent

company

Consolidated

12/31/2017 12/31/2016 12/31/2017 12/31/2016

Bank Deposit Certificates (CDB) - 176,297 534,768 1,529,284

Financial investments abroad - - 8,428 8,146

Eurobonds 775,665 - - -

Other investments 12 125 519 154

775,677 176,422 543,715 1,537,584

Financial investments in Bank Deposit Certificates (CDB) earn in average 100.07% (December 31, 2016 - 99.98%) of the CDI rate in the Parent company and 100.41% (December 31, 2016 –

101.43%) of the CDI rate in Consolidated. The amount of R$775,665 in the Parent Company refers to a portion of approximately US$ 220 million of Eurobonds originally issued in 2008 by the foreign subsidiary Usiminas Commercial in the total amount of US$400 million. As described in Note 20 - Borrowings, this portion was presented at the net amount of the loan agreement with Usiminas Commercial in current liabilities in the interim accounting information at June 30 and September 30, 2017. Due to the settlement of the loan agreement on December 12, 2017, the Company is presenting in these financial statements at December 31, 2017 the portion of Eurobonds held as marketable securities.. The marketable securities were converted into cash by the Company on January 18, 2018, as described in Note 41 - Events after the reporting period. None of these financial assets is either past due or impaired.


127

10 Trade receivables

Parent


12/31/2017 12/31/2016 12/31/2017 12/31/2016

Trade receivables:

In Brazil 954,817 681,778 1,485,132 1,149,077

Abroad 181,277 115,286 299,862 116,999

Provision for impairment of trade receivables (108,544) (99,026) (145,526) (128,452)

Trade receivables, net 1,027,550 698,038 1,639,468 1,137,624

Receivables from related parties

In Brazil 180,402 173,054 46,711 23,347

Abroad 3,529 19,124 773 18,241

Receivables from related parties 183,931 192,178 47,484 41,588

1,211,481 890,216 1,686,952 1,179,212

Current assets 1,127,029 890,216 1,555,494 1,179,212

Non-current assets 84,452 - 131,458 -

(i) Out of the total provision for impairment of trade receivables in the Parent company and Consolidated accounts, the balance of

R$2,669 (R$2,630 – December 31, 2016) refers to trade receivables denominated in foreign currency.

The ageing analysis of trade receivables is as follows:

Parent


12/31/2017 12/31/2016 12/31/2017 12/31/2016

Amounts not yet due 1,042,201 799,291 1,481,810 1,077,432

Amounts past due:

Up to 30 days 103,377 68,779 85,026 66,470

From 31 to 60 days 1,460 5,528 1,428 9,265

From 61 to 90 days 4 1,750 1,361 3,105

From 91 to 180 days 1,896 2,623 3,904 8,443

Over 181 days 171,087 111,271 258,949 142,949

(-) Provision for impairment of trade receivables (108,544) (99,026) (145,526) (128,452)

1,211,481 890,216 1,686,952 1,179,212


128

At December 31, 2017, trade receivables amounting to R$169,280 in the Parent company

and R$205,142 in Consolidated were past due but not impaired (December 31, 2016 –

R$90,925 and R$101,780, respectively). These relate to a number of independent

customers for whom there is no recent history of default, and the related outstanding

balances are supported by guarantees.

Trade receivables are denominated in the following currencies:

Parent


12/31/2017 12/31/2016 12/31/2017 12/31/2016

Brazilian real 1,029,344 803,712 1,388,986 1,091,878

U.S. dollar 175,804 77,609 291,633 78,439

Euro 6,333 8,895 6,333 8,895

1,211,481 890,216 1,686,952 1,179,212

The changes in the provision for impairment of trade receivables are as follows:

Parent


12/31/2017 12/31/2016 12/31/2017 12/31/2016

Opening balance (99,026) (65,573) (128,452) (91,687)

(Additions to) Reversals of profit or loss (16,757) (49,923) (24,313) (62,513)

Write-off against trade receivables 7,278 15,749 7,278 25,027

Exchange variation (39) 721 (39) 721

Closing balance (108,544) (99,026) (145,526) (128,452)

The additions to and release of the provision for impairment of trade receivables were included in “Selling expenses” in the statement of income. Usiminas does not hold any collateral for trade receivables. The maximum exposure to credit risk at the balance sheet date is the carrying value of each class of receivable mentioned above. Usiminas does not hold any collateral for the accounts receivable.


129

11 Inventories

Parent


12/31/2017 12/31/2016 12/31/2017 12/31/2016

Current assets

Finished products 562,902 470,828 667,178 541,935

Work in progress 749,839 633,478 756,195 640,050

Raw materials 385,305 370,764 701,609 663,385

Supplies and spare parts 499,492 489,112 554,467 534,190

Imports in transit 85,012 151,545 85,148 151,560

Provision for losses (123,938) (96,521) (136,858) (111,290)

Other 137,795 185,570 135,757 184,476

2,296,407 2,204,776 2,763,496 2,604,306

Non-current assets

Work in progress - - 39,037 22,657

2,296,407 2,204,776 2,802,533 2,626,963

The subsidiary Mineração Usiminas S.A, based on its production plan, transferred from current assets to long-term receivables under “Other receivables” the inventory of products that are expected to be realized in more than 12 months. At December 31, 2017 and 2016, no impairment loss was recorded in the subsidiary Mineração Usiminas S.A.


130

12 Taxes recoverable

Parent

company

12/31/2017 12/31/2016

Current Non-current Current Non-current

Social Integration Program (PIS) 3,527 - 3,972 -

Social Contribution on Revenues (COFINS) 15,387 - 17,571 -

Value-added Tax on Sales and Services (ICMS) 56,639 19,291 38,034 20,424

Excise tax (IPI) 24,453 - 5,953 -

Export credit - Reintegra 21,170 - 539 -

National Institute of Social Security (INSS) - - 18 -

Other - 11,631 - 11,631

121,176 30,922 66,087 32,055

Consolidated

12/31/2017 12/31/2016

Current Non-current Current Non-current

PIS 4,760 18 4,244 16

COFINS 21,013 85 18,918 76

ICMS 78,090 42,992 69,404 84,192

IPI 31,480 - 15,453 -

Export credit - Reintegra 21,170 - 539 -

INSS 19,654 - 16,098 -

Other 684 11,786 535 11,786

176,851 54,881 125,191 96,070


131

13 Income tax and social contribution

(a) Taxes on profit The amounts of income tax and social contribution on net income differ from the theoretical value that would be obtained by using the nominal rates of such taxes, applicable to profit before taxation, in the Parent company and Consolidated accounts, as shown below:

Parent company Consolidated

12/31/2017 12/31/2016 12/31/2017 12/31/2016

Profit (loss) before income tax and social contribution 273,647 (501,133) 420,950 (251,748)

Nominal rates 34% 34% 34% 34%

Taxes on profit at nominal rates (93,040) 170,385 (143,123) 85,594

Adjustments to determine taxes on profit:

Equity in the results of investees 96,894 16,418 52,665 48,574

Interest on capital received (34,316) (10,679) (5,410) (10,679)

Permanent exclusions (additions) (63,533) (12,947) (66,197) (20,688)

Unrecognized tax credits 53,363 (331,996) 53,363 (338,548)

Tax incentives - - 2,595 756

Non-taxable income and rate differences of foreign subsidiaries - - 237 (90,479)

Other - - - 375

Taxes on profit determined (40,632) (168,819) (105,870) (325,095)

Current - - (59,038) (17,951)

Deferred (40,632) (168,819) (46,832) (307,144)

Taxes on profit (loss) in the statement of income (40,632) (168,819) (105,870) (325,095)

Income tax (29,877) (124,132) (79,762) (243,202)

Social contribution (10,755) (44,687) (26,108) (81,893)

Effective rates 15% - 25% -

There are no current tax items presented in equity in these financial statements.


132

(b) Deferred income tax and social contribution

The balances and changes in deferred income tax and social contribution assets and liabilities at nominal rates are as follows:

(i) Parent company

12/31/2016

Equity/ Comprehen-sive income

Recognized in profit or loss Other (i) 12/31/2017

In assets

Income tax and social contribution

Tax losses 2,303,097 - 62,168 (3,909) 2,361,356

Unrecognized tax credits (1,013,844) - 53,363 - (960,481)

Temporary provisions

Provision for actuarial liability 398,836 - (86,760) - 312,076

Provision for litigation 142,532 - 20,520 - 163,052

Provision for inventory adjustments 32,817 - 9,321 - 42,138

Swap contracts recognized on a cash basis 42,968 - (42,892) - 76

Foreign exchange variation on borrowings on a cash basis (ii) 85,488 - (49,341) - 36,147

Adjustments to PP&E (Law 11,638/07) 59,577 - (59,577) - -

Gain/loss on swap contracts - market value 8,368 - (8,368) - -

Impairment of assets 42,646 - (3,183) - 39,463

Actuarial liability (Law 11,638/07) 187,970 (28,259) - - 159,711

Other 101,162 (66) 14,813 - 115,909

Total assets 2,391,617 (28,325) (89,936) (3,909) 2,269,447

In liabilities


Tax-incentive depreciation 17,403 - (3,705) - 13,698

Adjustment to PP&E (IAS 29) 67,869 (6,061) - - 61,808

Monetary restatement of judicial deposits on a cash basis 39,997 - 8,628 - 48,625

Adjustment to goodwill 48,825 - (27,375) - 21,450

Actuarial liability (Law 11,638/07) 190,608 - (27,953) - 162,655

Other 5,350 - 1,101 - 6,451

Total liabilities 370,052 (6,061) (49,304) 314,687

Total, net 2,021,565 (22,264) (40,632) (3,909) 1,954,760

(i) The Company used part of the balance of tax losses to settle federal taxes included in the Special Tax Settlement

Program (PERT) under Law 13,496/2017. These taxes were fully written off from current liabilities.

(ii) Arising from the temporary difference between the cash basis and the accrual basis of accounting.


133

(ii) Consolidated

12/31/2016

Equity/ Comprehen-sive income

Recognized in profit or loss Other (i) 12/31/2017

In assets


Tax losses 2,483,739 - 49,337 (3,909) 2,529,167

Unrecognized tax credits (1,038,425) - 53,363 - (985,062)

Temporary provisions

Provision for actuarial liability 412,475 (1,251) (89,514) - 321,710

Provision for litigation 181,247 - 32,058 - 213,305

Provision for inventory adjustments 34,959 - 8,152 - 43,111

Swap contracts recognized on a cash basis

42,968 - (42,892) - 76

Foreign exchange variation on borrowings on a cash basis (ii) 85,488 - (49,341) - 36,147

Goodwill/acquisition of companies 306,776 - (2,949) - 303,827

Impairment of assets 558,087 - - - 558,087

Adjustment to PP&E (Law 11,638/07) 59,577 - (59,577) - -

Actuarial liability (Law 11,638/07) 187,970 (28,259) 159,711

Other 201,933 (66) 6,655 - 208,522

Total assets 3,516,794 (29,576) (94,708) (3,909) 3,388,601

In liabilities


Tax-incentive depreciation 17,403 - (3,705) - 13,698

Tax rate depreciation 20,021 - (710) - 19,311

Monetary restatement of judicial deposits on a cash basis 67,870 (6,061) (1) - 61,808

Monetary restatement of judicial deposits 43,241 - 9,401 - 52,642

Adjustment to goodwill 48,825 - (27,375) - 21,450

Actuarial liability (Law 11,638/07) 190,608 - (27,953) - 162,655

Other 8,458 - 2,467 - 10,925

Total liabilities 396,426 (6,061) (47,876) - 342,489

Total, net 3,120,368 (23,515) (46,832) (3,909) 3,046,112

(i) The Company used part of the balance of tax losses to settle federal taxes included in the Special Tax Settlement Program (PERT) under Law 13,496/2017. These taxes were fully written off from current liabilities.

(ii) Arising from the temporary difference between the cash basis and the accrual basis of accounting.


134

In the year ended December 31, 2017, the Company’s management reversed a provision for tax credit losses amounting to R$53,363 in the Parent company and in Consolidated (December 31, 2016 – R$331,996 and R$338,548, respectively). Deferred tax credits not recognized in the financial statements totaled R$960,481 in the Parent company and R$985,062 in Consolidated (December 31, 2016 – R$1,013,844 and R$1,038,425, respectively). Company management will continue monitoring this unrecognized amount, which may be accounted for as soon as its use becomes probable. Deferred taxes are expected to be realized as follows: Parent company Consolidated

12/31/2017 12/31/2016 12/31/2017 12/31/2016

2017 - - - 116,603

2018 134,070 - 173,660 110,602

2019 188,375 151,070 226,861 278,781

2020 198,944 216,926 247,540 360,573

2021 210,905 241,874 262,293 375,346

2022 to 2024 733,180 914,267 817,754 1,197,842

2025 to 2027 803,972 1,168,090 1,421,438 1,377,657

2028 to 2030 745,738 713,234 797,372 737,815

After 2030 (i) 214,744 - 426,745 -

Assets 3,229,928 3,405,461 4,373,663 4,555,219

Unrecognized tax credits (960,481) (1,013,844) (985,062) (1,038,425)

Assets 2,269,447 2,391,617 3,388,601 3,516,794

Liabilities (314,687) (370,052) (342,489) (396,426)

Net position 1,954,760 2,021,565 3,046,112 3,120,368

(i) In Consolidated, the amounts substantially refer to tax credits arising from goodwill on merger, determined by Mineração

Usiminas. These tax credits have been used based on the expected useful lives of the mines, the total depletion of which is estimated for 2053.

The recognition of tax assets is based on a study of the expected future taxable income, reviewed by the Statutory Audit Board and approved by the Board of Directors of the Company. The study to determine the expected future taxable income adopts the same data and assumptions as those adopted in the impairment test of assets (Note 17). As the income tax and social contribution taxable bases arise not only from the profit that may be generated, but also from the existence of non-taxable income, non-deductible expenses, tax incentives and other variables, there is no immediate correlation between the Company's profit and the income subject to income tax and social contribution. Accordingly, the projected tax credits offsets should not be considered as the only indication of the future profitability of Usiminas.


135

(c) Income tax and social contribution in current liabilities

Consolidated

12/31/2017 12/31/2016

Income tax

Current income (expense) (i) (43,596) (13,926) Prepayments and offsets in the year 42,292 6,835

(1,304) (7,091)

Social contribution

Current income (expense) (i) (15,442) (4,025) Prepayments and offsets in the year 15,312 3,578

(130) (447)

Total IRPJ and CSLL payable (1,434) (7,538)

(i) Refers to the adjustment between the provision and the income tax return for prior years. In the year ended December 31, 2017 and 2016, the Parent Company did not present current income tax and social contribution expenses, as it recorded income tax and social contribution losses. Additionally, there were no prepayments or offsets in the aforementioned period.


136

14 Judicial deposits

Parent

company

12/31/2017 12/31/2016

Judicial

deposits Taxes payable in installments Net balance

Judicial deposits

Taxes payable in installments Net balance

IPI 177,454 (106,138) 71,316 174,418 (106,138) 68,280

IRPJ and CSLL 152,847 (57,089) 95,758 95,529 (57,089) 38,440

INSS 120,856 (7,265) 113,591 107,777 (8,405) 99,372 Economic Domain Intervention Contribution (CIDE) 26,384 (26,384) - 44,188 (26,384) 17,804

ICMS 9,836 - 9,836 65,357 - 65,357

Labor 179,137 - 179,137 191,055 - 191,055

Civil 43,525 (16) 43,509 35,801 (16) 35,785

Other 3,724 - 3,724 12,922 - 12,922

713,763 (196,892) 516,871 727,047 (198,032) 529,015

Consolidated

12/31/2017 12/31/2016

Judicial

deposits Taxes payable in installments Net balance

Judicial deposits

Taxes payable in installments Net balance

IPI 177,454 (106,138) 71,316 174,418 (106,138) 68,280

IRPJ and CSLL 158,787 (57,089) 101,698 101,469 (57,089) 44,380

INSS 128,703 (7,265) 121,438 114,456 (8,405) 106,051

CIDE 26,384 (26,384) - 44,188 (26,384) 17,804

ICMS 10,957 - 10,957 65,818 - 65,818

COFINS 21,414 - 21,414 19,994 - 19,994

Labor 234,202 - 234,202 240,680 - 240,680

Civil 63,368 (16) 63,352 40,633 (16) 40,617

Other 51,223 - 51,223 56,605 - 56,605

872,492 (196,892) 675,600 858,261 (198,032) 660,229

Changes in judicial deposits are as follows: Parent company Consolidated

12/31/2017 12/31/2016 12/31/2017 12/31/2016

Opening balance 727,047 686,343 858,261 795,424

Additions 34,712 47,098 85,888 82,469

Interest/restatements 26,108 34,578 31,612 47,675

Reversals (74,104) (40,972) (103,269) (67,307)

Closing balance 713,763 727,047 872,492 858,261

15 Investments


137

(a) Changes in investments

(i) Parent company

12/31/2016 Additions

(reductions)

Equity in the results of

investees (i)

Interest on capital and dividends

Unrealized profits in

inventories Other

12/31/2017

Subsidiaries

Mineração Usiminas (ii) 3,047,638 (700,000) 149,376 (47,240)

- (13,387) 2,436,387

Soluções Usiminas 650,840 - 34,641 (7,882) (22,449) 1,676 656,826

Usiminas Commercial 20,603 - (16,826) -

- - 3,777

Usiminas Europa 864,794 (786,138) 36,189 - - - 114,845

Usiminas International 33,881 - 553 -

- - 34,434

Usiminas Mecânica (iii) 532,745 (57,866) (30,337) - (2,318) - 442,224 Usiminas Participações e Logística S.A. (UPL) 62,851 - 8,263 (1,435)

- (1) 69,678

Goodwill in subsidiaries (v) 10,835 (10,835) - -

- - -

5,224,187 (1,554,839) 181,859 (56,557)

(24,767) (11,712) 3,758,171

Jointly-controlled subsidiaries

Unigal 573,284 - 132,707 (126,000)

- - 579,991

Usiroll 8,831 - 1,306 - - (264) 9,873

582,115 - 134,013 (126,000) - (264) 589,864

Associates

Codeme 61,944 - (33,847) - - 2,776 30,873

MRS 9,511 - 1,233 (849)

- - 9,895

Goodwill in associates (iv) 62,175 (62,175) - - - - -

133,630 (62,175) (32,614) (849)

2,776 40,768

5,939,932 (1,617,014) 283,258 (183,406) (24,767) (9,200) 4,388,803

(i) To the equity in the results of investees presented in the statements of income and cash flows of the Parent company,

which totals R$260,214 when compared to the income of R$283,258 disclosed in changes in investments, losses related to net capital deficiency of the subsidiary Rios Unidos totaling R$1,723 and unrealized profit on inventories determined in the subsidiaries Soluções Usiminas and Usiminas Mecânica in the amount of R$24,767 must be added.

(ii) Of the total amount disclosed in “Other”, R$13,382 refers to the reimbursement to the stockholders Serra Azul Iron Ore

L.L.C and Sumitomo Corporation do Brasil equivalent to a portion of the amount paid to Mineração Usiminas in 2011 by Summit Empreendimentos Minerais Ltda. (SEM).

(iii) Capital reduction in the period, comprising R$42,492 of ICMS credits, R$14,477 of property, plant and equipment and R$897 of Inventories.

(iv) In the year ended December 31, 2017, the amount of R$73,010 was recorded as impairment of assets, related to goodwill arising from the acquisition of the subsidiary Rios Unidos and the associate Codeme. This amount was recorded in “Other operating income (expenses)”.

(ii) Consolidated

12/31/2016 Additions

(reductions)

Equity in the results of investees

Interest on capital and dividends

Other

12/31/2017


138

Jointly-controlled subsidiaries

Modal 2,669 - 2,830 (2,827) -

2,672

Unigal 573,284 - 132,707 (126,000) -

579,991

Usiroll 8,831 - 1,306 - (264)

9,873

Goodwill in jointly-controlled subsidiaries (i) 16,083 (1,882) - - -

14,201

600,867 (1,882) 136,843 (128,827) (264)

606,737

Associates

Codeme 61,944 - (33,847) - 2,776

30,873

MRS 388,532 - 50,384 (34,661) (9)

404,246

Terminal Paraopeba 910 - (8) - - 902

Terminal Sarzedo 1,852 - 1,585 (1,978) -

1,459

Other 2,696 - (61) - -

2,635

Goodwill in associates (i) 69,375 (62,175) - - -

7,200

525,309 (62,175) 18,053 (36,639) 2,767

447,315

1,126,176 (64,057) 154,896 (165,466) 2,503

1,054,052

(i) In the year ended December 31, 2017, the amount of R$64,057 was recorded as impairment of assets, related to goodwill

arising from the acquisition of the subsidiary Modal and the associate Codeme. This amount was recorded in “Other operating income (expenses)”.


139

(b) Financial information on associated companies The Company’s share of profit (loss) in its main associates at December 31, 2017 is as follows:

Country of

incorporation

Assets Liabilities Equity

Net revenue

Profit % interest

held

Codeme Brazil 373,142 224,832 148,310

119,345 (31,855) 30.77

MRS (i) Brazil 7,799,492 4,257,721 3,541,771

3,492,805 443,532 11.41

(i) Direct investment of 0.28% and indirect investment of 11.13% through UPL.

The share of profit was calculated after income tax and social contribution and non-controlling interest in associates. The voting capital percentage in the associated companies is the same as that of total capital, except for the company MRS, where the percentage of voting capital is 19.92%. USIMINAS participates in the control group and has significant influence, and classifies this investment as associated company. The summarized financial statements of the jointly-controlled subsidiaries are consolidated as shown below.


140

(i) Summarized balance sheets

12/31/2017 12/31/2016

Modal Unigal Usiroll Modal Unigal Usiroll

Current assets

Cash and cash equivalents 2,663 262,599 4,206 2,496 30,818 2,063

Trade receivables 894 33,215 1,193 827 52,994 1,044

Inventories - 46,925 362 - 48,702 407

Other 8 5,110 132 8 12,615 138

Total current assets 3,565 347,849 5,893 3,331 145,129 3,652

Non-current assets

Long-term receivables - 2,466 - - 13,402 56

Property, plant and equipment 2,597 905,003 14,418 2,621 948,863 15,068

Intangible assets - 204 6 - 432 7

Total non-current assets 2,597 907,673 14,424 2,621 962,697 15,131

Total assets 6,162 1,255,522 20,317 5,952 1,107,826 18,783

Liabilities and equity

Borrowings - 33,152 - - 97,939 -

Trade payables 138 8,411 127 - 7,366 93

Contingencies - 1,291 - - 12,674 47

Deferred income tax and social contribution - 179,703 5 - 148,052 -

Other (i) 681 195,295 434 615 12,219 978

Equity 5,343 837,670 19,751 5,337 829,576 17,665

Total liabilities and equity 6,162 1,255,522 20,317 5,952 1,107,826 18,783

(i) At December 31, 2017, Unigal approved the distribution of dividends and interest on capital amounting to R$180,000.

(ii) Summarized statements of income

12/31/2017 12/31/2016

Modal Unigal Usiroll Modal Unigal Usiroll

Net sales and services 9,648 361,332 8,795 9,302 277,041 8,073

Cost of sales and services (2,997) (102,644) (4,302) (2,722) (99,929) (4,211)

Operating income (expenses): (33) (13,354) (791) (29) (12,694) (2,100)

Finance income (costs) 208 8,637 206 255 39,100 168

Provision for IRPJ and CSLL (1,160) (65,877) (1,296) (1,135) (53,518) (632)

Profit for the year 5,666 188,094 2,612 5,671 150,000 1,298


141

(c) Other significant information on the investments

Mineração Usiminas - Service agreement related to port operation with Porto Sudeste do Brasil S.A. (formerly MMX Porto Sudeste Ltda.)

On May 27, 2015, Mineração Usiminas S.A. notified Porto Sudeste do Brasil S.A. (formerly MMX Porto Sudeste Ltda.) of the immediate termination of the agreement for the rendering of port operation services related to the receipt, handling, storage and shipment of ore owned by Mineração Usiminas at the Porto Sudeste Terminal under Take-or-Pay and Delivery-or-Pay arrangements. This agreement was terminated due to repeated default by Porto Sudeste in its obligation of completing and putting the port into operation, as well as to non-payment of contractual penalties. The Company took reasonable steps to enforce its rights, including in arbitration proceedings claiming the payment of penalties, compensation for loss of profits, in addition to other damages provided for in the agreement. The agreement signed was effective for 5 years as from the first shipment, originally scheduled for April 2012. On June 6, 2017, Mineração Usiminas entered into an agreement with Porto Sudeste to terminate the arbitration proceeding, which resulted in the termination of said agreement and the waiver of all rights that both parties might still have in relation to the agreement. The agreement establishes a payment by Porto Sudeste to Mineração Usiminas in the amount of R$205,106. On the same date, a new agreement for the rendering of port operation services was signed, which provides that Mineração Usiminas will have the right, but not the obligation, to handle a total volume of up to 17.5 million metric tons of iron ore at Porto Sudeste Port Terminal, located in the municipality of Itaguaí - RJ. On July 12, 2017, the subsidiary Mineração Usiminas S.A. received the amount of R$205,106 from Porto Sudeste do Brasil S.A., arising from the agreement entered into to terminate the arbitration proceeding. With this receipt, the accounting effects of which were recorded in the statement of income at June 30, 2017, the agreement for the rendering of port operation services entered into on February 11, 2011 and the arbitration proceedings are now terminated. The judgment that approved the agreement between the parties was rendered on September 5, 2017.


142

16 Property, plant and equipment

Parent

company

12/31/2017 12/31/2016

Weighted average rate of

annual depreciation

% Cost Accumulated depreciation

PP&E net Cost

Accumulated depreciation

PP&E net

In operation

Buildings 4 2,043,821 (1,236,488) 807,333 2,034,834 (1,191,917) 842,917

Machinery and equipment 5 20,814,835 (12,243,142) 8,571,693 20,737,962 (11,497,391) 9,240,571

Facilities 4 905,888 (232,928) 672,960 780,681 (187,650) 593,031

Furniture and fittings 17 49,775 (40,340) 9,435 49,425 (37,055) 12,370

IT equipment 29 176,834 (168,610) 8,224 174,720 (160,545) 14,175

Vehicles 66 37,039 (35,757) 1,282 37,327 (34,810) 2,517

Tools and instruments 20 195,186 (172,944) 22,242 193,262 (163,426) 29,836

24,223,378 (14,130,209) 10,093,169 24,008,211 (13,272,794) 10,735,417

Land 419,550 - 419,550 419,553 - 419,553

Total in operation 24,642,928 (14,130,209) 10,512,719 24,427,764 (13,272,794) 11,154,970

Under construction

Construction in progress 555,878 - 555,878 598,966 - 598,966

Assets in progress 32,793 - 32,793 7,941 - 7,941

Imports in transit 512 - 512 2,076 - 2,076

Advances to suppliers 817 - 817 416 - 416

Capitalized charges on borrowings 7,613 - 7,613 46,438 - 46,438

Other 82,479 - 82,479 72,251 - 72,251

Total under construction 680,092 - 680,092 728,088 - 728,088

25,323,020 (14,130,209) 11,192,811 25,155,852 (13,272,794) 11,883,058


143

Consolidated

12/31/2017 12/31/2016


annual depreciation

% Cost


PP&E net Cost


PP&E net

In operation

Buildings 4 2,400,504 (1,418,472) 982,032 2,391,791 (1,356,869) 1,034,922

Machinery and equipment 5 22,059,248 (13,053,003) 9,006,245 22,006,733 (12,226,909) 9,779,824

Facilities 4 1,618,523 (518,455) 1,100,068 1,489,090 (421,235) 1,067,855

Furniture and fittings 17 66,823 (54,102) 12,721 67,038 (50,472) 16,566

IT equipment 29 218,076 (202,079) 15,997 217,355 (191,940) 25,415

Vehicles 66 55,914 (54,507) 1,407 57,260 (54,410) 2,850

Tools and instruments 20 224,943 (188,394) 36,549 222,747 (176,700) 46,047

Other 91,118 (6,079) 85,039 89,285 (4,817) 84,468

26,735,149 (15,495,091) 11,240,058 26,541,299 (14,483,352) 12,057,947

Land 798,335 - 798,335 798,338 - 798,338

Total in operation 27,533,484 (15,495,091) 12,038,393 27,339,637 (14,483,352) 12,856,285

Under construction

Construction in progress 705,901 - 705,901 743,294 - 743,294

Assets in progress 45,967 - 45,967 27,753 - 27,753

Imports in transit 545 - 545 2,109 - 2,109

Advances to suppliers 929 - 929 430 - 430

Capitalized charges on borrowings 7,613 - 7,613 46,438 - 46,438

Other 83,270 - 83,270 72,581 - 72,581

Total under construction 844,225 - 844,225 892,605 - 892,605

28,377,709 (15,495,091) 12,882,618 28,232,242 (14,483,352) 13,748,890

Changes in property, plant and equipment are as follows:

Parent company

Buildings Machinery and

equipment Facilities Tools and

instruments

Land Under

construction Other

Total

At December 31, 2016 842,917 9,240,571 593,031 29,836

419,553 728,088 29,062 11,883,058

Additions (i) - 1,332 - 6 - 168,261 28 169,627

Additions (capital reduction) - 7,575 6,662 185

- - 55 14,477

Disposals - (669) - (2) (3) (8,729) (1) (9,404)

Depreciation (ii) (44,691) (746,945) (45,279) (9,564) - - (13,029) (859,508)

Capitalized charges on borrowings (iii) - - - -

- 7,613 - 7,613

Transfers 9,107 68,635 115,916 1,781

- (198,295) 2,856 -

Other (iv) - 1,194 2,630 - - (16,846) (30) (13,052)

At December 31, 2017 807,333 8,571,693 672,960 22,242

419,550 680,092 18,941 11,192,811

(i) Additions to property, plant and equipment in the Parent company comprise cash purchases totaling R$169,627. (ii) At December 31, 2017, in addition to the total depreciation for the period the amount of R$82,440 related to the

depreciation originally recognized in inventories and realized in the period was recognized in profit or loss. (iii) These charges were capitalized at the contracted rates, which are described in Note 20. (iv) The colunn “Under construction” includes balances of transfer to intangible assets of R$17,855, and transfer of inventory

items related to property, plant and equipment totaling R$4,801.


144

Parent company



instruments

Land Under

construction Other

Total

At December 31, 2015 864,465 9,941,429 195,051 39,394

419,553 1,224,674 31,611 12,716,177

Additions (i) - 5,125 - -

- 159,158 158 164,441

Disposals (354) (11,195) - (73)

- (56,439) (1) (68,062)

Depreciation (ii) (44,285) (872,034) (31,147) (10,426) - - (15,783) (973,675)

Capitalized charges on borrowings - - - -

- 46,438 - 46,438

Write-off of prepayments - - - -

- (3,086) - (3,086)

Transfers 23,091 176,452 409,735 941 - (623,035) 12,816 -

Other - 794 19,392 -

- (19,622) 261 825

At December 31, 2016 842,917 9,240,571 593,031 29,836

419,553 728,088 29,062 11,883,058

(i) Additions to property, plant and equipment in the Parent company comprise cash purchases of R$163,250 and

purchases under the FINAME system amounting to R$1,191. (ii) At December 31, 2016, in addition to the total depreciation for the period, the amount of R$21,894 related to the

depreciation originally recognized in inventories and realized in the period was recognized in profit or loss.

Consolidated



instruments

Land Under

construction Other

Total

At December 31, 2016 1,034,922 9,779,824 1,067,855 46,047

798,338 892,605 129,299 13,748,890

Additions (i) - 9,559 2,657 158 - 195,604 493 208,471

Disposals (243) (831) - (9)

(3) (8,729) (15) (9,830)

Depreciation (ii) (61,756) (851,135) (111,536) (12,274) - - (19,769) (1,056,470)

Capitalized charges on borrowings (iii) - - - -

- 7,613 - 7,613

Impairment of assets - - - - - - 1,833 1,833

Transfers 9,109 66,319 137,643 2,643

- (219,090) 3,376 -

Other (iv) - 2,509 3,449 (16) - (23,778) (53) (17,889)

At December 31, 2017 982,032 9,006,245 1,100,068 36,549

798,335 844,225 115,164 12,882,618

(i) Additions to property, plant and equipment in Consolidated comprise cash purchases totaling R$208,471. (ii) At December 31, 2017, in addition to the total depreciation for the period the amount of R$82,440 related to the

depreciation originally recognized in inventories and realized in the period was recognized in profit or loss. (iii) These charges were capitalized at the contracted rates, which are described in Note 20. (iv) The colunn “Under construction” includes balances of transfer to intangible assets of R$19,350, and transfer of inventory

items related to property, plant and equipment totaling R$13,016.


145

Consolidated



instruments

Land Under

construction Other

Total

At December 31, 2015 1,047,756 10,552,413 717,632 57,226

798,338 1,425,978 144,286 14,743,629

Additions (i) 237 8,775 2,760 153

- 196,909 638 209,472

Disposals (354) (11,760) (1) (77) - (56,435) (7,588) (76,215)

Depreciation (ii) (60,636) (981,175) (93,465) (13,102)

- - (23,050) (1,171,428)

Capitalized charges on borrowings - - - -

- 46,438 - 46,438

Write-off of prepayments - - - -

- (3,086) - (3,086)

Transfers 47,919 210,777 421,537 1,845 - (696,782) 14,704 -

Other - 794 19,392 2

- (20,417) 309 80

At December 31, 2016 1,034,922 9,779,824 1,067,855 46,047

798,338 892,605 129,299 13,748,890

(i) Additions comprise cash purchases of R$207,035; credit purchases of R$1,246; and purchases under the FINAME

system amounting to R$1,191. (ii) At December 31, 2016, in addition to the total depreciation for the period, the amount of R$21,894 related to the

depreciation originally recognized in inventories and realized in the period was recognized in profit or loss.

At December 31, 2017, additions to property, plant and equipment amounting to R$208,471 mainly refer to the resuming of operations of Ipatinga’s AF1 (R$ 48,168), sustaining equipment (R$31,574), replacement of staves in blast furnace No. 3 in Ipatinga (R$17,239), replacement of the converter frame No. 5 of the steel plant of Ipatinga (R$4,733), replacement of shed beams of the continuous casting area in Ipatinga (R$4,378), replacement of Askarel-insulated transformers in Cubatão (R$4,069), improvements in the coke plant No. 2 of Ipatinga (R$4,028), implementation of a wastewater chemical treatment system in Cubatão (R$ 4,024) and compact projects (R$3,120) and disposal of scrap for the Samambaia dam (R$ 2,571) of the subsidiary Mineração Usiminas. At December 31, 2017, construction in progress amounting to R$844,225 in Consolidated refers to projects for improvement of the production process to maintain the production capacity, sustaining and environmental protection projects. The main works include: rolling mill for thick steel plates at Ipatinga (R$334,862), resuming of operations of Ipatinga’s AF1 (R$48,168); replacement of staves in blast furnace No. 3 in Ipatinga (R$18,480); and a project for processing compact iron ore (R$75,937) of the subsidiary Mineração Usiminas. At December 31, 2017, interest and foreign exchange variation were capitalized on borrowings in property, plant and equipment, at an amount of R$7,613 in the Parent company and in Consolidated. (ii) These charges were capitalized at the contracted rates, which are described in Note 20. At December 31, 2017, depreciation in the Parent company was recognized in “Cost of sales”, “Selling expenses” and “General and administrative expenses”, in the amounts of R$844,724, R$3,125 and R$11,659 (December 31, 2016 – R$957,275, R$3,130 and R$13,270), respectively. At the same date, in the Consolidated accounts, depreciation was recognized in “Cost of sales”, “Selling expenses” and “General and administrative expenses” in the amounts of R$1,035,389, R$4,424 and R$16,658 (December 31, 2016 - R$1,148,451, R$4,485 and R$18,492), respectively.


146

Certain property, plant and equipment items are pledged as collateral for borrowings and judicial proceedings (Note 39).

17 Impairment of non-financial assets

For calculation of the recoverable amount of each business segment, Usiminas uses the discounted cash flow method based on the economic and financial projections of each segment. The projections take into consideration the changes observed in the economic scenario of the markets in which the companies operate, as well as assumptions of expected results and the history of profitability of each segment. Usiminas has four cash generating units or reportable operating segments, which offer different products and services and are managed separately. These cash generating units are determined based on the smallest identifiable group of assets that generates cash inflows and there are no different segments or cash generating units within the same company. The four cash generating units and/or reportable segments identified in the Company are Mining and Logistics, Steelworks, Steel Transformation and Capital Goods (Note 28). At December 31, 2017, Usiminas evaluated its cash generating units as described below:

(a) Impairment testing of goodwill

For the cash generating units which include intangible assets with indefinite useful lives (goodwill), Usiminas carried out tests for impairment as described below.

The operating segment-level summary of the goodwill allocation is presented below:

Parent


12/31/2017 12/31/2016 12/31/2017 12/31/2016

Mining - 21,401 23,283

Steelworks 110,343 183,353 110,343 183,353

Steel transformation - 2,433 2,433

110,343 183,353 134,177 209,069

In the year ended December 31, 2017, an impairment loss was recognized in the Steel segment amounting to R$73,010 (December 31, 2016 - R$8,030), of which R$62,175 related to goodwill paid on the acquisition of associate Codeme and R$10,835 of associate Rios Unidos. An impairment loss of R$1,882 was recognized in the Mining segment related to goodwill of subsidiary Modal. These amounts were recorded in “Other operating income (expenses)”.

The calculations of value in use utilize cash-flow projections based on financial budgets approved by the Executive Board.


147

To calculate the recoverable value, 5-year projections of sales volumes, average prices and operating costs were prepared by the commercial and planning areas, considering market share, international price changes and dollar and inflation rates based on market reports. The need for working capital and investments to maintain the assets tested were also considered. For the subsequent years growth rates were adopted based on estimated long-term inflation and foreign exchange rates.

The discount rates used were based on market information available on the testing date.

The Company adopted different rates for each business segment tested to reflect its

capital structure. The nominal rates used to discount the cash flow of each cash

generating unit ranged from 11.9% to 14.9% p.a. The long-term inflation rate used in the projected flows was 4.3% p.a.

(b) Impairment testing of the mining segment

The value in use of the Mining segment was updated to reflect management's best

estimates of future results from the processing and sale of iron ore, based on projections

of sales price, expenses and investments. This evaluation can change depending on

commodity price fluctuations, and any changes in long-term expectations can lead to

future adjustments to the recognized amount.

The discount rate applied to the projections of future cash flows represented an estimate

of the rate that the market would use to meet the risks of the asset being evaluated. The

actual rate in reais (R$) used was 7.54% p.a. The Company considered market sources

to define the inflation and foreign exchange rates used in the projections of future cash

flows. The estimated Brazilian long-term inflation rate was 4.08% p.a. For the projection of

annual exchange rates (real / dollar), the long-term inflation rates for United States and

Brazil were considered. Projected prices for iron ore (CFR China, 62% Fe) ranged from

US$60/metric ton to US$63/metric ton. The prices used to calculate future cash flows are

within the range of estimates published by market analysts.

In the year ended December 31, 2016, the Company recognized a reversal of impairment

of R$357,508, which was recognized in the statement of income of the financial

statements of the subsidiary Mineração Usiminas S.A. The remaining impairment in the

amount of R$1,641,432 continues to be monitored by the Company and will be reversed

considering future projections. The Company will continue to monitor the key assumptions of this business segment.


148

(c) Impairment testing of other long-lived assets At December 31, 2017 and 2016, the Company performed impairment tests of the property, plant and equipment of its cash generating units of the Steelworks, Steel Transformation and Capital Goods segments. No impairment loss was identified in long-term assets of the Steelworks and other segments. To calculate the recoverable value, 5-year projections of sales volume, average prices and operating costs were prepared by the commercial and planning areas, considering market share, international price changes and dollar and inflation rates. For the subsequent years growth rates were adopted based on estimated long-term inflation and foreign exchange rates. The discounted cash flow was prepared according to the estimated useful life of the equipment in use. The scenarios used in the aforementioned tests are Usiminas’ best estimates for future results and cash generation in its business segments. The assumptions used in the impairment testing of long-term assets are the same assumptions used in the impairment testing of goodwill described in item (a). Management will continue to monitor the results in 2018, which will indicate the reasonableness of the future projections used Long-lived assets by operating segment are described in Note 28.

18 Intangible assets

The composition of intangible assets is as follows:

Parent

company

12/31/2017 12/31/2016


annual depreciation

% Cost Accumulated amortization Net balance Cost

Accumulated amortization Net balance

Software 27 242,821 (170,547) 72,274 196,945 (146,307) 50,638

Goodwill - 153,692 (43,349) 110,343 153,692 (43,349) 110,343

Other - 4,049 - 4,049 25,874 - 25,874

400,562 (213,896) 186,666 376,511 (189,656) 186,855


149

Consolidated

12/31/2017 12/31/2016


annual depreciation

% Cost Accumulated amortization Net balance Cost

Accumulated amortization Net balance

Software 27 335,591 (252,302) 83,289 287,700 (222,902) 64,798

Goodwill - 156,125 (43,349) 112,776 166,960 (43,349) 123,611

Mineral rights - 2,063,280 (80,560) 1,982,720 2,063,280 (77,882) 1,985,398

Impairment of assets - (1,509,251) - (1,509,251) (1,509,251) - (1,509,251)

Other - 21,539 (13,883) 7,656 42,382 (13,020) 29,362

1,067,284 (390,094) 677,190 1,051,071 (357,153) 693,918

The changes in intangible assets are presented below:

Parent

company

Goodwill paid on acquisition

Software acquired

Other

Total

Residual value at December 31, 2016 110,343 50,638 25,874 186,855

Additions - - 6,196 6,196

Transfers - 25,389 (25,389) -

Amortization - (24,240) - (24,240)

Other - 20,487 (2,632) 17,855

At December 31, 2017 110,343 72,274 4,049 186,666

Total cost 153,692 242,821 4,049 400,562

Accumulated amortization (43,349) (170,547) - (213,896)


Annual amortization rate % - 27 - -


150

Parent

company

Goodwill paid on acquisition

Software acquired

Other

Total


Additions - 52 14,025 14,077

Disposals - - (35) (35)

Transfers - 7,566 (7,566) -

Amortization - (16,259) - (16,259)

Other 16,499 (11,168) 5,331

At December 31, 2016 110,343 50,638 25,874 186,855

Total cost 153,692 196,945 25,874 376,511

Accumulated amortization (43,349) (146,307) - (189,656)


Annual amortization rate % - 24 - -

Consolidated

Mineral rights

(i) Goodwill paid on acquisition

Software acquired Other

Total

Residual value at December 31, 2016 476,148 123,611 64,798 29,361 693,918

Additions - - 1.314 6.385 7.699

Transfers - - 24.596 (24.596) -

Amortization (2,678) - (29.400) (863) (32.941)

Reversal of impairment of assets - (10,835) - - (10.835)

Other 21.981 (2.632) 19.349

At December 31, 2017 473,470 112,776 83,289 7,655 677,190

Total cost 557,929 156,125 335,591 17,639 1,067,284

Accumulated amortization (84,459) (43,349) (252,302) (9,984) (390,094)


Annual amortization rate % - - 27 - -

(i) Mineral rights are amortized in accordance with mine depletion at an average rate of R$0.55 per metric ton (this rate is adjusted considering the net value of the asset, net of impairment.


151

Consolidated

Mineral rights

(i) Goodwill paid on acquisition

Software acquired Other

Total


Additions - - 1,349 14,375 15,724

Disposals - - - (35) (35)

Transfers - - 8,797 (8,797) -

Amortization (677) - (22,300) (192) (23,169)

Reversal of impairment of assets 357,508 - - - 357,508

Other - - 17,136 (11,168) 5,968

At December 31, 2016 476,148 123,611 64,798 29,361 693,918

Total cost 557,929 166,960 287,700 38,482 1,051,071

Accumulated amortization (81,781) (43,349) (222,902) (9,121) (357,153)


Annual amortization rate % - - 24 - -

(i) Mineral rights are amortized in accordance with mine depletion at an average rate of R$0.13 per metric ton (this rate is adjusted considering the net value of the asset, net of impairment.

At December 31, 2017, additions to consolidated intangible assets of R$7,699 mainly refer to the e-social project (R$703), optimization and protection of the corporate network (R$700), tax collection management (R$489), Steel Metallurgy and Rolling Processes industrial site (R$ 463), and technological upgrading projects of the subsidiary Soluções Usiminas (R$1,314) and the subsidiary Mineração Usiminas (R$189). The amortization in the Parent company accounts was recognized in "Cost of sales" and "General and administrative expenses" in the amounts of R$ 310 and R$23,930 (December 31, 2016 - R$308 in "Cost of sales" and R$15,951 in "General and administrative expenses"), respectively. At the same date, in the Consolidated accounts, amortization was recognized in “Cost of sales”, “Selling expenses” and “General and administrative expenses” in the amounts of R$5,540, R$74 and R$27,327 (December 31, 2016 - R$3,147, R$123 and R$19,899), respectively. Goodwill arising from the difference between the amounts paid to acquire investments in subsidiaries and the fair value of assets and liabilities (goodwill based on expected future profitability) is classified as intangible assets in the parent company and consolidated financial statements. At December 31, 2017, an impairment of R$10,835 was recognized in the statement of income of the financial statements of the subsidiary Rios Unidos (Note 17(a)). In 2016, a reversal of impairment of R$357,508 was recognized in the statement of income of the Mining segment (Note 17 (b)).


152

19 Trade payables, contractors and freight charges

Parent


12/31/2017 12/31/2016 12/31/2017 12/31/2016

In Brazil 392,304 651,732 471,041 704,711

Abroad 29,034 31,387 47,460 35,812

Payables to related companies 454,061 177,716 458,416 105,854

875,399 860,835 976,917 846,377

20 Loans and financing

On September 12, 2016, the Company completed the renegotiation of its financial debt with its creditors. As part of this renegotiation, the following conditions were established that would require the early maturity of the debts: (i) the non-receipt of funds held in cash of its subsidiary Mineração Usiminas S.A. (MUSA)

at a minimum amount of R$ 700,000 up to June 30, 2017; and

(ii) the non-performance of an exchange offer of not less than 50% of Eurobonds originally issued in 2008 in the total amount of US$400 million, maturing in January 2018, up to June 30, 2017. This offer would cover only the Eurobonds outstanding on the market, which represent approximately US$180 million at December 31, 2017.

With respect to item (i), at the Extraordinary General Meeting of MUSA held on March 3, 2017, a reduction of its share capital of R$1,000,000 was approved, of which R$700,000 was delivered to the Company on May 19, 2017. As regards item (ii), at June 30, 2017, the Company obtained from the Brazilian Private Banks (Banco do Brasil S.A., Banco Bradesco S.A. and Itaú Unibanco S.A.) and the National Bank for Economic and Social Development (BNDES) a waiver from the obligation to carry out the exchange offer transaction, which was conditional on obtaining on a definitive basis such waiver from the Japanese Banks (Nippon Usiminas Co., Ltd., Japan Bank for International Cooperation, The Bank of Tokyo-Mitsubishi UFJ, Ltd., Mizuho Bank, Ltd. and Sumitomo Mitsui Banking Corporation) and from the debenture holders, which was obtained on August 31, 2017. In consideration, the Company agreed to pay to the Brazilian Private Banks, BNDES, Japanese Banks and debenture holders on December 15, 2017, the amount corresponding to 50% of the outstanding balance of the principal amount of Eurobonds, on a pro-rata basis, as partial repayment of the Company’s debts to each of these creditors. At December 15, 2017, this amount was R$290,410.


153

20.1 Conditions and covenants of debt renegotiation

(a) Covenants With respect to financial covenants, the Company is required to comply with the following indices, calculated on an individual basis (Parent company): (i) Net debt / EBITDA:

less than or equal to 4.5 times at June 30, 2019 and December 31, 2019;

less than or equal to 3.5 times at June 30, 2020 and December 31, 2020;

less than or equal to 3.0 times at June 30, 2021 and December 31, 2021; and

less than or equal to 2.5 times in the half-yearly measurements determined at June 30 and December 31 of subsequent years.

(ii) EBITDA / Finance costs:

not less than 2.0 times at June 30, 2019, December 31, 2019 and in the half-yearly measurements determined at June 30 and December 31 of subsequent years.

In relation to the non-financial covenants established in the debt instruments, the Company has monitoring controls and, for the year ended December 31, 2017, no breaches of these covenants were found, except in relation to the offering of guarantees to certain creditors in the context of the renegotiation, which would no longer be permitted under the Eurobond provisions due to the expiration, at June 30, 2017, of the temporary waiver previously granted by the holders of such bonds with respect to the limitation of guarantees offered as established in the Eurobond provisions. Such non-compliance can be remedied by the Company within 60 days from the date of receipt of a notice of non-compliance sent by the custodian of the Eurobonds or by a minimum quorum of Eurobond holders, which has not been received to date. After the expiration of this period, non-compliance would give rise to early maturity only if a new notice was received from the custodian of the Eurobonds or from a minimum quorum of Eurobond holders, requesting the early maturity of the debt. The Company chose not to request a new waiver from the Eurobonds holders with respect to these limitations on the offering of guarantees, taking into account, among other factors, the full payment of the Eurobonds in January 2018.

(b) Cash sweep The debt renegotiation instruments also defined the cash sweep mechanism, which requires that the Company, if there is a cash surplus exceeding the established limits at June 30 and December 31 of each year, excluding certain liquidity events, distribute this excess amount of cash to its creditors on a pro-rata basis, for the early repayment of the principal amount, interest and other charges payable under these instruments. For the year ended December 31, 2017, the Company determined the amount of R$378,799 as cash surplus, which was reclassified to the short term, since it will be paid on a pro-rata basis to its creditors up to March 15, 2018.


154

20.2 Composition of borrowings

The composition of borrowings is as follows:

(a) Parent company (i) In local currency

12/31/2017 12/31/2016

Currency /

index Maturity of the

principal amount Annual finance

charges (%) Current Non-

current Current Non-

current

BNDES R$ 2026 TJLP + 3.48%, 3.88%

and 4.88% p.a. 23,996 332,140 1,822 371,586

BNDES R$ 2018 5.50% p.a. 431 - 1,278 425

BNDES R$ 2026 TJLP 248 3,512 13 3,930 Government Agency for Machinery and Equipment Financing (FINAME) R$ 2018 to 2024 2.5% to 9.5% p.a. 4,926 20,378 8,190 25,250

Banco do Brasil R$ 2026 CDI + 3% p.a. 157,591 2,222,667 17,137 2,486,701

Bradesco R$ 2025 TR + 9.8% p.a. 8,019 49,213 7,709 53,115

Bradesco R$ 2026 CDI + 3% p.a. 34,790 488,784 4,620 546,856

Itaú BBA R$ 2026 CDI + 3% p.a. 42,898 602,680 5,696 674,289 Commissions and other costs - - - (12,772) (60,853) (12,797) (73,626)

260,127 3,658,521 33,668 4,088,526

(ii) In foreign currency

12/31/2017 12/31/2016

Currency /

index

Maturity of the principal amount

Annual finance charges (%) Current

Non-current Current

Non-current

BNDES US$ 2026 Basket of currencies (US$) + 3.88% p.a. 1,297 18,226 72 20,112


Nippon Usiminas US$ 2026 Libor + 2.83% p.a. 10,583 152,091 381 167,606

JBIC US$ 2026 Libor + 2.55% p.a. 28,135 406,637 675 448,120

JBIC US$ 2026 Libor + 2.885% p.a. 28,347 406,637 872 448,120

Eurobond YEN 2017 4.1165% p.a. - - 25,388 1,199,220 Commissions and other

costs - - - (1,659) (7,949) (1,660) (9,610)

74,341 1,082,909 26,150 2,391,943

In local currency 260,127 3,658,521 33,668 4,088,526

334,468 4,741,430 59,818 6,480,469


155

(b) Consolidated (i) In local currency

12/31/2017 12/31/2016

Currency /

index



Non-current Current

Non-current

BNDES R$ 2026 TJLP + 3.48%, 3.88%

and 4.88% p.a. 23,996 332,140 1,822 371,586

BNDES R$ 2018 5.50% p.a. 431 - 1,278 425

BNDES R$ 2026 TJLP 248 3,512 13 3,930

FINAME R$ 2018 to 2024 2.5% to 10% p.a. 7,431 24,245 11,342 31,603

Banco do Brasil R$ 2026 CDI + 3% p.a. 157,591 2,222,667 17,137 2,486,701

Bradesco R$ 2025 TR + 9.8% p.a. 8,019 49,213 7,709 53,115

Bradesco R$ 2026 CDI + 3% p.a. 34,790 488,784 4,620 546,856

Itaú BBA R$ 2026 CDI + 3% p.a. 42,898 602,680 5,696 674,289

Other - - - 269 13,171 2,637 13,172 Commissions and other costs - - - (12,772) (60,853) (12,797) (73,626)

262,901 3,675,559 39,457 4,108,051

(ii) In foreign currency

12/31/2017 12/31/2016

Currency /

index



Non-current Current

Non-current



Nippon Usiminas US$ 2026 Libor + 2.83% p.a. 10,583 152,090 381 167,606

JBIC US$ 2026 Libor + 2.55% p.a. 28,135 406,637 675 448,120

JBIC US$ 2026 Libor + 2.885% p.a. 28,347 406,637 872 448,120

Eurobond US$ 2018 7.25% 590,704 - 18,330 563,642 Other - - - - - 3,608 - Commissions and other

costs - - - (1,659) (7,948) (1,660) (9,610)

665,045 1,082,909 22,700 1,756,365

In local currency 262,901 3,675,559 39,457 4,108,051

927,946 4,758,468 62,157 5,864,416


156

20.3 Schedule of borrowings in non-current liabilities The amounts recorded in non-current liabilities have the following composition, by maturity year:


12/31/2017 12/31/2016 12/31/2017 12/31/2016

2018 - 1,198,975 - 568,519

2019 66,368 67,924 70,943 72,513

2020 332,197 336,046 336,104 339,953

2021 624,370 623,317 627,517 626,464

2022 903,198 897,509 905,928 900,239

2023 to 2026 2,815,297 3,356,698 2,817,976 3,356,728

4,741,430 6,480,469 4,758,468 5,864,416

20.4 Changes in borrowings

Changes in borrowings are as follows: Parent company Consolidated

12/31/2017 12/31/2016 12/31/2017 12/31/2016

Opening balance 6,540,287 8,204,643 5,926,573 6,808,424

Inflows - 193,422 - 206,592

Recognition – renegotiation of debt - 5,312,578 - 5,312,578

Accrued charges 538,579 449,733 528,546 437,736

Monetary variation 88,269 185,827 88,518 189,091

Exchange variation 73,640 (717,953) 26,400 (625,707)

Payment of interest (667,509) (682,363) (634,409) (670,791)

Repayment of principal (1,511,824) (963,786) (263,670) (289,536)

Derecognition – renegotiation of debt - (5,354,040) - (5,354,040)

Deferral of commissions 14,456 (87,774) 14,456 (87,774)

Closing balance 5,075,898 6,540,287 5,686,414 5,926,573


157

20.5 Other significant information on borrowings

Eurobonds In 2008, the foreign subsidiary Usiminas Commercial issued Eurobonds on the market totaling US$400 million. The funds arising from this issue were immediately loaned to the Company by means of an intercompany loan agreement indexed to the JPY. In 2014, the foreign subsidiary Usiminas Europa purchased from third parties a portion of these Eurobonds for approximately US$220 million. In June 2017, the Company reduced the capital of its foreign subsidiary Usiminas Europa, and transferred to its ownership the Eurobonds that this subsidiary had in its portfolio, which totaled R$775,665 at December 31, 2017. After this capital reduction, the Company began to hold financial assets and liabilities on the same bases, having Usiminas Commercial as its counterparty. Therefore, the Company presented these financial assets and liabilities at their net amount under current liabilities in the interim accounting information at June 30 and September 30, 2017. On December 12, 2017, the Company settled the loan agreement with Usiminas Commercial for a total amount of US$400 million. Therefore, in the year ended December 31, 2017, the Company held only the financial asset with Usiminas Commercial in the amount of R$775,665, as presented in Note 9 - Marketable securities.


158

21 Debentures The non-convertible, unsecured debentures issued by the Company, together with loan agreements were included in the debt renegotiation arrangement under the same conditions described in Note 20. Therefore, the amount of R$1,000,000, related to the principal, was derecognized and recognized in 2016, with annual payments maturing between 2019 and 2026, plus finance charges of 3% p.a. plus 100% of the CDI At December 31, 2017, changes in debentures are as follows:

Parent company and

consolidated

12/31/2017 12/31/2016

Opening balance 997,735 1,060,290

Accrued and other charges 115,456 97,300

Monetary variation 12,125 66,596

Payment of interest (129,841) (226,451)

Repayment of principal (46,110) -

Closing balance (i) 949,365 997,735

Current liabilities 62,031 5,551

Non-current liabilities 887,334 992,184

(i) Balance presented net, after deducting the amount of R$7,816 (December 31, 2016 - R$9,166) related to the deferral of transaction costs, in accordance with Technical Pronouncement CPC 08 - Transaction Costs and Premiums on Issue of Securities.

At December 31, 2017, the charges of R$1,942 on the debentures are recorded in current liabilities (December 31, 2016 - R$5,551). The amounts recorded in non-current liabilities have the following composition, by maturity year:

Parent company and consolidated

12/31/2017 12/31/2016

2019 11,692 10,764

2020 61,692 61,632

2021 116,692 116,632

2022 169,192 169,131

2023 169,192 169,131

2024 to 2026 358,874 464,894

887,334 992,184


159

22 Taxes payable

Parent

company

Consolidated

12/31/2017 12/31/2016 12/31/2017 12/31/2016

ICMS 42,606 20,111 49,319 22,419

IPI 18,369 10,298 21,168 12,466

IRRF 6,793 7,003 8,353 9,345

ISS 1,046 890 3,321 3,179

PIS and COFINS 1,998 2,439 4,231 6,342

Other 1,781 540 8,697 4,696

72,593 41,281 95,089 58,447

23 Taxes payable in installments

The composition of taxes payable in installments is as follows:

Parent company

12/31/2017 12/31/2016

Taxes payable in

installments Judicial

deposits Net balance

Taxes payable in


deposits Net

balance

INSS 7,265 (7,265) - 8,405 (8,405) -

IPI 107,705 (100,079) 7,626 107,284 (100,079) 7,205

REFIS – Law 11,941/09 – IPI and CIDE 32,443 (32,443) - 32,443 (32,443) -

REFIS – Law 11,941/09 - IRPJ/CSLL

Elimination of the inflation effects of the Verão Economic Stabilization Plan 57,089 (57,089) - 57,089 (57,089) -

Other 16 (16) - 16 (16) -

204,518 (196,892) 7,626 205,237 (198,032) 7,205

In current liabilities - - 7,626 - - 7,205

Consolidated

12/31/2017 12/31/2016

Taxes payable in


deposits Net

balance

Taxes payable in



INSS 7,265 (7,265) - 8,405 (8,405) -

IPI 107,705 (100,079) 7,626 107,284 (100,079) 7,205

REFIS – Law 11,941/09 – IPI and CIDE 32,443 (32,443) - 32,443 (32,443) -

REFIS - Law 11,941/09 - - - 10,374 - 10,374

PERT 12,868 - 12,868 - - -

REFIS – Law 11,941/09 - IRPJ/CSLL

Elimination of the inflation effects of the Verão Economic Stabilization Plan 57,089 (57,089) - 57,089 (57,089) -

Other 16 (16) - 16 (16) -

217,386 (196,892) 20,494 215,611 (198,032) 17,579

In current liabilities - - 20,494 - - 8,529

In non-current liabilities - - - - - 9,050


160

Changes in the balance of taxes payable in installments are as follows:

Parent


12/31/2017 12/31/2016 12/31/2017 12/31/2016

Opening balance (i) 205,237 205,000 215,611 215,805

Additions - - 6,326 -

Provision for interest 421 560 421 560

Repayment of principal - (323) (4,342) (1,601)

Disposals (1,140) - (1,140) -

Monetary variation - - 510 847

Subtotal 204,518 205,237 217,386 215,611

Balance of judicial deposit offset (196,892) (198,032) (196,892) (198,032)

Closing balance (ii) 7,626 7,205 20,494 17,579

(i) From the amount of taxes payable in installments presented in the balance sheet, the amount of R$196,892 (December

31, 2016 - R$198,032), which refers to the offset of judicial deposits, must be deducted. (ii) The balance of the Parent company substantially comprises IPI. The balance of Consolidated, in addition to the IPI of the

Parent company, substantially comprises COFINS. At December 31, 2017, installments not yet due related to taxes payable in installments are recorded in current liabilities. At December 31, 2016, taxes payable in installments recorded in non-current liabilities are as follows:

Consolidated

12/31/2016

2018 1,324

2019 1,324

2020 1,324

2021 1,324

2022 to 2024 3,754

9,050


161

24 Provision for litigation

Parent

company

12/31/2017 12/31/2016

Provisions Judicial

deposits Net

balance Provisions Judicial


IRPJ and CSLL - - - 1,775 - 1,775

INSS - - - 5,293 - 5,293

ICMS 58,490 - 58,490 3,564 - 3,564

Labor 294,962 (110,478) 184,484 278,859 (108,585) 170,274

Civil 128,472 (30,660) 97,812 119,589 (26,321) 93,268

Other - - - 13,325 - 13,325

481,924 (141,138) 340,786 422,405 (134,906) 287,499

Consolidated

12/31/2017 12/31/2016

Provisions Judicial

deposits Net

balance Provisions Judicial


IRPJ and CSLL - - - 1,775 - 1,775

INSS 54 (54) - 5,344 - 5,344

ICMS 86,941 (1,121) 85,820 32,341 - 32,341

PIS/COFINS - - - 17,819 - 17,819

Labor 391,641 (145,652) 245,989 358,106 (108,585) 249,521

Civil 150,562 (33,394) 117,168 137,541 (26,321) 111,220

Other 39,766 (34,234) 5,532 54,937 (3,244) 51,693

668,964 (214,455) 454,509 607,863 (138,150) 469,713

The Company also has judicial deposits recorded in non-current assets, for which there are no related provisions (Note 14).

Changes in the provisions for litigation are as follows: Parent company Consolidated

12/31/2017 12/31/2016 12/31/2017 12/31/2016

Opening balance 422,405 395,834 607,863 557,455

Additions 139,202 66,515 202,058 97,133

Interest/restatements 88,258 73,057 98,241 91,782

Payments/reductions (121,441 (75,969) (165,455) (80,351)

Reversals (46,500) (37,032) (83,228) (58,156)

Transfers between liabilities - - 9,485 -

481,924 422,405 668,964 607,863


162

(a) Provisions for litigation

The provisions for litigation were recorded to cover probable losses arising from administrative proceedings and litigation relating to tax, labor, civil and environmental matters, in amounts considered sufficient by Management, based on the advice and assessment of internal and external legal advisors. The most significant proceedings at December 31, 2017 are described below:

(i) Provisions by the parent company

12/31/2017 12/31/2016

Description Position Balance Balance

Labor claims involving employees, former own employees and outsourced personnel of the Ipatinga Plant in which various labor and social security amounts are claimed.

Pending judgment by the Labor Court and administrative bodies, at several levels. 48,228 35,806

Labor claims involving employees, former own employees and

outsourced personnel of the Cubatão Plant in which various labor and social security amounts are claimed.


Claims for indemnities for material (pension, fixed medical expenses etc.) and moral damages due to exposure to benzene gas during working hours. Pending judgment. 27,458 27,853 Differences in relation to the price paid for the shares upon the acquisition of a company merged with Soluções Usiminas. Awaiting the development of the case.

67,071 65,227

Actions for annulment of administrative rulings by the Administrative Council for Economic Defense (CADE) (Usiminas and the former COSIPA).

Pending judgment by the Federal Regional Court (TRF) - 1st region. 11,343 11,536

Action for annulment filed in order to challenge the tax assessment notices issued by the tax authorities of the state of Rio Grande do Sul requiring the payment of ICMS/RS allegedly due by Usiminas. Pending judgment by the appellate court. 51,925 - Tax assessment notices related to the payment of Services Tax (ISS) on port services provided by Usiminas at the Praia Mole marine terminal in Vitória, Espírito Santo.

Pending judgment by the Federal Regional Court (TRF) - 1st region. - 13,250

Other civil and environmental proceedings. - 22,601 14,974

Other labor claims. - 17,714 22,802

Other tax proceedings. - 6,564 10,705

481,924 422,405


163

(ii) Provisions by the subsidiary Soluções Usiminas

12/31/2017 12/31/2016


Challenge of the interpretation of Law 9,718/98, related to the broadening of the calculation bases of PIS and COFINS. Pending judgment. - 17,746 Action challenging the deduction of CSLL on the calculation basis of IRPJ. Pending judgment. - - Tax Assessment Notice requiring the payment of Value-Added Tax on Sales and Services (ICMS/RS) in connection with an alleged irregularity when recording presumed credits.

Awaiting the development of the case at an appellate court. 28,450

26,527 Labor proceedings consist mainly of claims by former employees in connection with disputes about the amount of compensation paid on terminations. Pending judgment. 57,539

46,616 Other civil proceedings. - 16,821 11,904 Other tax proceedings. - 10,483 9,577

113,293 112,370

12/31/2017

12/31/2016

Provisions by the parent company 481,924

422,405

Provisions by Soluções Usiminas 113,293

112,370

Provisions by the other companies 73,747 73,088

Total Consolidated 668,964

607,863


164

(b) Possible contingencies

Also, the Parent company and some of its subsidiaries are parties to proceedings which involve risks of losses classified as possible by management, based on the assessment of legal counsel, for which no provisions have been recorded, which include:

(i) Parent company’s contingencies

12/31/2017 12/31/2016


Action challenging non-approval of the offset of federal tax debts against IRPJ credits determined after review of the Taxable Income Control Register (LALUR). Pending judgment by the appellate court. 91,660 88,414 Tax foreclosure proceedings claiming the reversal of ICMS/SP credits arising from the difference related to material classification between tax authorities and Usiminas records. Pending judgment by the trial court. 40,952 41,044 Tax assessment notice related to the collection of ICMS/SP on goods for which the proof of admission into the Manaus Free-Trade Zone was not presented.

Pending judgment by trial courts at administrative and judicial levels. 41,712 51,274

Tax collection proceedings requiring reversal of ICMS/SP credits on use and consumption materials (refractory items and others).

Several case records, declaratory actions and tax foreclosure proceedings, suspended or awaiting decisions by higher courts. 1,180,292 1,121,468

Tax collection proceedings requiring reversal of ICMS/SP credits used by Usiminas upon contracting transportation services.

Pending judgment by the trial court. 51,696 49,425

Action challenging the denial of the discontinuance of the payment in installments of IRPJ under Law 11,941/09.

Final and unappealable decision issued. Pending judgment by the appellate court. 93,516 88,331

Tax assessment notice related to the collection of ICMS/SP on export transactions, alleging that the recipients were not considered as qualified entities at the Foreign Trade Secretariat (SECEX).

Pending judgment by the trial court. 39,572 38,394 Tax collection proceedings related to the collection of ICMS/SP on goods shipped to other countries for alleged lack of proof of the export.

Pending judgment by the trial court. 609,031 581,988 Action challenging non-approval of the offset of IPI, PIS and COFINS debts against a credit arising from an undue payment of CSLL. Pending judgment at an administrative level. 46,740 44,167

Tax assessment notice for alleged underpayment of ICMS/MG arising from tax credits related to transportation services taken for shipment of items to bonded warehouses.

The Company enrolled with the state Tax Recovery Program and the action was terminated. - 101,430

Arbitration of the additional social security contribution amount related to the financing of the benefits granted in connection of the labor incapacity level arising from environmental risks. Pending judgment at an administrative level. 48,989 55,199

Suspension of the enforceability and declaration of unconstitutionality of Ordinary Law No. 10,168/00, which created the Economic Domain Intervention Contribution (CIDE).

The Company enrolled with the federal tax recovery program and the action was terminated. - 39,311

Action challenging the Occupancy Charge levied on land owned by the Navy and those added to them, in which the Company is joint defendant with the other condominium members. Pending judgment by higher courts. 34,651 32,742 Tax assessment notice requiring the payment of ICMS/SP in connection with the alleged improper use of tax credits for the purchase of use and consumption materials intended for the export of goods. Pending administrative decision. 136,464 257,010


165

Improper record of tax credits for the purchase of consumables used in the export of goods. Ordinary Action filed claiming that the reversal of ICMS credits determined on the acquisition of electric energy the subsequent shipment of which took place in connection with interstate transactions to sell or settle the input in the spot market be considered not applicable by the Electric Power Trade Chamber (CCEE).

12/31/2017 12/31/2016


Action for annulment filed in order to challenge tax assessment notices requiring the reversal of presumed credits that would have been recorded when Usiminas allegedly was not in full compliance with ICMS/RS requirements. Pending judgment by the appellate court. 91,419 132,902 Usiminas would have failed to add in the determination of income tax (IRPJ) and social contribution on net income (CSLL) the "profits" supposedly earned abroad by two subsidiaries and would also have improperly excluded from the tax base of these taxes the excess amount of equity in the results of investees. Pending judgment at an administrative level. 133,251 - Tax assessment notice requiring the payment of ICMS/SP in connection with an alleged improper record of tax credits related to the purchase of use and consumption materials linked to exports. Pending judgment by the trial court. 148,647 - Tax assessment notice issued alleging that the Company benefited between 2011 and 2014 from the suspension of ICMS/MG payments, which is provided for in RICMS/02, on fuel shipments to a thermoelectric plant assigned to CEMIG under a free lease arrangement. Pending judgment at an administrative level. 57,710 - Tax assessment notice requiring the payment of ICMS/SP in connection with an alleged improper record of tax credits related to the incoming of use and consumption materials linked to exports, as well as to an alleged tax credit recorded after the statute of limitation period. Pending judgment at an administrative level. 31,233 - Labor claims involving employees, former own employees and outsourced personnel of the Cubatão Plant in which various labor and social security amounts are claimed.


Labor claims involving employees, former own employees and outsourced personnel of the Ipatinga Plant in which various labor and social security amounts are claimed.


Action for annulment of an administrative ruling by the Administrative Council for Economic Defense (CADE), which sentenced the Company to pay fines for alleged violation of the economic order.

Pending ruling of admissibility of the appeal to the High Court of Justice (STJ) and to the Federal Supreme Court (STF) filed by the Company. 56,315 33,774

Action for annulment of an administrative ruling by the Administrative Council for Economic Defense (CADE), which fined Cosipa (currently Usiminas plant at Cubatão) for alleged violation of the economic order.

Pending ruling of admissibility of the appeal to the High Court of Justice (STJ) and to the Federal Supreme Court (STF) filed by the Company. 50,854 122,995

Other civil and environmental proceedings - 156,411 160,829

Other labor claims - 35,825 26,680

Other tax proceedings - 397,650 366,852 3,908,970 3,707,504


166

(ii) Usiminas Mecânica’s contingencies

12/31/2017 12/31/2016


Action claiming reimbursement of direct and indirect expenses incurred in the manufacturing and supply phases due to a disagreement between Usiminas Mecânica and the customer. Pending judgment. 614,087 555,945 Public Civil Action related to the construction of a bridge, claiming reimbursement to the customer of amounts added through an amendment to the construction contract. Pending judgment. 490,613 434,302 Public civil action filed by the Public Prosecution Office against Usiminas Mecânica, claiming reimbursement for alleged losses to the customer for improper expenses incurred in the construction of the bridge.

Pending decision about the request for annulment of the expert opinion. 101,530 89,716

Payment of ICMS/SP required by the State Government alleging various violations related to the issue and accounting for invoices issued for manufacturing purposes. Pending administrative decision. 12,778 12,035 Labor claims involving employees, former own employees and outsourced personnel in which various labor and social security amounts are claimed.


Other civil and environmental proceedings - 16,584 3,080

Other tax proceedings - 47,323 128,487

1,377,962 1,297,881


167

(iii) Soluções Usiminas’ contingencies

12/31/2017 12/31/2016


Several tax assessment notices related to non-approval of the offset of PIS against other taxes, such as COFINS, Tax for Social Security Financing (FINSOCIAL), ICMS and the National Institute for Colonization and Agrarian Reform (INCRA). The assessment notices were challenged. 26,280 24,739 Labor proceedings mainly consisting of claims by former employees in connection with disputes about the amount of compensation paid on terminations. Pending judgment. 102,774 107,751 Other tax proceedings - 73,445 59,883

Other civil proceedings - 12,371 11,307

214,870 203,680

(iv) Mineração Usiminas’ contingencies

12/31/2017 12/31/2016


Tax assessment notice issued by the Tax Office of Ipatinga/MG requiring the payment of ICMS arising from the improper use of ICMS credits related to the incoming of property, plant and equipment items. The tax assessment notice was challenged. - 22,586 Petition for Writ of Mandamus seeking a preliminary injunction with the purpose of rendering null and void the Instrument of Retention of Goods in the Port of Itaguaí/RJ. Acknowledgment phase. - 22,347

Arbitration proceeding in which the reimbursement of additional losses and costs incurred during the performance of the equipment construction works and not recognized by the customer is challenged. Pending examining and trial hearing. 9,975 18,404

Arbitration proceeding initiated by Mineração Usiminas in which contractual terms are discussed with the counterparty. Pending examining and trial hearing. 1,096,398 -

Other civil proceedings - 15,614 1,897

Other labor claims - 16,441 10,495

Other tax proceedings - 2,030 1,229 1,140,458 76,958

12/31/2017

12/31/2016

Parent company’s contingencies 3,908,970

3,707,504

Usiminas Mecânica’s contingencies 1,377,962

1,297,881

Soluções Usiminas’ contingencies 214,870

203,680

Mineração Usiminas’ contingencies 1,140,458

76,958

Other companies’ contingencies 24,299

17,842

Total Consolidated 6,666,559

5,303,865


168

(c) Contingent assets

The Company is the plaintiff in a lawsuit claiming the receipt of the full amount paid by Usiminas related to its Cubatão and Ipatinga branches to Eletrobrás, as a compulsory loan, in accordance with the legislation criteria in force at the time the tax was paid.

The proceedings related to the Company's contingent assets, for which final and unappealable decisions have not yet been issued and, as a result, have not been recognized in the balance sheet, are described below:

12/31/2017 12/31/2016


Action claiming the receipt of the full amount paid by the Company to Eletrobrás for compulsory loan purposes related to its Ipatinga branch, in accordance with criteria established in the legislation in force at the time the payment was made.

The Company is preparing a petition for liquidation by determination of the court to be included in the case records. 1,326,601 1,792,663

Action claiming the receipt of the full amount paid by the Company to Eletrobrás for compulsory loan purposes related to its Cubatão branch, in accordance with criteria established in the legislation in force at the time the payment was made.

A final and unappealable decision was rendered with respect to the action relating to the Cubatão branch. In June 2016, the Company filed for liquidation by determination, with the immediate appointment of a forensic expert 797,430 942,122

Action challenging the restriction on the right to record PIS and COFINS credits on machinery, equipment and other property, plant and equipment items acquired prior to April 30, 2004. Pending judgment by the appellate court. 241,726 221,787 Other contingent assets - 207,261 106,872

2,573,018 3,063,444

The Company was also the plaintiff in an action related to the unconstitutionality of the inclusion of ICMS and the contributions themselves in the calculation bases of PIS and COFINS on Imports. The final and unappealable decision issued in August 2015 recognized the right to offset the amounts effectively overpaid. The Company had the credits approved by the Federal Revenue Office. Of the total amount, R$332,827 were offset up to December 31, 2016. During the 12-month period ended December 31, 2017, the amount offset totaled R$405,578.

25 Provision for environmental recovery At December 31, 2017, the subsidiary Mineração Usiminas S.A. has a provision for environmental recovery of areas under exploration of R$158,333 (December 31, 2016 –

R$143,042). The expenditures for environmental recovery were recorded as part of the costs of the respective assets against the provision that will support such expenses, and take into consideration the management´s estimates regarding future expenses discounted to present value at the actual rate of 10.69% p.a. The estimates of expenses are reviewed periodically, adjusting, whenever necessary, the amounts previously recorded.


169

26 Retirement benefit obligations

The amounts and information on retirement benefit obligations are as follows:


12/31/2017 12/31/2016 12/31/2017 12/31/2016

Balance sheet obligations for:

Pension benefits

648,860 992,924

648,860 992,924

Post-employment medical benefits

401,464 345,495

401,464 349,803

1,050,324 1,338,419

1,050,324 1,342,727


12/31/2017 12/31/2016 12/31/2017 12/31/2016

Income (expenses) recognized in the statement of income related to (Note 32 (b))

Pension benefits 7,771 14,473 7,771 14,473

Post-employment medical benefits (36,273) (12,652) (36,867) (12,993)

(28,502) 1,821 (29,096)

1,480

Parent

company

Consolidated

12/31/2017 12/31/2016 12/31/2017 12/31/2016

Actuarial gains (losses) recognized directly in other comprehensive income (loss)

(45,117)

(409,258)

(44,365)

(416,580)

265,384

73,432

265,384

73,432 Actuarial gains (losses) of debts contracted and directly

recognized in other comprehensive income (loss) - CPC 33 and IFRIC 14

(160,575)

73,432

(160,575)

73,432

(45,117)

(409,259)

(44,365)

(409,259) Decrease (increase) in assets (asset ceiling) in other

comprehensive income (loss) - paragraph 58, CPC 33 and IAS 19

265,384 67,772

265,384 67,773

Accumulated actuarial gains (losses) recognized in other comprehensive income (loss) (i)

59,692

(268,054) 60,444

(275,375)

(i) At December 31, 2017, total balance in the Parent company includes the amount of R$2,708 (December 31, 2016 –

R$7,321) and total balance in Consolidated includes the amount of R$752 (December 31, 2016 – R$234) related to

actuarial gains (losses) of subsidiaries and jointly-controlled subsidiaries, recorded by the equity method of accounting.


170

26.1 Supplementary pension plans

In August 1972, the Company set up Caixa dos Empregados da Usiminas (CAIXA). On March 29, 2012, Supervisory Office (PREVIC) approved the merger of Cosipa Private Pension Foundation (FEMCO), set up in August 1975, into Caixa dos Empregados da Usiminas (CAIXA), both closed-end not-for-profit supplementary pension entities. With this approval, the Manager of the pension plans of Usiminas was renamed Previdência Usiminas. Previdência Usiminas, in line with the applicable legislation, aims mainly at managing and running private pension benefit plans. Plans managed by Previdência Usiminas

(i) Benefit Plan 1 - PB1

This is a defined benefit plan, which has been closed for new enrollments since November 1996. It provides the following benefits converted into life annuity: length-of-service retirement, disability retirement, age superannuation, special retirement, retirement based on the contribution period and pension on death. Furthermore, the members on this plan are entitled to benefits such as redemption, portability, funeral grant, prisoner’s family grant and sickness allowance.

(ii) Benefit plan 2 (USIPREV)

Variable contribution (VC) benefit plan, operating since August 1998, provided to the employees of the sponsor companies. Currently, this is the only Usiminas Plan accepting new enrollments.

During the accumulation phase, the USIPREV member defines their monthly contribution to set up savings reserve. Upon granting of the benefit, the member may opt for receiving their benefits in a monthly annuity ranging between 0.5% and 1.5% of its Account Balance or in a monthly annuity between 60 and 360 months. The “Charter Member” – on the plan until April 13, 2011, may also opt for converting their account balances into a monthly life annuity. In this case, during the payout phase, USIPREV will be similar to a Defined-benefit-type plan (DB).

The benefits offered by this plan comprise: programmed retirement, vesting, portability, disability retirement; sickness allowance and survivor benefit – pre and post retirement. The following benefits are also covered: self-funded retirement plan, vesting, portability and redemption.


171

(iii) Defined-benefit-type plan (PBD)

A defined benefit plan, which has been closed for new enrollments since December 2000.

It offers the following benefits converted into life annuity: retirement by length of service, disability retirement, age superannuation, special retirement and vesting.

Furthermore, the members on this plan are entitled to benefits such as redemption, portability, funeral grant, birth allowance and sickness allowance.

(iv) COSIPREV

A defined-benefit-type plan, which has been closed for new enrollments since April 30, 2009

The benefits offered are the following: programmed retirement, disability retirement and vesting.

In addition, members are entitled to retirement, sickness allowance, redemption and portability.

The technical reserves of benefit plans managed by Previdência Usiminas are calculated by an independent actuary hired by the Company, and are used to pay benefits granted and to be granted to members and their beneficiaries.

26.2 Debts contracted – minimum requirements

The Company has taken out debts in connection with the minimum requirements for payment of contributions, for the purpose of covering the gap in relation to the services already received. In the event of non-recoverable surplus, the debts taken are recognized as an additional liability in net actuarial liabilities. At December 31, 2017, the debit balance of the referred to debts payable by Company to Previdência Usiminas for PB1 and PBD plans amounted to R$654,370 (December 31, 2016 - R$1,006,590). The general characteristics of debts used in the actuarial calculation are described below.

The Company and other sponsoring employers of the PB1 plan have been paying monthly and special contributions, as required to cover the insufficient reserve identified in December 1994. This insufficient reserve is to be amortized by the sponsoring employers within 19 years, as from 2002, at the interest rate of 6% p.a., and monthly adjusted by the General Market Price Index (IGP-M).


172

The PBD plan debit balance is determined at the end of each year, based on direct actuarial revaluation of provisions, which takes into account the direct actuarial revaluation of mathematical estimates of benefits granted and to be granted. Over the subsequent year, as defined in the actuarial revaluation system, the debt is adjusted by the monthly surplus or deficit computed in the PBD plan, and by the payment of installments falling due in the respective period. This debt balance must be amortized in 177 installments, corresponding to the monthly installments calculated based on the “Price Table”, at an interest rate equivalent to 6% (six percent) p.a., and monthly adjustment by the National Consumer Price Index (INPC). The collateral of the PBD plan debt comprises assets amounting to approximately R$146,058 at December 31, 2017.

26.3 Actuarial calculation of retirement plans

The amounts calculated based on the actuarial report, and recognized in the balance sheet, are shown below:


12/31/2017

PB1 PBD USIPREV COSIPREV

TOTAL

Present value of actuarial liability (3,724,118) (1,581,302) (917,162) (3,370) (6,225,952)

Fair value of assets 4,729,071 1,481,199 1,050,667 29,829 7,290,766

1,004,953 (100,103) 133,505 26,459 1,064,814

Asset ceiling (1,004,953) - (128,769) (25,685) (1,159,407)

Minimum requirements (additional liabilities) (520,295)

(33,972)

-

-

(554,267)

(520,295) (134,075) 4,736 774 (648,860)


12/31/2016


TOTAL

Present value of actuarial liability

(3,535,068)

(1,492,519)

(1,671,295)

(3,824)

(6,702,706)

Fair value of assets 4,210,713 1,442,293 1,813,122 27,810 7,493,938

675,645 (50,226) 141,827 23,986 791,232

Asset ceiling (675,645) - (134,330) (17,817) (827,792)

Minimum requirements (additional liabilities)

(693,578)

(262,786)

-

-

(956,364)

(693,578) (313,012) 7,497 6,169 (992,924)

USIPREV's sponsoring employers are jointly liable to the obligations related to coverage of risk benefits offered by Previdência Usiminas to members and respective beneficiaries of this Plan.


173

USIPREV and COSIPREV plans have a Pension Fund from members’ account balances not used in benefit payouts. As provided for in the plans regulation, this fund may be used to fund these plans in the future. At December 31, 2017, the Pension Fund portion attributed to Usiminas amounts to R$75,041 (December 31, 2016 – R$81,797). Changes in the defined benefit obligation in the reporting periods are as follows:

Parent company and

consolidated

12/31/2017 12/31/2016

Opening balance (6,702,706) (5,846,362)

Account balance determined in prior year 802,111 -

Current service cost (708) (1,106)

Cost of interest (601,973) (711,465)

Benefits paid 571,308 517,886

Adjustments - Changes in benefit plans - 1,713

Actuarial gains (losses) (293,984) (663,372)

(6,225,952) (6,702,706)

Changes in fair value of plan assets in the reporting periods are as follows:


12/31/2017 12/31/2016

Opening balance 7,493,938 6,688,535

Account balance determined in prior year (802,111)

Expected return on assets 951,138 1,110,023

Actual contributions during the year 219,109 213,337

Benefits paid (571,308) (517,957)

Actuarial gains (losses) - -

Closing balance 7,290,766 7,493,938


174

The amounts recognized in the statement of income are shown below:


12/31/2017 12/31/2016

Current service cost (708) (1,199)

Cost of interest (690,299) (718,718)

Expected return on assets 698,778 734,294

Other - 96

7,771 14,473

The charges shown above were recognized in "Other operating expenses (income), net” in statement of income (Note 32(b)), net of post-employment benefits in the amount of R$36,273 (December 31, 2016 – R$12,652). The actual return on plan assets was R$951,139 (December 31, 2016 – R$1,110,023). The contributions expected for the post-employment benefit plans for 2018 total R$211,967. Actuarial assumptions 12/31/2017 12/31/2016

Discount rate (i)

Inflation rate 4.30 4.30%

Expected return on assets – PB1 and PBD 0% 0%

Expected return on assets – USIPREV and COSIPREV 0% 0%

Future salary increases From 1.66% to

3.04% 6.03%

Growth in the benefits of the Government Social Security 4.3% 4.30%

(i) At December 31, 2017, the actual discount rate presents the following actuarial assumptions by plan: PB1, 5.30%; PBD,

5.30%; USIPREV, 5.40%; and COSIPREV, 4.40%. (ii) At December 31, 2016, the actual discount rate presents the following actuarial assumptions by plan: PB1, 6.10%; PBD,

6.10%; USIPREV, 6.10%; and COSIPREV, 6.33%.

The assumptions referring to mortality rate are set according to the actuaries’ opinion, based on published statistics and their experience, according to note 26.5.


175

26.4 Experience adjustments

The effects of adjustments computed based on experiences for the period are as follows:

12/31/2017


TOTAL RETIREMENT

PLANS

HEALTH-

CARE PLAN Total

Present value of the defined benefit obligation (3,724,118) (1,581,302) (917,162) (3,370) (6,225,952)

(401,464) (6,627,416)

Fair value of plan assets 4,729,071 1,481,199 1,050,667 29,829 7,290,766

- 7,290,766

Plan surplus (deficit) 1,004,953 (100,103) 133,505 26,459 1,064,814

(401,464) 663,350

Experience adjustments on plan obligations 77,495 20,057 6,201 587 104,340

45,622 149,962

Return on assets Plan – greater

(lower) than the discount rate

206,050 19,648 27,580 (916) 252,362

- 252,362

12/31/2016


Total retirement plans

Healthcare

plan TOTAL

Present value of the defined benefit obligation

(3,535,068)

(1,492,519)

(1,671,295)

(3,824) (6,702,706)

(98,703) (6,801,409)

Fair value of plan assets

4,210,713

1,442,293

1,813,122 27,810 7,493,938

- 7,493,938

Plan surplus (deficit)

675,645

(50,226)

141,827 23,986 791,232

(98,703) 692,529

Experience adjustments on plan obligations

(118,471)

(47,955)

(15,509) 839 (181,096)

(209,639) (390,735)

Return on assets Plan – greater (lower)

than the discount rate (189,957) (30,563) (48,284) (10,463) (279,267)

- (279,267)

26.5 Actuarial assumptions and sensitivity analysis


12/31/2017

Significant actuarial assumptions PB1 PBD USIPREV COSIPREV

Present value of obligation (3,724,118) (1,581,302) (917,162) (3,370)

Discount rate applied to plan liabilities 9.83% 9.83% 9.83% 8.89%

Mortality table applied to plans

AT-2000 reduced by

10%

AT-83 reduced by

10%

AT-2000 reduced by

50% (M) and 40%(F)

AT-2000 reduced by

20%

Mortality table applied to invalids AT-1983 AT-1949

Men AT-1949

Men Not

applicable

Sensitivity analysis on plan obligations discount rate

1% increase on actual rate

(297,079)

(123,845)

(78,682)

(114)

1% decrease on actual rate

347,349

144,465

95,643

123

Sensitivity analysis on Mortality Table

Reduced by 10%

98,681

43,323

10,429

(47)

The sensitivity analysis on actuarial obligations was prepared considering solely changes in the discount rate and the mortality table applied to plan liabilities.


176

26.6 Post-retirement healthcare benefit plans

(a) COSaúde

The Cosaúde Plan was created with the objective of providing its members with coverage of medical and hospital expenses. The funds to support the Plan, which was closed for new enrollments in March 2010, are obtained from monthly contributions by users.

The Plan has the Health Fund - COSaúde, designed to manage expenses that are borne by users. These expenses refer to hospital, clinical and/or surgical hospitalizations, as well as to other expensive outpatient procedures provided for in the Plan's regulations. The Health Fund - COSaúde is an unregulated health plan, and is registered with the National Supplementary Health Care Agency (ANS) as an operating cost. Its management is carried out solely by company that operates the health plans, and, therefore without the Company's participation. Additionally, for procedures not covered by Cosaúde, the Company grants a subsidy to members who retired up to 2002, as well as to their respective pensioners and dependents. This benefit, which ranges from 20% to 40% of the medical expenses, varies according to the sum of the INSS benefit plus Usiminas Pension benefit.

(b) Saúde Usiminas In 2010, Usiminas established the Usiminas Health Plan. This Plan is open for new enrollments to all employees and retirees. The main characteristics of the Saúde Usiminas plan are the following: (i) Regulated plan by Law 9,656/98 covering clinical and hospital procedures, in

accordance with the list of covered procedures disclosed by the National Supplementary Health Care Agency (ANS);

(ii) Prepaid plan from Operadora de Planos de Saúde Fundação São Francisco Xavier; (iii) Price set by age; 60, 70 or 80% of the monthly fee is paid by the Company, in

accordance with the employee's salary; (iv) Terminated or retired employees may continue as a member of the Plan, in

accordance with articles 30 and 31 of Law 9,656/98, provided that the monthly fees are fully paid by them.

In addition to the assumptions above, the key actuarial assumption was the long-term increase in the medical services costs, of 11.08% p.a. for the year ended December 31, 2017, and 11.83% for the year ended December 31, 2016. The amounts recognized in the balance sheet, in accordance with the actuarial report, were determined as follows:

Parent company

Consolidated

12/31/2017

12/31/2016

12/31/2017

12/31/2016

Present value of actuarial liability (401,464) (345,495) (401,464) (349,803)


177

26.7 Retirement plan assets

Retirement plan assets comprise the following: 12/31/2017 12/31/2016

Amount % Amount %

Company shares 369,409 5 281,747 4

Federal government securities 3,651,891 50 4,318,270 58

Fixed income 2,618,965 36 2,466,039 33

Real estate investments 274,529 4 280,370 4

Other 375,972 5 147,512 1

7,290,766 100 7,493,938 100

The pension plan assets include 34,109,762 common shares of the Company, at the fair value of R$369,409 (December 31, 2016 – 34,109,762 common shares at fair value of R$281,747).

The expected return on plan assets corresponds to the discount rate defined based on long-term federal government bonds, which are bound to the inflation rate, and are in line with the weighted average term of future payment flow of the analyzed benefits.

27 Equity

(a) Share capital

At December 31, 2017, the Company’s capital is R$13,200,295, comprising 1,253,079,108 book entry shares with no par value, of which 705,260,684 common shares; 547,740,661 Class A preferred shares and 77,763 Class B preferred shares, as shown below:

Common shares

Class A Preferred

Class B Preferred Total

Total shares at December 31, 2017 705,260,684 547,740,661 77,763 1,253,079,108

Total treasury shares (2,526,656) (22,366,733) - (24,893,389)

Total shares except treasury stock 702,734,028 525,373,928 77,763 1,228,185,719

Under the bylaws, the Company is authorized to increase its capital up to the amount corresponding to 11,396,392 in preferred shares of the existing class.


178

Each common share entitles its holder to one vote at General Meetings. Preferred shares have no vote but are entitled to (i) receive dividends 10% higher than the dividends attributed to common shares; (ii) receive all the bonuses voted in General Meetings, under the same conditions as common shares; (iii) priority in the reimbursement of capital, with no right to premium, in the event of Company liquidation; and (iv) right to vote at meetings if the Company does not pay preferred dividends during three consecutive years. The preferred shares may not be converted into common shares. Holders of Class B preferred shares have priority in the reimbursement of capital, with no right to premium, in the event of Company liquidation. Holders of Class A preferred shares will be entitled to the same priority, however, only after the priority of Class B preferred shares is complied with. Class B preferred shares may be converted into Class A preferred shares at any time, at the exclusive discretion of the stockholder. All stockholders are entitled to a minimum dividend of 25% of the net income for the year, calculated in accordance with Brazilian corporate legislation.

(b) Reserves

At December 31, 2017, the reserves are as follows:

Excess upon subscription of shares – set up in the merger process, pursuant to article 14, sole paragraph of Law 6,404/76. This reserve can be used to offset losses which exceed retained earnings and revenue reserves, for the redemption, reimbursement or purchase of shares, redemption by beneficiaries, capital increases and payment of dividends on preferred shares, when applicable (article 200 of Law 6,404/76).

Treasury shares – at December 31, 2017 and 2016, the Company owned 2,526,656 common shares and 22,366,733 Class A preferred shares in treasury.

Special goodwill reserve - refers to the recognition of the tax benefit from the downstream merger conducted by the subsidiary Mineração Usiminas. This reserve may be used to offset losses exceeding retained earnings and revenue reserves.

Recognized stock option granted - refers to the recognition of shares granted under the Stock Option Plan (Note 38).

Legal reserve - credited annually with 5% of profit for the year up to the maximum of 20% of capital.


179

Reserve for investments and working capital - This reserve cannot exceed 95% of capital and it may be used for offsetting losses, for the distribution of dividends, redemptions, reimbursement or purchase of shares or, even, be capitalized.

(c) Carrying value adjustments

Carrying value adjustments refer substantially to:

(i) Result from equity transaction: corresponds to changes in shareholding interest, not resulting in loss or acquisition of control. At December 31, 2017, the credit balance of R$845,238 (December 31, 2016 – R$858,620) substantially refers to the corporate restructuring of Mineração Usiminas.

(ii) Actuarial gains and losses: correspond to actuarial gains and losses calculated in

accordance with CPC 33 and IAS 19 (Note 26). At December 31, 2017, the debit balance of this account totals R$906,481 (December 31, 2016 – R$966,173).

(iii) Monetary restatement of property, plant and equipment: corresponds to the

application of IAS 29. The referred to adjustment is based on the useful life of property, plant and equipment items against retained earnings At December 31, 2017, the credit balance of this account totals R$121,788 (December 31, 2016 –

R$133,553).

(d) Dividends and interest on capital Proposed dividends and interest on capital related to 2017 are as follows: 12/31/2017

Profit for the year (i) 233,015

Legal reserve (5%) (11,651)

Dividend calculation basis 221,364

Dividends payable 55,341

Amount per share (ON) R$0.043211

Amount per share (PN) R$0.047532

Total 55,341

Percentage of dividends in relation to profit for the year 25%

(1) Profit of the parent company, in accordance with the accounting practices adopted in Brazil


180

Changes in dividends and interest on payable are presented below:

Parent


Nature 12/31/2017 12/31/2016 12/31/2017 12/31/2016

Dividends payable at the beginning of the year 139 140 22,001 142

Payment of taxes and interest on capital (1) (1)

(25,505) (3)

Interest on capital and dividends approved 55,341 - 79,148 21,862

Total dividends payable at the end of the year 55,479 139 75,644 22,001

Dividends not claimed within three years are forfeited and revert to the Company. For 2016, considering the loss for the year determined by the Company, dividends and/or interest on capital were not distributed/approved.

28 Segment reporting

Usiminas has four reportable operating segments, which offer different products and services and are managed separately. These segments are determined based on different legal entities and there are no different segments within the same company. The following summary describes the main operations of each of the reportable segments of Usiminas: Reportable segments Operations

Mining and logistics

Extraction and processing of iron ore as pellet feed, sinter feed and granulated iron ore. Storage, handling, transport of cargo and operation of highway and railroad cargo terminals.Sales of iron ore are mainly destined for the steel segment. The sales of iron ore are mainly intended for the Steel segment.

Steelworks Manufacture and sales of steel products. A portion of sales is for the steel transformation and capital goods segments.

Steel transformation Transformation and distribution of steel products. Capital goods Manufacture of equipment and installations for several industries.

Management reviews the internal managerial reports for each segment periodically.


181

Information on operating income (loss), assets and liabilities by reportable segment 12/31/2017

Mining and

logistics Steelworks Steel

transformation Capital goods Subtotal

Eliminations and adjustments Total

Revenue 524,755 9,980,280 2,496,990 287,596 13,289,621 (2,555,503) 10,734,118

Cost of sales (342,908) (8,488,708) (2,328,070) (278,202) (11,437,888) 2,338,864 (9,099,024)

Gross profit (loss) 181,847 1,491,572 168,920 9,394 1,851,733 (216,639) 1,635,094

Operating (expenses)/income 60,430 (497,829) (99,470) (62,528) (599,397) (151,827) (751,224)

Selling expenses (31,434) (155,940) (46,271) (12,481) (246,126) (4,824) (250,950)

General and administrative expenses (20,015) (311,420) (54,017) (31,975) (417,427) 13,034 (404,393)

Other income (expenses) 61,153 (291,463) 818 (18,010) (247,502) (3,275) (250,777) Share of results of subsidiaries, jointly-controlled subsidiaries and associates

50,726 260,994 - (62) 311,658 (156,762) 154,896

Operating (loss) profit 242,277 993,743 69,450 (53,134) 1,252,336 (368,466) 883,870

Finance result 38,961 (506,463) 3,286 7,550 (456,666) (6,254) (462,920)

Profit (loss) before income tax and social contribution

281,238 487,280 72,736 (45,584) 795,670 (374,720) 420,950

Income tax and social contribution (51,601) (99,727) (22,442) 15,247 (158,523) 52,653 (105,870)

Profit (loss) for the year 229,637 387,553 50,294 (30,337) 637,147 (322,067) 315,080

Attributable to

Controlling interests 163,225 387,553 34,641 (30,337) 555,082 (322,067) 233,015

Non-controlling interests 66,412 - 15,653 82,065 - 82,065

Assets 4,221,699 23,973,135 1,437,086 631,843 30,263,763 (4,279,286) 25,984,477

Total assets include: Investments in associates (except goodwill and investment properties) 396,712 40,832 - 2,571 440,115 - 440,115

Additions to non-current assets (except financial instruments and deferred tax assets) 25,889 227,804 50,882 14,826 319,401 (2,868) 316,533

Current and non-current liabilities 581,960 10,146,763 350,593 184,596 11,263,912 (451,261) 10,812,651


182

12/31/2016

Mining and

logistics Steelworks Steel

transformation Capital goods Subtotal

Eliminations and adjustments Total

Revenue 366,144 7,518,356 1,853,499 568,273 10,306,272 (1,852,072) 8,454,200

Cost of sales (295,546) (7,080,057) (1,730,622) (529,212) (9,635,437) 1,668,559 (7,966,878)

Gross profit (loss) 70,598 438,299 122,877 39,061 670,835 (183,513) 487,322

Operating (expenses)/income 230,053 (672,928) (103,235) (59,234) (605,344) (103,570) (708,914)

Selling expenses (35,634) (178,336) (41,820) (12,290) (268,080) (4,651) (272,731)

General and administrative expenses (19,585) (261,707) (55,468) (31,783) (368,543) 14,325 (354,218)

Other income (expenses) 237,684 (437,097) (5,947) (15,090) (220,450) (4,376) (224,826) Share of results of subsidiaries, jointly-controlled subsidiaries and associates

47,588 204,212 - (71) 251,729 (108,868) 142,861

Operating (loss) profit 300,651 (234,629) 19,642 (20,173) 65,491 (287,083) (221,592)

Finance result 128,157 (147,102) 3,784 12,586 (2,575) (27,581) (30,156)

Profit (loss) before income tax and social contribution

428,808 (381,731) 23,426 (7,587) 62,916 (314,664) (251,748)

Income tax and social contribution (128,763) (233,599) (10,370) 2,217 (370,515) 45,420 (325,095)

Profit (loss) for the year 300,045 (615,330) 13,056 (5,370) (307,599) (269,244) (576,843)

Attributable to

Controlling interests 212,602 (615,330) 7,390 (5,370) (400,708) (269,244) (669,952)

Non-controlling interests 87,443 - 5,666 - 93,109 - 93,109

Assets 5,004,338 24,126,728 1,398,071 715,780 31,244,917 (4,990,172) 26,254,745

Total assets include: Investments in associates (except goodwill and investment properties 381,783 71,518 - 2,633 455,934 - 455,934

Additions to non-current assets (except financial instruments and deferred tax assets) 38,156 243,609 32,842 11,193 325,800 (3,463) 322,337

Current and non-current liabilities 506,189 10,543,619 352,861 180,328 11,582,997 (519,886) 11,063,111

Sales between segments are carried out at arm's length. Billings are dispersed and the Company and its subsidiaries do not have third-party customers representing more than 10% of their billings.


183

29 Revenue The accounting standards establish that the Company must disclose revenue by product and geographic area, unless the necessary information is not available or the cost of its preparation is excessive. Most of the parent company and consolidated net revenue comes from the domestic market, and management believes that information by product and geographic area within Brazil is not significant for decision making and, therefore, cannot be used as an analysis tool for determining trends and historical development. In view of this scenario and considering that the breakdown of revenue by product and geographic area is not maintained by the Company on a consolidated basis and that management does not use this information on a managerial basis, the Company is not disclosing such information in these financial statements. The reconciliation between gross and net revenue is as follows:

Parent


12/31/2017 12/31/2016 12/31/2017 12/31/2016

Sales of products

Domestic market 11,057,570 8,577,136 11,686,230 9,119,740

Foreign market 1,345,119 909,357 1,533,157 989,187

12,402,689 9,486,493 13,219,387 10,108,927

Sales of services

Domestic market 7,936 6,513 191,940 552,335

Foreign market 451 - 451 -

8,387 6,513 192,391 552,335

Gross revenue 12,411,076 9,493,006 13,411,778 10,661,262

Deductions from revenue (2,433,547) (1,977,452) (2,677,660) (2,207,062)

Net revenue 9,977,529 7,515,554 10,734,118 8,454,200


184

30 Expenses by nature

Parent


12/31/2017 12/31/2016 12/31/2017 12/31/2016

Depreciation, amortization and depletion (966,188) (1,011,828) (1,171,851) (1,216,491)

Employee benefits and expenses (851,370) (761,951) (1,215,816) (1,329,214)

Raw materials and consumables (6,123,905) (4,650,909) (5,874,055) (4,546,630)

Scheduled maintenance (104,193) (110,020) (106,468) (111,190)

Judicial charges (20,741) (29,904) (32,002) (33,546)

Distribution costs (82,443) (80,495) (112,446) (111,192)

Loss on the sale of excess electricity (i) 12,339 (127,902) 14,012 (132,821)

Third-party services (745,554) (681,265) (893,556) (837,022)

Income (expenses) in litigation, net (92,702) (29,483) (118,830) (38,977)

Profit on the sale/write-off of PP&E, intangible assets

and

investment (1,255) 71,748 (1,183) 71,473

Impairment of assets,

net (73,010) (7,277) (74,892) 343,006

PIS/COFINS credits on imports 237,492 176,299 237,492 176,299

Porto Sudeste Agreement - - 205,106 -

Freight charges and insurance (322,005) (270,991) (436,603) (354,388)

Contractual obligations (ii) - (70,700) - (70,700)


Losses on advances to suppliers - (37,285) - (37,285)

Other (273,496) (388,482) (399,739) (527,462)

(9,423,788) (8,060,368) (10,005,144) (8,818,653)

Cost of sales (8,676,104) (7,200,317) (9,099,024) (7,966,878)

Selling expenses (155,940) (177,543) (250,950) (272,731)

General and administrative expenses (301,419) (251,834) (404,393) (354,218)

Other operating income (expenses), net (290,325) (430,674) (250,777) (224,826)

(9,423,788) (8,060,368) (10,005,144) (8,818,653)

(i) At December 31, 2017, the Company had receivables from the sale of excess electricity amounting to R$33,578

(December 31, 2016 – R$ 13,223), which is recorded in Other current assets.

(ii) At December 31, 2016, it refers to a penalty for termination of an agreement with a supplier.


185

31 Employee expenses and benefits

Parent


12/31/2017 12/31/2016 12/31/2017 12/31/2016

Salaries and social charges (655,925) (567,838) (961,618) (1,048,169)

Social security charges (119,885) (122,482) (166,264) (193,561)

Retirement plans and post-employment medical benefits (28,502) 1,821 (29,096) 1,480

Bonuses (12,606) (37,379) (13,324) (37,684)

Profit sharing (14,514) - (22,484) (10,605)

Retirement plan costs (5,569) (19,202) (6,024) (20,275)

Stock option plan (789) (3,077) (951) (3,719)

Other (13,580) (13,794) (16,055) (16,681)

(851,370) (761,951) (1,215,816) (1,329,214)

Employee benefit expenses are recorded under "Cost of sales", "Selling expenses" and "General and administrative expenses", in accordance with the function of each employee.

32 Operating income (expenses) (a) Selling and general and administrative expenses

Parent


12/31/2017 12/31/2016 12/31/2017 12/31/2016

Selling expenses

Personnel (26,943) (21,556) (64,659) (58,887)


Depreciation and amortization (3,125) (3,130) (4,498) (4,608)

Distribution costs (82,443) (80,495) (112,446) (111,192)

Sales commission (3,874) (1,669) (14,245) (9,813)


General expenses (9,109) (6,450) (14,846) (6,370)

(155,940) (177,543) (250,950) (272,731)

General and administrative expenses

Personnel (150,146) (142,340) (193,005) (182,603)


Depreciation and amortization (35,589) (29,221) (43,985) (38,391)

Management fees (i) (17,055) 5,248 (22,779) (417)

General expenses (35,765) (31,642) (55,167) (51,603)

(301,419) (251,834) (404,393) (354,218)

(i) At December 31, 2016, refers to the reversal of management fees related to 2015 (Note 36 (d)).


186

(b) Other operating income (expenses)

Parent


12/31/2017 12/31/2016 12/31/2017 12/31/2016

Other finance income

Revenue from sale of electricity 363,628 125,038 385,134 144,131

PIS/COFINS credits on imports (i) 237,492 176,299 237,492 176,299

Recovery of taxes in legal proceedings 19,797 5,817 21,485 6,704

Porto Sudeste Agreement - - 205,106 -

Reversal of impairment of assets - - - 357,508 Sales of investments, fixed assets and intangible assets

8,150 94,120

8,649 94,289

Recovery of costs 870 25,830 4,800 32,361

Recovery of expenses 7,415 9,750 8,087 10,385

Rental of properties 3,641 5,137 4,217 5,516

Revenue from sundry sales 4,425 5,859 5,102 6,950

Reintegra Project 25,420 844 25,420 844

Other income 6,278 19,114 10,443 12,750

677,116 467,808 915,935 847,737

Other operating expenses

Expenses for the sale of electricity (317,654) (243,001) (335,498) (265,247)

Impairment of assets (73,010) (7,277) (74,892) (14,502)

Expenses in temporary shutdown of equipment items (283,364) (383,726) (403,844) (485,145)

Restructuring of operations - (3,823) - (3,823)

Cost of sundry sales and freight charges (479) (11,548) (911) (11,582)

Judicial charges (20,741) (29,904) (32,002) (33,546)

Income (expense) from litigation, net (92,702) (29,483) (118,830) (38,977)

Losses on advances to suppliers - (37,285) - (37,285)

PIS and COFINS on the sale of electricity (33,635) (9,939) (35,624) (11,705)

Technological research (25,382) (25,180) (25,382) (25,180)

Profit on the sale/write-off of PP&E, investment and intangible assets (9,405) (22,372) (9,405) (22,816)

Taxes (INSS, ICMS, Municipal real estate tax (IPTU), etc.) (14,544) (7,565) (22,722) (11,964)

Stock option plan (578) (2,170) 208 (1,805)

Environmental control (2,149) (774) (2,149) (774)

Post-employment benefits (pension and medical) (28,502) 1,821 (29,096) 1,480

Fine for contractual termination - (70,700) - (70,700)

Inventory adjustment (35,929) - (35,929) -

Other expenses (29,367) (15,556) (40,636) (38,992)

(967,441) (898,482) (1,166,712) (1,072,563)

(290,325) (430,674) (250,777) (224,826)

(i) Refers to the offset of credits approved by the Brazilian Federal Revenue Secretariat (RFB), as described in Note 24 (c).


187

33 Finance result

Parent


12/31/2017 12/31/2016 12/31/2017 12/31/2016

Finance income

Interest from customers 13,856 18,306 21,351 26,093

Income from financial investments 80,102 51,069 173,898 147,667

Monetary effects 15,730 35,187 35,169 126,554

Restatement of PIS/COFINS credits Imports (i) 168,087 156,529 168,087 156,529

Restatement of judicial deposits 26,108 34,578 31,612 47,334

Interest on tax credits 4,675 7,728 12,003 19,014

Realization of adjustment to present value of trade receivables 85,601 110,520 85,601 110,520

Reversal of the provision/restatement of judicial deposits / decrease in the REFIS installment program 18,256 24,045 19,975 24,045

Other finance income 36,214 8,137 13,542 13,462

448,629 446,099 561,238 671,218 Finance costs

Interest on borrowings and taxes payable in installments (636,409) (496,439) (636,533) (493,510)

Result of swap transactions 6,410 (159,839) (129) (302,123)

Monetary effects (100,495) (251,464) (116,573) (273,797)

PIS/COFINS on interest on capital (9,336) (2,905) (9,336) (2,905)

Interest on provisions for litigation (88,258) (73,057) (98,241) (91,782)

Adjustment to present value of trade payables (22,115) (20,605) (44,255) (41,771)

Commissions on borrowings and other (41,421) (64,828) (35,984) (51,081)

Credit assignment - - - (2,539)

Other finance costs (31,636) (51,184) (61,506) (80,964)

(923,260) (1,120,321) (1,002,557) (1,340,472)

Foreign exchange gains (losses), net (65,677) 726,054 (21,601) 639,098

(540,308) 51,832 (462,920) (30,156)

(i) Refers to the restatement of credits approved by the Brazilian Federal Revenue Service (RFB), as described in Note 24 (c).


188

34 Earnings (loss) per share

Basic and diluted

Basic and diluted earnings (loss) per share is calculated by dividing the profit (loss)

attributable to the Company’s stockholders by the weighted average number of common

and preferred shares in issue during the year excluding common shares acquired by the

Company and held in treasury (Note 27).

The Company does not have debt convertible into shares. The stock option plan does not include potential common or preferred shares for dilution purposes (Note 38).


12/31/2017 12/31/2016

Common

shares Preferred

shares

Total Common

shares Preferred

shares Total

Basic and diluted

Basic and diluted numerator

Profit (loss) available to controlling interests 127,855 105,160 233,015 (383,746) (286,206) (669,952)

Basic and diluted denominator Weighted average number of shares, excluding treasury shares

702,734,028 524,782,193 1,227,516,221

618,350,466 502,582,330 1,120,932,796

Basic and diluted earnings (loss) per share (R$) 0.18 0.20 - (0.60) (0.60) -


189

35 Commitments

At December 31, 2017, the Company has several commitments with third parties totaling

R$5,142,574 in Parent company and R$5,303,433 in Consolidated. The expected due

dates of such commitments are as follows.

Parent company

Expected due dates

Less than 1 year

From 1 to 3 years

From 4 to 5 years

Over 5 years

Total

Acquisition of property, plant and equipment 124,220

12,060

-

-

136,280

Suppliers 1,258,762

1,901,978

961,121

884,433

5,006,294

1,382,982

1,914,038

961,121

884,433

5,142,574

Consolidated

Expected due dates

Less than 1 year

From 1 to 3 years

From 4 to 5 years

Over 5 years

Total

Acquisition of property, plant and equipment 139,789

20,350

-

-

160,139

Suppliers 994,762

1,748,978

760,121

679,433

4,183,294

Operating Leases 40,000

120,000

120,000

680,000

960,000

1,174,551

1,889,328

880,121

1,359,433

5,303,433

(a) Capital commitments

At December 31, 2017, capital commitments total R$136,280 in Parent company and

R$160,139 in Consolidated and are intended for improvements on coke plant of Ipatinga,

refurbishing and improvements in the blast furnaces, enhancing the quality and reducing

costs, maintenance, technological update of its equipment as well as environmental

protection projects.e estão destinados à adequação das coquerias da usina de Ipatinga,

reformas e melhorias nos altos fornos, aumento da qualidade, redução de custos,

manutenção, atualização tecnológica de equipamentos e proteção ambiental.

(b) Commitments with suppliers

At December 31, 2017, commitments with suppliers total R$5,006,294 in Parent company

and R$4,183,294 in Consolidated and arise mainly from take-or-pay arrangements, and

contracts for the purchase of electricity and raw materials.

(c) Operating leases

The operating leases relate to lease of mineral rights and rental of railway wagons. At

December 31, 2017, the related amount corresponds to R$960,000 in Consolidated only.


190

36 Transactions with related parties

The Company's shareholding is as follows:

12/31/2017

Stockholder

Shares Common shares

Shares Preferred shares

Total

Number % Number % Number %

Nippon Usiminas Co. Ltd. (“Nippon Usiminas”) (i) 119,969,788 17.01 2,830,832 0.52 122,800,620 9.80

Ternium Investments S.A.R.L. (i) 198,766,651 28.18 6,987,367 1.28 205,754,018 16.42

Companhia Siderúrgica Nacional (“CSN”) 100,084,935 14.19 108,678,122 19.84 208,763,057 16.66

Previdência Usiminas (i) 34,109,762 4.84 - - 34,109,762 2.72

Nippon Steel & Sumitomo Metal Corporation (i) 100,351,191 14.23 307,926 0.06 100,659,117 8.03

Confab (i) 36,502,746 5.17 1,283,203 0.23 37,785,949 3.01

Prosid (i) 29,202,198 4.14 1,026,563 0.19 30,228,761 2.41

Siderar (i) 14,601,097 2.07 513,281 0.09 15,114,378 1.21

Metal One Corporation (i) 759,248 0.10 - - 759,248 0.06

Mitsubishi Corporation do Brasil S.A. (i) 7,449,544 1.06 - - 7,449,544 0.59

Usiminas in treasury 2,526,656 0.36 22,366,733 4.08 24,893,389 1.99

Other stockholders 60,936,868 8.65 403,824,397 73.71 464,761,265 37.10

Total 705,260,684 100.00 547,818,424 100.00 1,253,079,108 100.00

12/31/2016

Stockholder

Shares Common shares

Shares Preferred shares

Total

Number % Number % Number %

Nippon Usiminas Co. Ltd. (“Nippon Usiminas”) (i) 119,969,788 17.01 2,830,832 0.52 122,800,620 9.80

Ternium Investments S.A.R.L. (i) 198,766,651 28.18 6,987,367 1.28 205,754,018 16.42

Companhia Siderúrgica Nacional (“CSN”) 100,084,935 14.19 108,678,122 19.84 208,763,057 16.66

Previdência Usiminas (i) 34,109,762 4.84 - - 34,109,762 2.72

Nippon Steel & Sumitomo Metal Corporation (i) 100,351,191 14.23 307,926 0.06 100,659,117 8.03

Confab (i) 36,502,746 5.17 1,283,203 0.23 37,785,949 3.01

Prosid (i) 29,202,198 4.14 1,026,563 0.19 30,228,761 2.41

Siderar (i) 14,601,097 2.07 513,281 0.09 15,114,378 1.21

Metal One Corporation (i) 759,248 0.10 - - 759,248 0.06

Mitsubishi Corporation do Brasil S.A. (i) 7,449,544 1.06 - - 7,449,544 0.59

Usiminas in treasury 2,526,656 0.36 23,705,728 4.33 26,232,384 2.09

Other stockholders 60,936,868 8.64 402,485,402 73.46 463,422,270 36.99

Total 705,260,684 100.00 547,818,424 100.00 1,253,079,108 100.00

(i) Controlling stockholders through the stockholders' agreement


191

The main balances and transactions with related parties are presented below:

(a) Assets

Parent company

12/31/2017 12/31/2016

Trade

receivables Dividends receivable

Other receivables

Trade receivables

Dividends receivable

Other receivables

Controlling interests 26,668 - 4,011 14,467 - 4,216

Subsidiaries 136,915 48,584 103,674 151,043 52,864 97,804

Jointly-controlled subsidiaries 55 126,000 - 42 - 22

Associates 16,525 425 - 15,277 2,463 -

Other related parties 3,768 - - 11,349 - 4,370

Total 183,931 175,009 107,685 192,178 55,327 106,412

Current 167,931 175,009 53,742 192,178 55,327 46,632

Non-current 16,000 - 53,943 - - 59,780

Total 183,931 175,009 107,685 192,178 55,327 106,412

Consolidated

12/31/2017 12/31/2016

Trade

receivables Dividends receivable

Other receivables

Trade receivables

Dividends receivable

Other receivables

Controlling interests 26,668 - 4,011 14,467 - 4,216

Non-controlling interests 401 - - 453 - -

Jointly-controlled subsidiaries 55 126,000 - 42 - 22

Associates 16,592 13,078 - 15,277 2,463 -

Other related parties 3,768 - 650 11,349 - 5,020

Total 47,484 139,078 4,661 41,588 2,463 9,258

Current 31,484 139,078 1,514 41,588 2,463 5,416

Non-current 16,000 - 3,147 - - 3,842

Total 47,484 139,078 4,661 41,588 2,463 9,258

Receivables from related parties arise mainly from sales transactions. The receivables are unsecured in nature and are subject to interest. At December 31, 2017 and 2016, no provisions were recorded for receivables from related parties.


192

(b) Liabilities

Parent company

12/31/2017 12/31/2016

Trade

payables Other payables Borrowings Trade

payables Other payables Borrowings

Controlling interests 89 18,184 162,673 144 16,939 167,987

Subsidiaries 33,793 78,751 - 106,087 74,504 1,224,608

Jointly-controlled subsidiaries 33,215 - - 52,994 - -

Associates 1,494 - - 2,578 - -

Other related parties (i) 368,470 - - 588 - -

Total 437,061 96,935 162,673 162,391 91,443 1,392,595

Current 437,061 17,000 358 162,391 15,325 25,769

Non-current - 79,935 162,315 - 76,118 1,366,826

Total 437,061 96,935 162,673 162,391 91,443 1,392,595

(i) At December 31, 2017, accounts payable refer to the purchase of plates from Ternium Brasil Ltda.

Consolidated

12/31/2017 12/31/2016

Trade payables Other payables Borrowings

Trade payables Other payables Borrowings

Controlling interests 392 18,184 162,673 636 16,965 167,987

Non-controlling interests - 16,604 - - 22,364 -

Jointly-controlled subsidiaries 33,215 834 - 53,493 - -

Associates 36,586 143,905 - 2,815 184,123 -

Other related parties (i) 368,470 - - 588 1 -

Total 438,663 179,527 162,673 57,532 223,453 167,987

Current 438,663 38,646 358 57,532 70,184 381

Non-current - 143,170 162,315 - 153,269 167,606

Total 438,663 181,816 162,673 57,532 223,453 167,987

(i) At December 31, 2017, accounts payable refer to the purchase of plates from Ternium Brasil S.A. At December 31, 2016, as described in Note 20, a borrowing from the subsidiary Usiminas Commercial of R$1,224,608 was recorded. At December 31, 2017, the related agreement was terminated and, therefore, there is no remaining book balance. In the Consolidated accounts, a borrowing from Nippon Usiminas Co. Ltd., controlling stockholder of Usiminas, of R$162,673 (December 31, 2016 - R$167,987) was recorded.


193

(c) Results

Parent company

12/31/2017 12/31/2016

Sales Purchases

Finance and operating result Sales Purchases

Finance and operating

result

Controlling interests 207,035 4,715 (10,885) 239,981 7,002 29,695

Subsidiaries 2,922,662 464,174 (78,347) 2,141,874 349,117 128,437

Jointly-controlled subsidiaries - 406,260 2,636 13 317,223 (2,711)

Associates 18,111 140,354 - 25,492 118,153 -

Other related parties (i) 125,053 1,086,288 (540) 47,304 133,939 (4,869)

Total 3,272,861 2,101,791 (87,136) 2,454,664 925,434 150,552

Consolidated

12/31/2017 12/31/2016

Sales Purchases

Finance and operating result Sales Purchases

Finance and operating

result

Controlling interests 207,035 4,715 (10,867) 274,405 9,926 27,249

Non-controlling interests 401 9,243 - 4,003 - -

Jointly-controlled subsidiaries 2,173 411,124 2,636 1,844 322,141 (2,711)

Associates 18,755 236,805 (22,140) 25,698 188,432 (21,166)

Other related parties (i) (ii) 125,192 1,086,288 (1,146) 124,133 133,939 (7,226)

Total 353,556 1,748,175 (31,517) 430,083 654,438 (3,854)

(i) At December 31, 2017, total sales to other related parties mainly refer to sales by Usiminas S.A. to Nippon Corporation,

amounting to R$65,362. (ii) At December 31, 2017, of the total purchases presented, R$874,232 refers to the purchase of plates from Ternium Brasil

Ltda.

The nature of the main transactions between the Company and related parties is described in Note 36(e). Finance income (costs) with related parties refers mainly to charges on borrowings disclosed in item (b) above.

(d) Remuneration of the key management personnel

The remuneration paid or payable to key management personnel, which includes the

Executive Board, the Board of Directors and the Statutory Audit Board of the Company is

as follows:


12/31/2017 12/31/2016

Fees 11,067 12,007

Social charges 2,256 2,214

Retirement plans 45 256

Changes in the provision for variable compensation 3,687 (19,725)

17,055 (5,248)


194

On 2016, it was reversed to statement of operations the amount of R$19.725 related to the

excess provision for fees and related charges, which totalized R$15,552 and R$4,173,

respectively. The expense, net of the reversal of the period is recorded in the income

statement in "General and administrative expenses".

At December 31, 2017, the amount paid to key management was R$13,156 (December 31, 2016 – R$14,959).

The Company has a shared-based payment plan in place, which amounts to R$212 at

December 31, 2017 (December 31, 2016 – R$907), as described in Note 38.

(e) Nature of transactions with related parties

The more significant transactions between the Company and related parties are as below:

Sale of products to Confab intended for the production of large diameter ducts and industrial equipment.

Purchases of services from Nippon Steel & Sumitomo Metal Corporation, including the provision of advanced industrial technology, technical support services and training courses for employees.

Sales of products to Siderar.

Purchases of iron ore from Mineração Usiminas to be used in Ipatinga and Cubatão plants.

Sales of products to Soluções Usiminas for transformation and distribution.

Sales of products to Usiminas Eletrogalvanized and Usiminas Galvanized to foster trading with foreign customers.

Sales of products to Usiminas Mecânica S.A. and purchases of services, such as the manufacture of steel products and equipment;

Purchases from Unigal of services related to hot-dip galvanizing and cooling for the production of hot-rolled galvanized steel sheets and coils.

Purchases of services related to texturing and chrome plating of cylinders used in the rolling processes of Usiroll.

Purchases of railway transportation services from MRS for the transportation of iron ore.

Purchases of services related to storage and loading of iron ore from Modal and Terminal Sarzedo.

Borrowing from Nippon Usiminas (Note 20).


195

Sales of iron ore from Mineração Usiminas to Sumitomo Corporation. Also, the subsidiary Mineração Usiminas sells iron ore to and purchases port services from CSN.

Transactions with related parties are substantially carried out under market conditions, with respect to prices and terms.

37 Insurance The insurance policies taken out by the Company and certain of its subsidiaries provide cover considered sufficient by management. At December 31, 2017 and 2008, these policies covered buildings, products and raw materials, equipment, machinery, furniture, objects, fixtures and installations at the insured establishments and respective facilities of the Company, Usiminas Mecânica, Unigal and Usiroll, with value at risk of US$ 12,002,992 thousand (December 31, 2016 - US$ 15,193,325 thousand), and an "All Risks" policy with a maximum indemnity of US$600,000 thousand per claim. At December 31, 2017 and 2016, the deductible amount for material damages is US$7,500 thousand and the cover for loss of profits (loss of revenues) has a deductible term of 30 days (waiting period). This insurance policy expires on December 30, 2018.

38 Stock option plan

At the Extraordinary General Meeting held on April 14, 2011, the stockholders approved the Company's Stock Option Plan ("Plan"). The main objectives of the Plan are:

Alignment of interests between executives and stockholders;

incentive to the creation of sustainable value;

attraction and retention of talents; and

maintaining competitiveness with market practices.

The plan is managed by the Company’s Board of Directors, with the support of the Human Resources Committee, subject to the Plan’s limitations. At December 31, 2017, the Plan includes four effective programs:

Program 2011, released on October 3, 2011;

Program 2012, released on November 28, 2012;

Program 2013, released on November 28, 2013; and

Program 2014, released on November 27, 2014. For the years ended December 31, 2017 and 2016, the Company’s management decided not to launch new programs.


196

(a) Call Option Types Options are of two different types:

(i) Basic Grant - the number of Options granted will be based on Usiminas strategy, and

each Option granted will entitle its holder to acquire or subscribe for a preferred share of the Company.

(ii) Bonus Grant - it must be bound to a voluntary investment made by employees, who

invests part of the net variable compensation to acquire preferred shares.

(b) Key program characteristics The Options to be granted to executive officers and directors (“Members”) of the Company, under a “Call Option Agreement”, are as follows:

Program

Grant date Preço de

exercício (USIM5)

Grace period

Options granted

Basic Bonus Total

2011 10/3/2011 R$11.98

3 years, 33% for each year

2,589,451 402,302 2,991,753

2012 11/28/2012 R$10.58 3,576,963 83,598 3,660,561

2013 11/28/2013 R$11.47 2,784,155 143,178 2,927,333

2014 11/27/2014 R$6.14 4,778,483 370,948 5,149,431

13,729,052 1,000,026 14,729,078

In addition, the Plan provides that up to 50% of the variable compensation may be used to buy Usiminas’ shares. As payment, the Company grants bonus options. The call option is effective within up to 7 (seven) years.

(c) Options fair value

Fair value on the grant date, as well as key assumptions applied in accordance with the Black & Scholes pricing model, were the following: Program 2011

1st ano 2nd year 3rd year

Fair value on grant date R$ 4.83 R$ 5.07 R$ 5.27

Share price R$ 11.45 R$ 11.45 R$ 11.45

Weighted average of exercise price R$ 11.98 R$ 11.98 R$ 11.98

Share price volatility 50.70% 50.70% 50.70%

Grace period (3 years) 33% after 1st year 33% after 2nd year 33% after 3rd year

Estimated dividends 2.94% 2.94% 2.94%

Risk-free return rate 11.62% p.a. 11.65% p.a. 11.69% p.a.

Option average period 4 years 4.5 years 5 years


197

Program 2012



Share price R$ 10.38 R$ 10.38 R$ 10.38




Estimated dividends 0.63% 0.63% 0.63%



Program 2013



Share price R$ 11.88 R$ 11.88 R$ 11.88




Estimated dividends (*) - - -



Program 2014



Share price R$ 5.70 R$ 5.70 R$ 5.70




Estimated dividends (*) - - -



(*) Dividends were not distributed in the 12 months prior to the grant date.

The exercise price was determined based on the average daily quotation for the 30-day period prior to the Option grant. The estimated share price volatility is based on the adjusted historical volatility of 36 months prior to the grant date.


198

Changes in outstanding options under the Stock Option Plan are shown below: 12/31/2017 12/31/2016

Program

Program

2014 2013 2012 2014 2013 2012

Options:

Outstanding options at beginning of the year 3,514,643 1,414,677 1,204,548 4,633,880 1,746,706 1,558,472

Exercised during the year (1,312,493) - - - - -

Canceled during the year (380,275) (172,672) (165,078) (1,119,237) (332,029) (353,924)

Outstanding options at end of the year 1,821,875 1,242,005 1,039,470

3,514,643

1,414,677

1,204,548

The impact on P&L of the Stock Option Plan totaled an expense of R$951 at December 31,2017 (December 31, 2016 - R$3,719) recorded in the consolidated statement of income. Also, the amount of R$6,708 was reversed to “Retained earnings (accumulated deficit)” due to the cancellation and exercise of options occurred in 2017 (December 31, 2016 - R$6,600). Thus, the impact on capital reserve was R$5,757 (December 31, 2016 - R$2,881). At December 31, 2017, according to the vesting period of the programs in force all estimated expenses were fully appropriated.

39 Warranties

The composition of the assets pledged as collateral is as follows:

Parent


Assets pledged as collateral Liabilities secured 12/31/2017 12/31/2016 12/31/2017 12/31/2016

Cash and cash equivalents Litigation 40,000 40,000 40,000 40,000

Inventories Litigation 118,253 95,577 118,253 95,577

Property, plant and equipment Litigation 693,156 789,327 747,390 839,820

Property, plant and equipment (i) Borrowings 3,990,612 4,503,801 4,012,674 4,525,862

4,842,021 5,428,705 4,918,317 5,501,259

(i) The Company has assets evaluated at market value, as collateral for the debt with Previdência Usiminas related to the PBD retirement plan (Note 26.2).


199

40 Non-cash investment transactions In the year ended December 31, 2017, investment and financing transactions were carried out in Parent company and Consolidated with no effect on cash, and the most significant ones are the following: (i) a capital reduction in the subsidiary Usiminas Mecânica S.A. of R$57,866, having as a corresponding entry the receipt of ICMS credits in the amount of R$42,492 and inventory and property, plant and equipment items totaling R$15,374; (ii) a capital reduction in the foreign subsidiary Usiminas Europa A/S, having as a corresponding entry the receipt of Eurobonds issued by another foreign subsidiary, Usiminas Commercial Ltd., classified in Parent company as marketable securities, in the amount of R$786,138; (iii) transfer of parts and spare parts originally classified in inventories to property, plant and equipment in the amount of R$4,803; (iv) write-off of dividends receivable in prior periods from associate Codeme Engenharia S.A. of R$2,356 as a corresponding entry for investments; (v) interest and charges on borrowings capitalized in property, plant and equipment in the amount of R$7,613; and (vi) offset of judicial deposits as a corresponding entry to the provision for litigation in the amount of R$36,463.

41 Events after the reporting period

The maturity of the debt securities ("Eurobonds") originally issued in 2008 by the foreign subsidiary Usiminas Commercial Ltd. took place on January 18, 2018, with the full payment of the total amount of US$ 400 million to the holders of these Eurobonds. Of this amount, approximately US$ 220 million returned to the Company's cash, due to the transaction described in Note 9 - Marketable securities and Note 20 (e) - Borrowings.


200

Board of Directors

Elias de Matos Brito

Chairman

Francisco Augusto da Costa e Silva Board Member

Gesner José Oliveira Filho Board Member

Guilherme Poggiali Almeida

Board Member Ichiro Sato

Board Member

Kazuhiro Egawa Board Member

Luiz Carlos de Miranda Faria Board Member

Oscar Montero Martinez

Board Member Ricardo Antonio Weiss

Board Member

Rita Rebelo Horta de Assis Fonseca Board Member

Wanderley Rezende de Souza Board Member

Statutory Audit Board

Paulo Roberto Evangelista de Lima Chairman

Domenica Eisenstein Noronha

Board Member Lúcio de Lima Pires

Board Member

Masato Ninomiya Board Member

Paulo Frank Coelho da Rocha

Board Member

Executive Board

Sérgio Leite de Andrade

CEO Vice-President - Technology and Quality

Vice-President - Commercial Area

Ronald Seckelmann Vice-President - Finance and

Investor Relations Vice-President - Subsidiaries

Takahiro Mori Vice-President - Corporate Planning

Túlio César do Couto Chipoletti

Industrial Vice-President

Lucas Marinho Sizenando Silva Accountant CRC-MG 080.788/O


201

FISCAL COUNCIL OPINION

Usinas Siderúrgicas de Minas Gerais S.A. – Usiminas’ Fiscal Council (“Conselho Fiscal”), in

compliance with its legal and statutory provisions, analyzed (i) the Management Report; (ii) Financial Statements of the fiscal year ended December 31st, 2017; and (iii) Allocation of the 2017 results, including the capital budget and the date to payment of the dividends (May 30th, 2018). Based on the examinations held, considering, also, the opinion of the independent auditors (PwC) unqualified (“clean”), issued on February 08th, 2018, as well as the information and clarifications received during the year, issues the opinion that the referred documents are able to be appreciated by the Company's Annual Shareholders

Meeting .

São Paulo, February 08th, 2018.

Paulo Roberto Evangelista de Lima

President

Paulo Frank Coelho da Rocha Lúcio de Lima Pires

Masato Ninomiya Domenica Eisenstein Noronha

202

DECLARATION By this instrument, the Board of Directors of USINAS SIDERÚRGICAS DE MINAS GERAIS

S.A. Usiminas, in compliance with the provisions set forth in the terms V and VI of article 25 of CVM Ruling No. 480, of December 7, 2009, declare that they have reviewed, discussed and

agreed with the opinion expressed in the Independent auditor’s report from

PricewaterhouseCoopers Auditores Independentes (PWC), regarding the Financial Statements

(Parent Company and Consolidated) for the year ended on December 31, 2017.

Belo Horizonte, February 08, 2018. Sérgio Leite de Andrade Chief Executive Officer Vice-President of Technology and Quality Commercial Vice President Officer Ronald Seckelmann Finance and Investor Relations Vice-President Office Subsidiaries Vice-President Officer Túlio César do Couto Chipoletti Industrial Vice-President Officer Takahiro Mori Corporate Planning Vice-President Officer

203

DECLARATION By means of the present instrument, the Executive Board of USINAS SIDERÚRGICAS DE MINAS GERAIS SA Usiminas, in compliance with the provisions set forth in the terms V and VI of article 25 of CVM Ruling No. 480, of December 7, 2009, declare that they have reviewed, discussed and agreed with the Financial Statements of the fiscal year ended December 31st, 2017 (Parent Company and Consolidated). Belo Horizonte, February 08, 2018. Sérgio Leite de Andrade Chief Executive Officer Vice-President of Technology and Quality Commercial Vice President Officer Ronald Seckelmann Finance and Investor Relations Vice-President Office Subsidiaries Vice-President Officer Túlio César do Couto Chipoletti Industrial Vice-President Officer Takahiro Mori Corporate Planning Vice-President Officer

204

10. Comments of the directors

10.1. Management’s discussion and analysis

a) General financial and equity conditions

In 2017, Adjusted EBITDA was R$2.2 billion, against R$660.4 million in 2016, mainly due to better

performance in the Steel, Mining and Steel Processing Units. Adjusted EBITDA margin in 2017 reached

20.4%, against 7.8% in 2016. Consolidated net debt was R$6.7 billion at December 31, 2017, a decrease of

2.9% in comparison with the net debt of R$6.9 billion at December 31, 2016, mainly due to the amortization

of debt in the period, related to the prepayment of 50% of the outstanding principal of the Eurobonds, as

stablished at the renegotiation of the financial debt; and to depreciation of 1.5% of the Real against the

Dollar in the year which directly impacted the parcel of dollar-denominated debt. The breakdown of debt by

maturity was 15% in the short term and 85% in the long term following the renegotiation of approximately

92% of the Company’s total debt. In the year of 2017, current liquidity ratio (Current assets / Current

liabilities) was 2.38 compared to 3.66 in 2015, mainly due to the transfer of loans and financing amounts

from the long to the short term, as stablished by the cash sweep agreement between the Company and its

creditors.

In 2016, Usiminas recognized adjusted EBITDA of R$660.4 million compared to R$291.5 million in 2015,

primarily due to the better performance of the Steel Metallurgy, Mining and Steel Transformation Business

Units. Adjusted EBITDA margin in 2016 reached 7.8% compared to 2.9% in 2015. Consolidated net debt

was R$4.7 billion at December 31, 2016, a decrease of 20.1% in comparison with the net debt of R$5.9

billion at December 31, 2015, representing 24% of the invested capital. Consolidated gross debt

(borrowings and debentures) was R$6.9 billion compared to R$7.9 billion in 2015, a decrease of 12.0%,

primarily due to the debt amortization in the period and the average exchange gain of 16.5% in the year, with

a positive effect on the debt portion denominated in foreign currency. The breakdown of debt by maturity was

1% in the short term and 99% in the long term, following the renegotiation of approximately 92% of the

Company’s total debt, which resulted in a total repayment term of 10 years, of which three years of grace

period for the repayment of the principal, and adjustment of the debt repayment profile to short, medium and

long-term prospects. In 2016, current liquidity ratio (Current assets / Current liabilities) was 3.66 compared to

1.53 in 2015, also because of the renegotiation of debt.

In 2015, Adjusted EBITDA was R$291.5 million, against R$1.9 billion in 2014, due to lower sales volume and

prices of steel and iron ore affecting its main units of business, the Steel Unit and Mining Unit. The Capital

Goods Unit was the exception, reaching an EBITDA of R$86.8 million, a 73.7% growth comparing both

periods. As of December 31, 2015, consolidated net debt was R$5.9 billion, representing 28% of invested

capital (net debt plus shareholders' equity). Consolidated gross debt was R$7.9 billion, against R$6.7 billion

in 2014, a 17.7% increase, mainly due to the strong currency devaluation of 47.0% in the period, which

directly impacted the Dollar debt portion, which corresponded to 47% of total debt on 12/31/15. Debt

composition by maturity was 24% in the short term and 76% in the long term. Usiminas duly obtained the

waivers from its lender for the breach of covenants on 12/31/15

205

b) Capital structure and possibility of redemption of shares or units of interest

The total liabilities of the company, comprising the total obligations with third parties decreased in 2017. The

ratio equity and debt, net of cash and securities, is summarized below:

In thousands of R$ 2017 2016 2015

Total Liabilities 10,800,513 11,063,111 12,764,475

Cash and cash equivalents and securities 2,314,288 2,257,454 2,024,457

Total Net Liabilities (A) 8,486,225 8,805,657 10,740,018

Equity (B) 15,183,964 15,191,634 14,993,857

Ratio (A)/(B) 86% 58% 72%

i. events of redemption

The Company`s articles of incorporation do not contain provision regarding redemption and the provisions of

the Brazilian Corporation Law must be complied with.

ii. redemption price calculation method

In the case of redemption, the company will adopt a formula in compliance with current legal provisions.

c) Ability to pay in relation to financial commitments assumed

In 12/31/2017, the company had in cash R$2.3 billion (R$2.6 billion in 12/31/2016 and R$2.0 billion in

12/31/2015). Its debt shows an average 4 years in 2017 (4 years in 2016 and 2 years 2015). The

concentration of short-term debt in 12/31/2017 is 15.0% of the total debt (1% in 2016 and 24.3% in 2015).

On 12/15/2017, payment was made in the amount corresponding to 50% of the balance of notes issued by

subsidiary Usiminas Commercial Ltd. in pro-rata form, for the purpose of partial amortization of Usiminas

debts with each one of its creditors, in the total amount of US$89.9 million.

Additionally, as a subsequent event of the quarter reported, on 01/18/18, full payment of the Notes issued in

2008 was made, in the amount of US$400.0 million, of which approximately US$220.0 million returned to the

Company’s cash position by reason of a repurchase of part of the Notes issued in 2013.

With these payments, Usiminas has overcome an important stage of its financial restructuring process with

creditors, with the objective of generation of sustainable results for the Company.

The following chart demonstrates the consolidated debt indexes on 12/31/17 (without effects of bond

repayment):

827

320

77

331

610

877 875 875 874

108

1,487

645

15

76

143

207 207 207 207

26

2,314

965

92

407

754

1,085 1,082 1,082 1,082

134

Cash 2018 2019 2020 2021 2022 2023 2024 2025 2026

Local Currency Foreign Currency

Duration: R$: 48 monthsUS$: 37 months

206

d) Sources of working capital and capital expenditure financing

The sources of financing for working capital and for investment in non-current assets are operating cash

generation, development bank credit lines, bank loans and financing with public and private

institutions/banks, and issuance of debt securities.

e) Sources of financing for working capital and investments in non-current assets to be used to cover liquidity

shortfalls

As described in the item (c), the Company seeks in its Strategic Plan, thought management of cash flow,

working capital and investments, sources to maintain a cover level of operating cash.

f) Levels of indebtedness and the characteristics of such debts, including:

Usiminas’ Companies had, on 12/31/2017, loans and financing in the amount of R$5.7 billion (R$ 5.9 billion

on 12/31/2016 and R$ 6.8 billion on 12/31/2015) and R$949 million debentures (R$ 998 million on

12/31/2016 and R$ 1.0 billion on 12/31/2015).

i. Relevant loan and financing contracts

Following the renegotiation in September 2016, the main financing operations are:

Several loan agreements with the BNDES and Finame for the purpose of financing the investments of the Company, with maturities until 2026. On 12/31/2017 the debt balance of these operations was R$516.0 million (on 12/31/2015 it was R$546.0 million and on 12/31/2015 it was R$658.0 million).

Loan Contracts with the JBIC and commercial Japanese Banks for financing the construction of Thermoelectric Power Plant of Ipatinga, Coke ovens in Ipatinga, Hot Strip Mill Plant in Cubatao, with maturities until 2026. On 12/31/2017 the debt balance of these operations was R$1.0 billion (on 12/31/2016 R$1.0 billion and on 12/31/2015 R$ 1.3 billion).

Export and Industrial Credit Notes and Industrial with Banco do Brasil for operating capital financing, with maturities until 2020. The Credit Notes were settled in September 2016 and there are no outstanding balances of these operations at the end of 2017 and 2016, in 2015 the balance was R$2.5 billion.

On 1 October, 2013 the subsidiaries of the Company based in Denmark acquired $124.2 million of debt securities maturing in 2016 and $220.2 million of debt securities maturing in 2018, issued by the companies; Cosipa Commercial Ltda. and Usiminas Commercial Ltda., both controlled by the Company. This operation allows a better allocation of resources of the Company, in addition to reducing its leverage gross and reducing financial disbursements designed until the expiration of the above-mentioned titles. On December 30, 2014 the Company exercised a clause of early redemption (Early Redemption) of the title of debt maturing in 2016 and thus repurchased all of the securities issued. The early redemption was also done with the objective of reducing the gross leverage and the financial disbursements projected. In June 2016, the Company liquidated the debt securities issued by Cosipa Commercial Ltda with maturity in 2016, mentioned above. In June 2017, the Company reduced the capital of its foreign subsidiary Usiminas Europa, and transferred to its ownership the Eurobonds that this subsidiary had in its portfolio, which totaled R$775,665 at December 31, 2017. After this capital reduction, the Company began to hold financial assets and liabilities on the same bases, having Usiminas Commercial as its counterparty. Therefore, the Company presented these financial assets and liabilities at their net amount under current liabilities in the interim accounting information at June 30 and September 30, 2017. On December 12, 2017, the Company settled the loan agreement with Usiminas Commercial for a total amount of US$400 million. Therefore, in the year ended December 31, 2017, the Company held only the financial asset with Usiminas Commercial in the amount of R$776 million. At December 31, 2017, in consolidated terms, the outstanding balance of these operations was R$591 million (R$582 million in 2016 and R$698 million in 2015).

Issuance of debentures in the amount of R$1.0 billion maturing in 2026 and interest rate of 3% p.a. + 100% of CDI, with the aim of meeting the company's investment plans. As of December 31, 2017,

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the outstanding balance of this operation was R$949.0 million (R$998.billion in 2016 and R$ 1.0 billion in 2015).

Working capital loan contracts with ITAU BBA maturing in 2026. In 2017, the debt balance with these operations was R$640.0 million (R$673.0 million in 2016 and R$935.0 million in 2015).

Working capital loan contracts with Banco do Brasil maturing in 2026. In 2017, the debt balance with these operations was R$2.3 billion (R$2.4 billin in 2016). There are no balances of this contract in 2015 since this debt was recognized in September 2016 due to the renegotiation mentioned in item c) above.

Working capital loan contracts with Bradesco maturing in 2026. In 2017, the debt balance with these operations was R$519.0 million (544 million in 2016). There are no balances of this contract in 2015 since this debt was recognized in September 2016 due to the renegotiation mentioned in item c) above.

ii. Other long-term relationships with financial institutions

On May 22, 2014, Management decided to hire a new revolving line of credit (Revolving Credit

Facility), whose total value is of R$ 300 million and duration of 3 years.

iii. Subordination between the debts

On 12/31/2017, the Company has only a subordinated debt, which is the issue of debentures in the amount

of R$1.0 billion maturing in 2026, according to item related in subitem f.i above.

iv. Any restrictions imposed on the issuer, in particular, in relation to debt limits and acquisition of new debt,

the distribution of dividends, the alienation of assets, the issuance of new securities and the the disposal of

controlling interest

The financial contracts mentioned in item (i) require the fulfilment of restrictive clauses (covenants) based on

certain financial ratios, calculated on the consolidated financial statements of the Company.

Net debt / EBITDA:

less than or equal to 4.5x as of June 30, 2019 and December 31, 2019; less than or equal to 3.5x as of June 30, 2020 and December 31, 2020; less than or equal to 3.0x as of June 30, 2021 and December 31, 2021; and less than or equal to 2.5x in semi-annual measurements determined as of June 30 and

December 31 of the subsequent years.

EBITDA / Financial expenses:

minimum of 2.0x as of June 30, 2019, December 31, 2019 and in semi-annual measurements determined as of June 30 and December 31 of the subsequent years.

In relation to the non-financial covenants established in the debt instruments, the Company has monitoring

controls and, for the year ended December 31, 2017, no breaches of these covenants were found, except in

relation to the offering of guarantees to certain creditors in the context of the renegotiation, which would no

longer be permitted under the Eurobond provisions due to the expiration, at June 30, 2017, of the temporary

waiver previously granted by the holders of such bonds with respect to the limitation of guarantees offered as

established in the Eurobond provisions. Such non-compliance can be remedied by the Company within 60

days from the date of receipt of a notice of noncompliance sent by the custodian of the Eurobonds or by a

minimum quorum of Eurobond holders, which has not been received to date. After the expiration of this

period, noncompliance would give rise to early maturity only if a new notice was received from the custodian

of the Eurobonds or from a minimum quorum of Eurobond holders, requesting the early maturity of the debt.

The Company chose not to request a new waiver from the Eurobonds holders with respect to these

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limitations on the offering of guarantees, taking into account, among other factors, the full payment of the

Eurobonds in January 2018.

At December 31, 2016, regarding non-financial covenants established in debt instruments, including

limitations of expansion capex, limitations for obtaining new loans, and change in the control group, the

Company has monitoring controls and, had not identified any breaches of these covenants.

At December 31, 2015, the Company, anticipating non-compliance with some of these covenants, especially

Total Debt to Ebitda Ratio and Net Debt to Ebitda Ratio, with respect to its debt agreements, obtained a

waiver from its creditors and, consequently, their consent to the non-performance of the related compliance

tests in December 2015. Further testing will be performed for some of the agreements in March, June and

December 2016. Therefore, these debt agreements were not classified as past due at December 31, 2015.

g) Limits for use of the funds already contracted

For the years of 2017 and 2016 the Company had no amount available from the BNDES, since the fully

cancellation was requested and one of the conditions of the renegotiation requires the Company not to

obtain new debt inflow.

On 12/31/2015 the Company still had the amount of R$ 305 million available with the BNDES to fulfill the

additional disbursements of investments in progress, which can be used when necessary. Such lines may

only be used for capital investments that are part of the BNDES loan regulations.

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h) Significant changes in each item in the financial statements

Assets 12/31/2017 AV (%) 2017 12/31/2016

AV (%) 2016 12/31/2015

AV (%) 2015

Horizontal Analysis

2017 x 2016

Horizontal Analysis

2016 x 2015

Current assets

Cash and cash equivalents 1,770,573 7% 719,870 3% 800,272 3% 146% -10%

Securities 543,715 2% 1,537,584 6% 1,224,185 4% -65% 26%

Trade accounts receivable 1,555,494 6% 1,179,212 4% 1,428,421 5% 32% -17%

Inventories 2.763.496 11% 2,604,306 10% 2,748,417 10% 6% -5%

Recoverable Taxes 362.465 1% 238,600 1% 377,198 1% 52% -37%

Dividends receivable 139.078 1% 2,463 0% 2,357 0% 5547% 4%

Derivative financial instruments 12 0% 44,669 0% 152,560 1% -100% -71%

Other accounts receivable 119.922 0% 93,774 0% 161,432 1% 28% -42%

Total current assets 7.254.755 28% 6,420,478 24% 6,894,842 25% 13% -7%

Noncurrent assets

Deferred income tax and social contribution 3.046.112 12% 3,120,368 12% 3,281,063 12% -2% -5%

Amounts receivable from related companies 3.147 0% 3,842 0% 4,412 0% -18% -13%

Judicial Deposits 675,600 3% 660,229 3% 597,392 2% 2% 11%

Derivative financial instruments 1,184 0% 100,670 0% 559,654 2% -99% -82%

Recoverable Taxes 54,881 0% 164,242 1% 81,263 0% -67% 102%

Other accounts receivable 334,938 0% 215,932 1% 173,844 1% 55% 24%

Investments in subsidiaries, jointly controlled and associated companies

1,054,052 4% 1,126,176 4% 1,084,311 4%

-6% 4%

Property, plant and equipment 12,882,618 50% 13,748,890 52% 14,743,629 53% -6% -7%

Intangible assets 677,190 3% 693,918 3% 337,922 1% -2% 105%

Total noncurrent assets 18,729,722 72% 19,834,267 76% 20,863,490 75% -6% -5%

Total assets 25,984.477 100% 26,254,745 100% 27,758,332 100% -1% -5%

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Liabilities and Equity 12/31/2017

AV (%)

2017 12/31/2016

AV (%)

2016 12/31/2015

AV (%)

2015

Horizontal

Analysis

2017 x 2016

Horizontal

Analysis

2016 x 2015

Current Liabilities

Suppliers, contractors and freight 976,917 4% 846,377 3% 1,187,274 4% 15% 3%

Loans and financing 927,946 4% 62,157 0% 1,850,392 7% 1393% -97%

Debentures 62,031 0% 5,551 0% 61,109 0% 1017% -91%

Advances in payment from customers 81,394 0% 35,806 0% 40,799 0% 127% -12%

Forfaiting 475,251 2% 356,970 1% 587,458 2% 33% -63%

Salaries and social charges 188,735 1% 197,076 1% 278,149 1% -4% -29%

Taxes payable 95,089 0% 58,447 0% 85,547 0% 63% -32%

Tax payable in installments 20,494 0% 8,529 0% 8,191 0% 140% 4%

Income Tax and social contribution payable 1,434 0% 7,538 0% 6,151 0% -81% 23%

Dividends and interest on shareholders' equity (JSCP) payable 75,644 0% 22,001 0% 142 0% 244% 15394%


Other accounts payable 141,485 1% 103,215 0% 191,054 1% 37% -46%

Total current liabilities 3,046,420 12% 1,752,244 7% 4,495,923 16% 74% -61%

Non-Current Liabilities

Loans and financing 4,758,468 18% 5,864,416 22% 4,958,032 18% -19% 18%

Debentures 887,334 3% 992,184 4% 999,181 4% -11% -1%

Amounts payable to related companies 143,170 1% 153,269 1% 162,957 1% -7% -6%

Taxes payable in installments 0 0% 9,050 0% 9,582 0% -100% -6%

Provision for contingencies 668,964 3% 607,863 2% 557,455 2% 10% 9%

Provision for environmental remediation 158,333 1% 143,042 1% 127,103 0% 11% 13%

Post-employment Benefits 1,050,324 4% 1,342,727 5% 1,153,379 4% -22% 16%


Other accounts payable 87,500 0% 95,903 0% 97,018 0% -9% -1%

Total noncurrent liabilities 7,754,093 30% 9,310,867 30% 8,268,552 30% -17% 13%

Total liabilities 10,800,513 42% 11,063,111 42% 12,764,475 46% -2% -13%

Equity

Capital 13,200,295 51% 13,200,295 50% 12,150,000 44% 0% 9%

Income reserves 311,747 1% 309,445 1% 327,191 1% 1% -5%

Income reserves 202,207 1% 0 0% 620,039 2% - -100%

Equity valuation adjustments 60,546 0% 26,000 0% 311,748 1% 133% -92%

Controlling shareholders’ equity 13,774,795 53% 13,535,740 52% 13,408,978 48% 2% 1%

Non-controlling shareholders 1,409,169 5% 1,655,894 6% 1,584,879 6% -15% 4%

Total equity 15,183,964 58% 15,191,634 58% 14,993,857 54% 0% 1%

Total liabilities and equity 25,984.477 100% 26,254,745 100% 27,758,332 100% -1% -5%

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Below, significant changes are shown that represent more than 2% of the group to which they belong and

which have varied more than 5% in the comparison between the periods.

Analysis of the Consolidated Balance Sheet of the year 2017 in comparison with the year 2016

CURRENT ASSETS

Cash and cash equivalents and marketable securities

The increase of R$1.1 billion in 2017 was mainly due to the receipt by Usiminas Commercial on December

12, 2017 of Eurobonds totaling USD400 million.

Trade receivables

The increase of R$376 million in trade receivables in 2017 is a result the recovery of the economy and

higher prices.

Inventories

Inventories increased by 6.1%, equivalent to R$159 million, due to the increase in production costs related to

higher raw material costs, mainly with coal and acquired slabs.

NON-CURRENT ASSETS

Investments in subsidiaries, jointly controlled and associated companies

Investments in subsidiaries, jointly controlled and associated companies decreased by 6%, equivalent to

R$72 million, mainly due to the impairment of goodwill arising from the acquisition of subsidiary Modal and

the subsidiary Codeme.

Property, plant and equipment

Property, plant and equipment decreased by 6%, equivalent to R$866 million, mainly due to the depreciation

of the period. Investments in CAPEX in 2017 were R$216 million, not contributing significantly to the

increase in assets.

CURRENT LIABILITIES

Suppliers, contractors and freight

The increase of 15% in suppliers, contractors and freight, equivalent to R$130.5 million, is mainly due to

expenses related to the increase of exports in the Mining Unit, which resulted in higher expenses with

maritime freight, rail and port loading. In addition, in the Mining Unit, the resumption of production in two ore

treatment facilities generated pulverized expenses among several suppliers.

Borrowings and debentures

The increase in short-term loans and financing of R$866 million mainly refers to the transfer of approximately

R$587 million from the long-term at Usiminas Commercial's to the short-term debt and the transfer of

approximately R$319 million from long-term to short-term related to the cash sweep mechanism, which

guides the anticipation of principal amounts, which will be paid on March 15, 2018. The increase in short-

term debentures of R$56 million refers to the transfer of approximately R$60 million for the short-term,

referring to the cash sweep mechanism, which guides the advance of principal amounts, which will be paid

on March 15, 2018.

NON-CURRENT LIABILITIES


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The reduction in long-term loans and financing of R$1.1 billion mainly refers to the transfer of approximately

R$587 million from Usiminas Commercial's long-term debt for the short term; from the transfer of

approximately R$319 million from the long-term to the short-term, referring to the cash sweep mechanism,

which guides the advance of principal amounts, which will be paid on March 15, 2018 and the payment of

principal of R$244 million referring to the payment of 50% of the outstanding principal of the Eurobonds due

to the debt renegotiation.

The reduction of the long-term debentures in R$105 million refers to the transfer of approximately R$60

million from the long-term to the short-term, referring to the cash sweep mechanism, which guides the

advance of principal amounts, which will be paid in March 15, 2018 and to the payment of a principal of

R$46 million referring to the payment of 50% of the outstanding principal of the Eurobonds due to the

renegotiation of the debt.

Provision for judicial proceedings

The balance at provision for judicial proceedings increased by 10.0% in the comparison between the

periods, from R$608 million in 2016 to R$669 million in 2017. This variation was mainly due to the monetary

correction of lawsuits in the business unit Steel and tax additions, having as main action: annulment of

infraction notices issued by the state of Rio Grande do Sul for ICMS requirement.

Post-employment Benefits

The reduction in provisions for post-employment benefits in the amount of R$292 million as of December 31,

2017, when compared to December 31, 2016, refers mainly to the amortization of liabilities with plans in the

total amount of R$230 million and also due to the reversion of the Defined Benefit Pension Plan in the

amount of R$157 million. This reduction was partially offset by R$97 million in the constitution of new

provisions, mainly in the Health Plan, among other variations.


CURRENT ASSETS

Cash and cash equivalents and marketable securities

The increase of R$233 million in 2016 was mainly due to the capitalization of R$1.05 billion by the Company,

which was partially used in the Company's operations in the second quarter, payment of interest and some

debts that were not included in the renegotiation.

Trade receivables

The decrease in trade receivables by R$249 million was mainly due to the shorter payment term of sales,

which reduced the average of 43 days in 2015 to 32 days in 2016, and to the increase in the provision for

impairment of trade receivables.

Inventories

Inventories decreased by 5%, which is equivalent to R$144 million, as a result of the reduction in production,

primarily due to the interruption of activities in Cubatão's basic areas, and also a reduction in sales, due to a

lower demand for products in stock.

Derivative financial instruments

The balance of derivative financial instruments presented a reduction of 71%, from R$153 million at

December 31, 2015 to R$45 million at December 31, 2016. This decrease was mainly due to the settlement

of swap contracts in 2016, in conformity with the Company’s debt renegotiation plan. In addition, in 2016 the

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U.S. dollar underwent a depreciation of 17% in relation to the Brazilian real compared to an appreciation

47% in 2014, resulting in a reduction in the mark-to-market valuation of swap instruments, aiming at

reducing cash flow volatility.

NON-CURRENT ASSETS

Deferred income tax and social contribution

The decrease of R$161 million in deferred taxes was due to the decrease in temporary differences. We

would highlight the variation of R$122 million in temporary differences on impairment of assets and the

decrease of R$64 million related to the temporary difference on the take-or-pay arrangement with MRS. The

other variations were dispersed.

Judicial deposits

The balance of judicial deposits increased by 11% in comparison with the prior year, from R$597 million in

2015 to R$660 million in 2016. This variation was mainly due to the monetary restatement of the deposits in

the Steel Metallurgy business unit, and new deposits made in connection with labor claims.


The decrease in derivative financial instruments by R$459 million was mainly due to the settlement of swap

contracts in 2016, in conformity with the Company’s debt renegotiation plan. In addition, in 2016 the U.S.

dollar underwent a depreciation of 17% in relation to the Brazilian real, resulting in a reduction in the mark-to-

market valuation of swap instruments, aiming at reducing cash flow volatility.

Property, plant and equipment

Property, plant and equipment had a decrease of 7%, which is equivalent to R$995 million, primarily due to

the depreciation in the year. In 2016, investments in capital expenditure were not significant (R$225 million),

and did not represent a material portion of the increase in assets.

Intangible assets

In 2016, the increase of R$355 million in intangible assets mainly corresponded to the reversal of impairment

in subsidiary Mineração Usiminas, in the amount of R$357 million, considering the new projections for long-

term investments and costs.

CURRENT LIABILITIES


The decrease in short-term borrowings of R$1.8 billion mainly reflects the renegotiation of most of the

contracts, extending the maturities of the principal installments through 2026, and transferring a significant

portion of the debt from short to the long term, especially the contracts entered into with Banco do Brasil in

the amount of R$790 thousand, and with JBIC and Nippon Usiminas in the amount of R$521 thousand. The

decrease in debentures in the short term by R$56 million refers to the lower amount of interest accrued in

the year, due to the renegotiation of the related contract, which changed the interest payment terms from a

semiannual to a quarterly basis.


The decrease of 76%, that is, R$151 million in the derivative financial instruments was mainly due to the

214

settlement of swap contracts in 2016, in conformity with the Company’s debt renegotiation plan.

NON-CURRENT LIABILITIES


The increase in long-term borrowings by R$906 million mainly reflects the renegotiation of most of the

contracts, extending the maturities of the principal installments through 2026, and transferring a significant

portion of the debt from short to the long term, especially the contracts entered into with Bradesco, in the

amount of R$545 thousand and with Banco do Brasil in the amount of R$837 thousand. The decrease in

debentures in the long term by R$7 million refers to the new amount to be repaid related to the deferral of

renegotiation expenses of this debt, from R$819 thousand in 2015 to R$7,816 thousand in 2016.

Provision for judicial proceedings

The provision for judicial proceedings increased by 9.04% in comparison with the prior year, from R$557

million in 2015 to R$608 million in 2016. This increase was mainly due to the monetary restatement of the

amounts related to judicial proceedings involving the Steel Metallurgy business unit, and the filing of new

labor claims involving employees, former employees and outsourced workers of the Cubatão Plant with

sundry labor claims.


The decrease of 50%, that is, R$101 million in derivative financial instruments was mainly due to the

depreciation of the U.S. dollar by 17% in relation to the Brazilian real compared to an appreciation 47% in

2014, resulting in a reduction in the mark-to-market valuation of swap instruments, aiming at reducing cash

flow volatility.


CURRENT ASSETS

Cash and Cash Equivalents and securities

The reduction of R$ 800 million recorded in 2015, occurred mainly in function of loan interest payments in the order of R$ 583 million, settlement of credit assignment operation in the amout of R$ 594 million, and also by the decrease of cash generated by the Company’s operations.

Trade Accounts Receivable

Accounts receivable from customers raised 15%, which is equivalent to R$ 182 million, mainly due to the

increase in the average collection period, from 27 days in 2014 to 36 days in 2015.

Inventory

Inventories presented a reduction of 22% equivalent to R$ 768 million, as a result of a lower production

volume and sales incurring in a reduction in the demand for inventories.


The increase of 133% in derivative finacial instruments, from R$ 65 million in 2014 to R$ 153 million in 2015,

occurred basically in function of the appreciation of the US Dollar against the Real by 47%, obtaining an

increase in the mark- to-market instruments of swap, which aims to reduce the volatility of cash flow. In

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addition, a portion of the balance registered as noncurrent assets was transferred to current assets in 2015 ,

following the normal flow of operations in consonance to the maturities.

NONCURRENT ASSETS

Deferred income tax and social contribution

Deferred taxes increased by R$ 1,236 million, mainly due to the calculation of deferred taxes on temporary

differences. It can highlight the variation of R$ 465 million on the exchange variation on loans and financing

(cash basis) and the temporary differences related to impairment loss.

Instrumentos financeiros derivativos

The increase in derivative finacial instruments in the order of R$ 308 million, occured basically in function of

the appreciation of the US Dollar against the Yen and Real, main indexes of the Company’s swap

operations. In addition, the Company contracted new swap operations with asset position in Dollar in the

amount of US$ 252 milhões, with the goal to reduce the volatility of cash flow.

CURRENT LIABILITIES Suppliers, contractors and freight

The reduction in accounts payable to suppliers, contractors and freight by 29 %, moving from R$ 1.7 billion

on 2014 to R$ 1.2 billion on 31 December 2015, was basically in accordance with the decline in the flow of

operations of the Company.

Loans and financing

The increase in loans and financing in the short term in R$ 195 million, is basically a result of foreign

exchange variation in 2015. The detail on the main financing contracts that constitutes the debt is available

on items 10.1 letter f.


The increase in derivative financial instruments in the order of 105 million occurred basically in function of

the increase in the mark- to-market instruments of swap with liability position indexed in Yen due to the

appreciation of this currency, which aims to reduce the foreign exchange exposure.

NONCURRENT LIABILITIES

Loans and financing

The increase in loans and financing in the long term in R$ 798 million, is basically a result of foreign

exchange variation in 2015, combined with accrued interest as demonstrated in the changes in loans and

financing. The detail on the main financing contracts that constitutes the debt is available on items 10.1 letter

f.

Provision for contingencies

Provision for contingencies increased by 17%, from R$ 475.8 million in 2014 to R$ 557.4 million in 2015 due

to monetary restatemement on judicial deposits in the Steel business unit and the addition of judicial

demands related to a Mineral Resources Inspection Fee at Mineração Usiminas S.A..

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Derivative financial instruments increased by R$ 22 million basically in function of the increase in the mark-

to-market instruments of swap with liability position indexed in Dolar and Yen, due to the appreciation of

these currencies.

Statements of the years 2017, 2016 and 2015 and their variations

Results 12/31/2017

AV (%)

2017 12/31/2016

AV (%)

2016 12/31/2015

AV (%)

2015

Horizontal

Analysis 2017

x 2016

Horizontal

Analysis 2016

x 2015

Revenues from sale of goods and/or services 10,734,118 100% 8,454,200 100% 10,185,570 100% 27% -17%

Cost of goods and/or services sold (9,099,024) -85% (7,966,878) -94% (10,013,018) -98% 14% -20%

Gross profit 1,635,094 15% 487,322 6% 172,552 2% 236% 182%

Operating income (expenses) (751,224) -7% (708,914) -8% (3,897,340) -38% 6% -82%

Selling expenses (250,950) -2% (272,731) -3% (258,141) -3% -8% 6%

General and administrative expenses (404,393) -4% (354,218) -4% (440,121) -4% 14% -20%

Other operating income (expenses) (250,777) -2% (224,826) -3% (3,199,078) -31% 12% -93%

Result of equity pickup 154,896 1% 142,861 2% 95,582 1% 8% 49%

Income (loss) before financial result and taxes 883,870 8% (221,592) -3% (3,629,206) -36% -499% -94%

Financial result (462,920) -4% (30,156) 0% (1,245,693) -12% 1435% -98%

Income (loss) before taxes on profit 420,950 4% (251,748) -3% (4,874,899) -48% -267% -95%

Income tax and social contribution (105,870) -1% (325,095) -4% 1,189,922 12% -67% -127%

Consolidated net income (loss) for the period 315,080 3% (576,843) -7% (3,684,977) -36% -155% -84%

Analysis of consolidated results for the year 2017 compared to the year 2016

Sales and services revenue

In 2017, net revenue was R$10.7 billion, against R$8.5 billion in 2016, a 27.0% increase due to high steel

and iron ore sales volume, as well as the increase in average price over the year.

In 2017, the Steel Unit sold 4.0 million metric tons of steel products(3.7 million metric tons in 2016), and the

Mining Unit sold 3.7 million metric tons of iron ore (3.2 million in 2016).

Cost of sales and services

In 2017, cost of sales was R$9.1 billion compared to R$8.0 billion in 2016, a increase of 14.2% manly due to

a higher volume of sales and higher price of some raw materials, principally coal and slabs purchased. The

gross margin in 2017 was 15.2% compared to 5.8% in 2016.

Operating income and expenses

In 2017, sales expenses were R$251.0 million, against R$272.7 million in 2016, mainly due to lower

provision for doubtful accounts by R$31.3 million, partially compensated by higher distribution costs

associated with higher steel and iron ore exports in the period.

General and administrative expenses in 2017 were R$404.4 million, against R$354.2 million in 2016, an

increase of 14.2%, due to higher expenses with own and third party personnel, as well as general expenses.

Net other operating expenses and income were R$250.8 million negative in 2017, against R$224.8 million

negative in 2016, due to:

Asset impairment of R$74.9 million in the 2017, relative to the Goodwill resulting from the acquisition of its subsidiaries Rios Unidos and Modal, and the associate company Codeme, against a reversal of

217

impairment at the Unit Mineração in the amount of R$358.3 in 2016; it is worthwhile mentioning that asset impairment does not affect Adjusted EBITDA;

Negative result of asset sale/write off in the amount of R$1.2 million in the 2017, against a positive result of R$71.5 million in 2016;

Higher provision for legal liabilities by R$73.1 million, which were R$138.1 million in 2017 against R$65.0 million in 2016.

These effects were partially offset by:

Receipt of revenue as a result of an arbitration process against Porto Sudeste in the amount of R$201.1 million, net of expenses in year 2017;

Result in the sale of surplus electrical energy of a positive R$14.0 million in 2017, against a negative R$132.8 million in 2016;

Tax credits of R$237.5 million in 2017, against R$176.3 million in 2016;

Lower expenses with non-absorbed equipment stoppage in the amount of R$403.8 million, of which R$349.1 million were relative to depreciation, against R$485.1 million in 2016, of which R$427.9 million were relative to depreciation;

Extraordinary event, non-recurring, referring to an expense for early termination of contract with a supplier of R$70.7 million in 2016. There was no event of this nature in 2017;

Higher revenue with the Reintegra Program, which was R$25.4 million in 2017, against R$0.8 million in 2016.

Equity in the results of associates and subsidiaries

The result at equity of associate and subsidiary companies was R$154.9 million in 2017, against R$142.9

million in 2016, mainly due to Unigal’s and MRS Logística’s performance.

Financial result

In 2017, net financial result were a negative R$462.9 million, against a negative R$30.1 million in 2016,

mainly due to a 1.5% depreciation of the Real against the Dollar in 2017, compared with an appreciation of

16.5% in 2016. This resulted in exchange losses of R$21.6 million in 2017, against exchange gains of

R$639.1 million in 2016. Additionally, in 2017, swap operation expenses of R$0.1 million were accounted,

against expenses of R$302.1 million in 2016, in function of debt renegotiation of the Company, initiated in

2016, where some contracts, targets of renegotiation, were concluded and substituted by new debt

instruments, thus contributing to the increase in these expenses.


Sales and services revenue

In 2016, net revenue was R$8.5 billion compared to R$10.2 billion in 2015, that is, a decrease of 17.0% due

to the lower sales volume of steel and iron ore, as a result of the market downturn faced by the Company's

Business Units.

In 2016, the Steel Unit sold 3.7 million metric tons of steel products(4.9 million metric tons in 2015), and the

Mining Unit sold 3.2 million metric tons of iron ore (3.8 million in 2015).

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Cost of sales and services

In 2016, cost of sales was R$8.0 billion compared to R$10.0 billion in 2015, a decrease of 20% following the

lower sales volume of steel and iron ore, as a result of the market downturn. The gross margin in 2016 was

5.8% compared to 1.7% in 2015.


In 2016, selling expenses amounted to R$272.7 million compared to R$258.1 million in 2015, primarily due

to the increase in the provision for impairment of trade receivables by R$37.3 million, which was partially

offset by lower distribution costs, lower expenses incurred in outsourced services and lower general

expenses.

In 2016, general and administrative expenses amounted to R$354.2 million compared to R$440.1 million in

2015, representing a drop of 20% as a result of the decrease of 31.9% in own employees’ expenses and

14.1% in general expenses.

In 2016, other operating expenses amounted to R$224.8 million compared to R$3.2 billion in 2015, primarily

due to the reversal of the impairment in the Mining Unit of R$357.5 million compared to an impairment of

R$2.6 billion in 2015 (of which R$2.1 billion in the Mining Unit, R$357.2 million in the Steel Metallurgy Unit

and R$56.7 million in the Steel Transformation Unit); lower expenses related to the restructuring of Steel

Metallurgy and Mining businesses, of which R$3.8 million in 2016 compared to R$256.8 million in 2015; and

tax credits amounting to R$176.3 million in 2016 (no event of this nature occurred in 2015). In 2016, these

events were partially offset by higher expenses in unabsorbed costs related to equipment shutdown totaling

R$485 million compared to R$164 million in 2015, and losses of R$132 million on the sale of electric energy

in 2016, in comparison with a profit of R$65.4 million in 2015.

Equity in the results of associates and subsidiaries

In 2016, equity in the results of associates and subsidiaries was R$142.9 million compared to R$95.6 million

in 2015, primarily due to the better performance of associates Unigal and MRS Logística.

Finance result

In 2016, net finance costs amounted to R$30.2 million compared to R$1.2 billion in 2015, due to the foreign

exchange gain of 16.5% compared to a foreign exchange loss of 47.0% in 2015, which resulted in foreign

exchange gains of R$639.1 million in 2016 against foreign exchange losses of R$1.1 billion in 2015, and

monetary gains of R$9.0 million in 2016 compared to monetary losses of R$215 million in 2015. These

events were offset by higher interest rates on borrowings totaling R$493 million in 2016, in comparison with

R$255 million in 2015.


Revenue from sales of goods and services

Revenue from sales of goods and services totaled R$ 10.2 billion in 2015 compared to R$ 11.7 billion in

2014, in function of lower sales of steel and iron ore, due to market retraction faced by the Company's

business units, with exception of the Capital Goods Unit, which had an increase in its net revenue by 9.4% in

the period.

In the year of 2015, total sales volume of steel was 4.9 million tons (5.5 million tons in 2014) and total Iron ore sales volume was 3.8 million tons (5.6 million tons in 2014)

Cost of goods or services sold

219

Cost of goods or services sold was R$ 10 billion in 2015 compared to R$ 10.7 billion in 2014, a decline of

6.5% in function of a lower volume os sales in the Steel Unit and the reduction in the prices of in some raw

material, among them iron ore prices.


Operating income and expenses totaled R$ 258.1 million in 2015 compared to R$ 290,9 million in 2014,

mainly due to lower costs of distribuction, lower expenses with third-party services, partially compensate by

higher provision for losses on doubtful accounts and general expenses. General and administrative

expenses in 2015 were R$440.1 million, against R$501.5 million in 2014, a decrease of 12.2%, as a result of

the decrease in own labor force expenses of 9.0%, in third party expenses of 7.9% and in general expenses

of 22.1%. Other operating expenses and income were a negative R$3.2 billion, against a positive R$278.7

million in 2014, mainly in function of Impairment of assets accounted in the amout of 26 billion (R$ 2.1 billion

in the Mining Unit, R$357.2 million in the Steel Unit, and R$56.7 in the Steel Transformation Unit), the result

of surplus electric energy of R$65.4 million, against R$378.8 million in 2014, and provision related to the

business restructuring in the Steel Unit and Mining Unit in the order of R$ 258.7 million (labor force

adjustments at the Cubatão plant and renegotiation of domestic freight contracts with MRS).

Financial Result

In the year of 2015, net financial expenses were R$1.2 billion, against R$522.8 million in 2014, in function of

the strong depreciation of the Real against the Dollar of 47.0% in that year, generating higher foreign

exchange losses, which were R$1.1 billion in 2015, against R$193.1 million in 2014.

Financial Result

In 2014, net financial expenses were R$522.8 million, against R$895.2 million in 2013, due to lower foreign

exchange losses of R$47.4 million and lower commissions on financing of R$129.0 million. In addition, the

year 2013 was impacted by the reverse operation of Hedge Accounting in R$174.8 million. During the years

of 2014 and 2013, loans and financing of Usiminas’ Companies, at variable rates, were in Reais, U.S dollars,

Yen and Euros.

10.2. The directors should comment on:

a) The results of operations of the issuer, in particular:

i. Description of any important components of revenue

The Company's revenue is generated mainly from the sale of steel products, such as thick plates, hot-rolled,

cold-rolled, plates, galvanized, among others, carried out by our Steelmaking unit. The revenue not recurring

with the sale of electricity impacted the results of the Company in the year 2017. Usiminas also presents in

its consolidated financial statements, revenue from Mining units, processing of Steel and Capital Goods.

The revenue of these units stems mainly from:

Mining: The Sale of iron ore.

Steel-Processing: Processing and distribution of steel products.

Capital Goods: Manufacture of Metal Structures, Industrial Equipment, Foundry and Railway wagons and

Services of Industrial Assemblies.

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ii. Factors that materially affected operating results

The operating result of the Usiminas is affected mainly by demand that influences the volume sold and the

prices of our main products. Also, exchange rates facilitate the imports of products and diminish our

competitiveness.

In the year ended 31 December 2017, the consolidated net revenue of the Company reached R$10.7 billion compared to R$8.5 billion in 31 December, 2016, an increase of 27.0% due to the higher sales volume of steel and iron ore, as well the average price hikes in the during the year. This revenue in the domestic market represented 86% and 14% in exports. In the Steel Unit, net revenues in 2017 totaled R$10.7 billion, 32.7% higher when compared to the R$ 7.5

billion in the year of 2016, mainly due to higher due to volume and price of sales. In The Mining Unit net

revenue was R$524.8 million, against R$366.1 million in 2016, a 43.3% increase, as a result of higher

volume and higher sales prices in the international market. The PLATTS reference price, adjusted for the

period of price formation of Mineração Usiminas sales prices (Fe 62%, CFR China) was US$73.3/t in 2017,

against US$54.4/t in 2016, a 33.0% increase. In the Steel Processing Unit in 2017, net revenue was R$2.5

billion, against R$1.9 billion in 2016, a 34.7% increase, due to higher volume of sales and services and also

by the hike in the average price of about 16% in the period. In the Unit of Capital Goods, in the year of 2017,

net revenue accounted for was R$287.6 million, against R$568.3 million in 2016, a 49.4% decrease, mainly

due to the reduced portfolio of projects for equipment, structures and assembly, as a consequence of market

stagnation in the oil and gas and infrastructure sectors in the country.

In the Steel Unit, net revenues in 2016 totaled R$ 7.5 billion, 18.1% lower when compared to R$ 9.2 billion in

the year of 2015 due to the retraction in the market faced by the Company’s Business Units and the lower

volume of exports by 64.0%, reflecting the anti-dumping measures from some countries and the heavy

competition from Chinese export. In The Mining Unit net revenue was R$366.1 million, against R$401.5

million in 2015, an 8.8% decrease, as a result of lower sales volume and the downfall in the iron ore price in

the international market. The PLATTS reference price, adjusted for the period of price formation of

Mineração Usiminas sales prices (Fe 62%, CFR China) was US$54.4/t in 2016, against US$58.5/t in 2015, a

7.0% decrease. In the Steel Processing Unit in 2016, net revenue was R$1.85 billion, against R$1.92 billion

in 2015, a 3.7% decrease, due to lower sales and services volume, partially compensated by higher average

price of 1% in the period. In the Unit of Capital Goods, in the year of 2016, net revenue accounted for was

R$568.3 million, against R$868.6 million in 2015, a 34.6% decrease, mainly due to the reduced portfolio of

projects for equipment, structures and assembly, as a consequence of market stagnation in the oil and gas

and infrastructure sectors in the country.

In the year ended 31 December 2015, the consolidated net revenue of the Company reached R$10.2 billion

compared to R$ 17.7 billion in 31 December, 2014. This revenue in the domestic market was lower than the

year of 2014 by 19.3 %, and in the external market performance was higher than the year of 2014 by 21.6 %.

The sales mix of the Steelmaking unit represented 73% in the domestic market and 27% in exports. In the

Steel Unit, net revenues in 2015 totaled R$ 92 billion, 16.1% lower when compared to R$ 10.9 billion in the

year of 2014 due to the lower volume of sales of steel in the domestic market and lower average price by

2.2%, partially offset by the higher volume of exports by 36.8%. In addition, there was a higher sales of

lower value-added products in both markets. In the Mining unit, net revenues showed a reduction of 46 %,

reaching R$401.5 million, compared to R$743 million in the year 2014, according to the fall in the average

price of iron ore and the lower volume of sales. The PLATTS reference price adjusted for the period of sales

price formation of Mining Unit (62% Fe, CFR China) was US$103.6/t in 2014 and went to US$58.5/t in 2015,

a 43.5% decline. Such effects were partially compensated by the foreign exchange depreciation in 2015.In

the Steel Processing Unit net revenue was R$1.9 billion in 2015, against R$2.3 billion in 2014, a 17.8%

decrease due to lower sales and services volume, partially compensated by higher average price of 2.5% in

the period. Net revenue accounted in the Capital Goods Unit for 2015 was R$868.6 million, against R$794.3

million, higher by 9.4% increase, mainly due to the increase in projects related to the industrial assembly

segment.

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Income Statement per Business Units - Accumulated

R$ milhões Steel * Mining Steel

Processing Capital Goods

Elimination and

Adjustment Consolidated

2017

Net Revenue 9,980 525 2,497 288 (2,556) 10,734

Domestic Market 8,635 344 2,496 287 (2,556) 9,207

Exports 1,346 180 1 1 - 1,527

2016

Net Revenue 7,518 366 1,853 568 (1,852) 8.454

Domestic Market 6,609 292 1,853 567 (1,852) 7.469

Exports 909 74 - 1 - 985

2015

Net Revenue 9,174 402 1,925 869 (2,184) 10.186

Domestic Market 7,088 402 1,919 840 (2,184) 8.065

Exports 2,086 - 6 28 - 2.120

b) Variations in revenue attributable to changes in prices, exchange rates, inflation, changes in volumes and

the introduction of new products and services

i. Sales Volumes

Indicators 2017 Var (%)

2017 2016 Var (%)

2016 2015 Var (%)

2015 Var.

2017/2016 Var.

2016/2015

Physical Sales of steel (t thousand) 4,026 100% 3,652 100% 4,915 100% 10% -26%

Domestic Market 3,441 85% 3,176 87% 3,590 73% 8% -12%

Exports 585 15% 477 13% 1,325 27% 23% -64%

Sales of ore (t thousand) 3,676 100% 3,207 100% 3,790 100% 15% -15%

Domestic Market - Third-party 293 8% 284 9% 279 7% 4% 2%

Exports 891 24% 520 16% - - 71% -

Domestic Market - Usiminas 2,492 68% 2,403 75% 3,511 93% 4% -32%

In 2017, steel sales totaled 4.0 million tons compared to 3.7 million tons in 2016, an increase of 10.2%.

Domestic sales, which accounted for most of total sales, totaled 3.4 million tons in 2017, an increase of 8.4%

in comparison with the previous year, mainly driven by recovery in the demand of the automotive industry,

segments connected to agriculture, such as agricultural machinery and silos and exporting segments.

Exports were 584.3 thousand tons, a 22.6% increase over 2016. Share of domestic market sales was 85%

of total sales in 2017.

Iron ore sales totaled 3.7 million tons in 2017 compared to 3.2 million in 2016, an increase of 14.6%, mainly

due to the resumption of exports in the third quarter of the year.

In 2016, steel sales totaled 3.7 million tons compared to 4.9 million tons in 2015, a decrease of 25.7%.

Domestic sales, which accounted for most of total sales, totaled 3.2 million tons in 2016, a reduction of

11.5% in comparison with the previous year, due to the strong demand decrease in Brazil. Exports totaled

477 thousand tons, a reduction of 64.0% in comparison with 2015, reflecting anti-dumping measures

adopted in some countries and a strong competition with Chinese exports. In 2016, the share of sales in the

domestic market grew, reaching 87% of total sales.

Iron ore sales totaled 3.2 million tons in 2016 compared to 3.8 million in 2015, a reduction of 15.4%, mainly

due to the drop in steel consumption in Brazil, which was partially offset by exports of 520 thousand metric

tons.

In 2015, the total volume of sales of steel products was 4.9 million of tons compared to 5.5 million of tons in

2014, a reduction of 11.3%. Domestic market, with a higher representatively, recorded a volume of 3.6

million tons in 2015, a decline of 21.5% compared to 2014, in function of a lower demand for the segments of

distribution and automotive (declines of 15.5% and 27.7% respectively). Exports reached 1.3 million of tons,

an increase of 36.8%, partially compensated by the decline in the sales for domestic market.

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In 2015, the volume of sales of iron ore was 32.6% lower when compared to 2014 as a result of logistic

restrictions to exports and steel consumption downfall in Brazil.

We highlight the sales volume of the Steel Industry in 2017 on the table below:

Detail of Physical Sales of Steel Product

Thousand tons 2017 2016 2015 Var.

2017/2016 Var.

2016/2015

Physical sales total 4,026 100% 3,652 100% 4,915 100% 10% -26%

Heavy Plates 481 12% 518 14% 890 18% -7% -41%

Hot-rolled coils 1,139 28% 975 27% 1,580 32% 17% -38%

Cold-rolled 1,319 33% 1,152 32% 1,125 23% 14% 2%

Galvanized 1,028 26% 920 26% 851 18% 12% 4%

Processed Products - 0% - 0% 10 0% - -

Plates 58 1% 87 2% 459 9% -32% -81%

The main destinations of exports in 2017 were:

ii. Sales Prices

The average sales price of steel products in 2017 presented a hike in comparison with 2016. Net revenue

per ton increased by 20.4%, of which 20,5%took place in the domestic marked and and 20.4% in the export

sales prices. At the Mining Unit, net revenue per ton in 2017 was 25% higher when compared to 2016, due

to the hike in the average iron ore prices in the international market. The PLATTS reference price, adjusted

for the period of price formation of Mineração Usiminas sales prices (Fe 62%, CFR China) was US$73.3/t in

2017, against US$54.4/t in 2016, a 33.0% increase.

In 2016, the average sales price of steel products underwent an increase. The net revenue per metric ton

increased by 6.4% in comparison with 2015, as follows: a 0.9% increase in the average price of domestic

sales and a 17.1% increase in the average price of foreign sales. As for the Mining Unit, in 2016, the net

revenue per metric ton was 11% lower than the net revenue per metric ton in 2015, due to the drop in the

average sales price of the iron ore in the foreign market. In 2016, adjusted price under the PLATTS

assessment methodology for the period of composition of the sales price of Mineração Usiminas (62% Fe,

CFR China) was US$54.4/metric ton compared to US$58.5/metric ton in 2015, a reduction of 7.0%.

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In 2015 the average price of steel products showed a negative variation as result of the fierce competition

between the local plants and the adverse business environment of the steel industry worldwide. Net revenue

per ton decreased by 5.4% with a reduction of 2.2% in the average price in the domestic market and 7.6% in

export. In addition, there was a higher sales of lower value-added products in both markets.

For the Mining unit in the year 2015 net revenues per ton decline 2.9% when compared to 2014, reflecting

the decrease in the average price of iron ore and the lower volume of sales, partially compensated by the

impact of the devaluation of the Brazilian currency in 2015. In the Mining unit, net revenues showed a

reduction of 46 %, reaching R$401.5 million, compared to R$743 million in the year 2014, according to the

fall in the average price of iron ore and the lower volume of sales. The PLATTS reference price adjusted for

the period of sales price formation of Mining Unit (62% Fe, CFR China) was US$103.6/t in 2014 and went to

US$58.5/t in 2015, a 43.5% decline.

c) Impacts of inflation, the variation of prices of the main raw materials and products, exchange rate, interest

rate on the operating profit and the financial result of the issuer

Variations in the sales cost

In 2017, the cost of sales for the Steel Unit was R$8.5 billion, an increase of 19.9% in comparison with 2016,

mainly in function of a higher volume sold and volume of sales and higher price of some raw materials,

principally coal and slabs purchased. At the Mining Unit, the cost of sales was R$343.0 million, a 15.9%

increase in caparison with 2016, mainly due to the higher volume of iron ore sold in 14.6%.

The cost of raw materials corresponds to more than half of the Company's cost of sales, mainly acquired slabs,

coals and iron ore. The prices of these items follow the supply and demand dynamics of the market, following

the evolution of the PLATTS index. Fuel, energy and utilities has a share of about 10% of cost of sales. Fuel

prices, mostly natural gas, are defined by the state regulatory agencies, while the value of utilities follows the

parametric formula defined in the contract. The price of electric energy, for which the Company has specific

contracts that guarantee supply, is adjusted by the IGP-M price index or by the IPCA, according to each

contract, without impact of market variations. Finally, the cost of labor represents approximately 9% of the cost

of sales, following the collective agreements negotiated in each locality. The other cost items behave mostly

according to inflation.

In 2016, the cost of sales for the Steel Unit was R$7.1 billion, a reduction of 22.5% in comparison with 2015,

because of the lower volume sold by the steel segment. The average cost of sales per metric ton increased by

4.3% in comparison with 2015.

Fixed labor costs accounted for approximately 11% of the Company's cost of sales in 2016, and followed the

increases established in the collective labor agreements entered into with the related employment categories.

Expenses with electricity and utilities accounted for 7% of the Company's cost of sales in the year. Electricity

has specific contracts that guarantee supply, and prices are adjusted based on the General Market Price Index

(IGPM) or the Extended Consumer Price Index (IPCA), according to each contract. Other costs are influenced

by local inflation rates.

Cost of goods or services sold was R$ 10 billion in 2015 compared to R$ 10.7 billion in 2014, a decline of

6.5% in function of a lower volume os sales in the Steel Unit and the reduction in the prices of in some raw

material, among them iron ore prices. For the Steelmaking Industry, the cost of the Company's sales totaled

R$9.1 billion in 2014, 9.3% lower compared to 2014 in function of a lower volume os sales in the Steel Unit

partially compensated by the operatins restructuring costs. The COGS per ton in 2015 was higher by 2.2%

when compared to 2014. The fixed costs with labor represent approximately 11% of the Company’s sales

cost and follow the development of wage agreements of the categories and the variation of the INPC.The

energy and utilities bills represent 7% Company’s sales cost. The electrical energy has specific contracts to

ensure power supply and prices which are adjusted by the index of price variation IGP-M or by the IPCA,

according to each contract. The remaining costs are influenced by local inflation.

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Exchange

In addition to what was above-mentioned, Usiminas Companies’ operate internationally and are exposed to

foreign exchange risks stemming from exposure to some currencies, especially in relation to U.S Dollar and,

to a lesser extent, the Yen and the Euro. The exchange rate risk arises from assets and liabilities recognized

and net investment in overseas operations. The financial policy of Usiminas companies’ highlight that the

derivative transactions has the objective of reducing their costs, reduce the volatility in cash flow, reduce

foreign exchange exposure and avoid the mismatch between currencies. As a protective measure to reduce

the effect of exchange rate variation, the Administration has adopted as policy to use log swap

operations and Non Deliverable Forwards (NDF) and, in addition, have its assets tied to exchange indexing,

as shown below:

In Thousands of Reais 2017 2016 2015

Cash and cash equivalents 1,478,473 103,130 143,256

Securities 8,428 8,146 160,976

Accounts receivable 297,966 87,334 176,207

Advances to suppliers 5,404 12,684 21,804

Foreign currency Assets 1,790,271 211,294 502,243

Loans and financing (1,747,954) (1,779,065) (3,725,360)

Suppliers, contractors and freightetes (219,628) (167,613) (471,048)

Advances from customers (13,699) (4,607) (13,857)

Other (18.159) (16,786) (15,763)

Liabilities in Foreign currency (1,999,440) (1,968,071) (4,226,028)

Net Exposure (209,169) (1,756,777) (3,723,785)

In 2017 the exchange rate variation on the net liabilities position of the Company generated a loss of R$21.6

million, against a gain of R$639.0 million in 2016 and a loss of R$1.1 billion in 2015.

Interest Rate

During the years 2017, 2016 and 2015, loans and financing of Usiminas Companies’, at variable rates were

denominated in Reais, U.S dollars, Yen and Euro.

Interest rates for the loans and financing can be demonstrated as follows:

In Thousands of Reais 2017 % 2016 % 2015 %

Loans and financing

Pre-fixed 636,251 9 642,964 9 2,295,166 29

TJLP 359,896 5 379,880 5 413,518 5

Libor 1,032,430 16 1,065,773 15 1,306,185 17

CDI 3,549,410 54 3,735,406 54 2,551,219 33

Other 108,427 2 102,550 1 242,336 3

Total 5,686,414 86 5,926,573 86 6,808,424 87

Debentures

CDI 949,365 14 997,735 14 1,060,290 13

Total of loans and financing and debentures

6,635,779 100 6,924,308 100 7,868,714 100

In 2017, 2016 and 2015, the actuall interest rates on loans and financing of the Company impacted their

results negatively in the amount of R$637 million, R$494 million and R$256 million respectively.

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Impact on the financial result

In Thousands of Reais 2017 2016 2015

Monetary effects (assets) basically on short-term investments restated by reference to CDI variation

203,256 126,554 137,555

Monetary restatemement on judicial deposits 31,612 47,334 51,475

Monetary effects (liabilities), mainly on loans and financing indexed by CDI and TJLP (116,573) (273,797) (352,754)

Foreign exchange gains and losses, net, arising from assets and liabilities denominated in foreign currency (loans and financing, suppliers, short-term investments and customers)

(21,601) 639,098 (1,072,090)

10.3. The directors should comment on the relevant effects that the events bellow have caused or are

expected to cause in the financial statements of the issuer and its results:

a) Introduction or disposal of operating segment

The Company is comprised of four business units: Mining, Steel, steel Transformation and Capital Goods.

b) Constitution, acquisition or disposal of equity interest

i. Disposal of Rios Unidos’ transportation operation

On April 22, 2015 the Company and its subsidiary Usiminas Mecânica S.A. signed a purchase and sale

agreement with Grecco International Logistics S.A. ("Grecco") to transfer the totality of its shares in the

capital of Transporte Itaquaquecetuba Ltda. ("Transport Itaquaquecetuba").

On September 30, 2015 Transporte Itaquaquecetuba Ltda received the spun-off portion of Rios Unidos Logística e Transportes de Aço Ltda. (“Rios Unidos”) with asset and liabilities elements related to the transportation and storage of steel cargo activities. On January 15, 2016 the transaction was concluded and Transportes Itaquaquecetuba in the amount of R$ 18 million, which will occur in montly installments for a maximum of five years.

c) Events or operations unusual

2017

i. Capital reduction of its subsidiary Mineração Usiminas S.A. ("MUSA")

On March 03, 2017, at an Extraordinary General Meeting, in which its shareholders unanimously approved

the proposal for the reduction of MUSA's capital stock in the amount of one billion reais (R$

1,000,000,000.00), of which R$700 million were paid to Usiminas on May 19, 2017, proportionally to its

participation in the capital stock of MUSA.

ii. Agreement between Mineração Usiminas S.A. and Porto Sudeste do Brasil S.A.

On May 27, 2015, Mineração Usiminas S.A. notified Porto Sudeste do Brasil S.A. (formerly MMX Porto

Sudeste Ltda.) of the immediate termination of the agreement for the rendering of port operation services

related to the receipt, handling, storage and shipment of ore owned by Mineração Usiminas at the Porto

Sudeste Terminal under Take-or-Pay and Delivery-or-Pay arrangements. This agreement was terminated

due to repeated default by Porto Sudeste in its obligation of completing and putting the port into operation,

as well as to non-payment of contractual penalties. The Company took reasonable steps to enforce its rights,

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including in arbitration proceedings claiming the payment of penalties, compensation for loss of profits, in

addition to other damages provided for in the agreement. The agreement signed was effective for 5 years as

from the first shipment, originally scheduled for April 2012. On June 6, 2017, Mineração Usiminas entered

into an agreement with Porto Sudeste to terminate the arbitration proceeding, which resulted in the

termination of said agreement and the waiver of all rights that both parties might still have in relation to the

agreement. The agreement establishes a payment by Porto Sudeste to Mineração Usiminas in the amount

of R$205,106. On the same date, a new agreement for the rendering of port operation services was signed,

which provides that Mineração Usiminas will have the right, but not the obligation, to handle a total volume of

up to 17.5 million metric tons of iron ore at Porto Sudeste Port Terminal, located in the municipality of Itaguaí

- RJ. On July 12, 2017, the subsidiary Mineração Usiminas S.A. received the amount of R$205,106 from

Porto Sudeste do Brasil S.A., arising from the agreement entered into to terminate the arbitration

proceeding. With this receipt, the accounting effects of which were recorded in the statement of income at

June 30, 2017, the agreement for the rendering of port operation services entered into on February 11, 2011

and the arbitration proceedings are now terminated. The judgment that approved the agreement between the

parties was rendered on September 5, 2017.

2016

In order to reinforce the Company’s cash position, Usiminas issued new ordinary (voting) and preferred (non-

voting) shares, totaling R$1,050,294,935.04. On 06/03/16, the Board of Directors approved the Capital

Increase with the subscription of 39,292,918 preferred class “A” shares, identical to the share of this type,

already issued, at the issuance price of R$1.28 per share, totaling the amount of R$50,294,935.04. On

07/19/16, at the General Extraordinary Shareholders Meeting, the Capital Increase was approved with the

subscription of 200,000,000 ordinary shares issued at R$5.00 per share, totaling the amount of

R$1,000,000,000.00. Thus, the Company’s share capital turned to be R$13,200,294,935.04, divided into

1,253,079,108 shares, being 705,260,684 ordinary, 547,740,661 preferred class “A” shares and 77,763

preferred class “B” shares, without nominal value.

On 09/12/16, the Company concluded the signing of all final documents related to the debt renegotiation and

confirms that the signing of Definitive Instruments settles the conclusion of the Company’s total debt

restructuring with its creditors (representing approximately 92% of the Company’s total debt), which, in the

vision of Top Management, preserves its financial and operational capabilities, adjusting its debt profile to

the short, medium and long term outlooks.

10.4 Reviews of directors on changes in accounting practices

a) Significant changes in accounting practices

New pronouncements, revisions and interpretations of standards not yet in force at December 31,

2017

IFRS 9 –

Financial

Instruments

IFRS 9 replaces the ‘incurred loss’ model in IAS 39 (CPC 38) with a forward-looking ‘expected credit loss’ (ECL) model.

IFRS 9 contains a new classification and measurement approach for

financial assets that reflects the business model in which assets are

managed and their cash flow characteristics. The new standard

maintains the existing guidance on the recognition and derecognition of

financial instruments of IAS 39.

The adoption of IFRS 9 will be

effective on or after January 1,

2018. The Company is currently

evaluating the impact of IFRS 9

on its financial statements and

disclosures.

IFRS 15 –

Revenue from

contracts with

customers

IFRS 15 establishes a comprehensive framework for determining whether, how much and when revenue is recognized. It replaces existing revenue recognition guidance, including CPC 30 (IAS 18) Revenue, CPC 07 (IAS 11) Construction Contracts and IFRIC 13

The new standard is effective on

or treafter January 1, 2018. Early

adoption is being allowed,

applying the approach of

cumulative effects. The

Company is currently

227

Customer Loyalty Programmes.

evaluating the impact of IFRS

15 on its financial statements

and disclosures.

IFRS 16 -

Leases

IFRS 16 introduces a single, on-balance lease sheet accounting model

for lessees. A lessee recognizes a right-of-use asset representing its

right to use the underlying asset and lease liability representing its

obligation to make payments. There are optional for short-term leases

and leases of low value items. Lessor accounting remains similar to the

current standard – i.e. lessor continue to classify leases as finance or

operating leases.

IFRS 16 replaces existing leases guidance including CPC 06 (IAS 17) Leases and ICPC 03 (IFRIC 4, SIC 15 and SIC 27) Complementary Aspects.

The standard is effective for

annual periods beginning on or

after January 1, 2019. Early

adoption is permitted for entities

that apply IFRS 15 Revenue from

Contracts with Customers at or

before the date of initial

application of IFRS 16.


2016

The standards and interpretations issued which are significant for the Usiminas, but not yet adopted until the

date of issuance of the Company’s financial statements are presented below. The Usiminas companies

intend to adopt these standards, if applicable, where applicable, as they go into effect.

IFRS 9 –

Financial

Instruments

IFRS 9 replaces the ‘incurred loss’ model in IAS 39 (CPC 38) with a forward-looking ‘expected credit loss’ (ECL) model.

IFRS 9 contains a new classification and measurement approach for

financial assets that reflects the business model in which assets are

managed and their cash flow characteristics. The new standard

maintains the existing guidance on the recognition and derecognition of

financial instruments of IAS 39.






disclosures.

IFRS 15 –

Revenue from

contracts with

customers

IFRS 15 establishes a comprehensive framework for determining whether, how much and when revenue is recognized. It replaces existing revenue recognition guidance, including CPC 30 (IAS 18) Revenue, CPC 07 (IAS 11) Construction Contracts and IFRIC 13 Customer Loyalty Programmes.


or treafter January 1, 2018. Early

adoption is being allowed,


cumulative effects. The

Company is currently

evaluating the impact of IFRS

15 on its financial statements

and disclosures.

IFRS 16 -

Leases

IFRS 16 introduces a single, on-balance lease sheet accounting model

for lessees. A lessee recognizes a right-of-use asset representing its

right to use the underlying asset and lease liability representing its

obligation to make payments. There are optional for short-term leases

and leases of low value items. Lessor accounting remains similar to the

current standard – i.e. lessor continue to classify leases as finance or

operating leases.

IFRS 16 replaces existing leases guidance including CPC 06 (IAS 17) Leases and ICPC 03 (IFRIC 4, SIC 15 and SIC 27) Complementary Aspects.

The standard is effective for



adoption is permitted for entities

that apply IFRS 15 Revenue from

Contracts with Customers at or

before the date of initial

application of IFRS 16.

Disclosure

Initiative

(Amendments

to CPC 26 /

IAS 7)

The amendments require additional disclosures that allow users of financial statements to understand and assess changes in liabilities arising from financing activities, both cash flow and other changes.

The amendments are effective for



adoption is permitted only for

financial statements in

accordance with IFRS. The

Company is currently evaluating

the effects that CPC 26 / IAS 7 on

its financial statements and

disclosures.

228

Recognition of

Deferred Tax

Assets for

Unrealized

Losses

(Amendments

to CPC 32 /

IAS 12)

The amendments clarify the accounting for deferred tax assets for

unrealized losses on debt instruments measured at fair value.

The amendments are effective for


after January 1, 2017, with early

adoption permitted only for

financial statements in

accordance with IFRS. The

Company is currently evaluating

the effects of CPC 32 / IAS 12 on

its financial statements and

disclosures.

The Brazilian FASB (CPC) has not issued new standards or made changes to the effective standards related

to all recently issued IFRS standards. Therefore, the early adoption of these new standards is not permited

for entities issuing their financial statements in accordance with accounting principles adopted in Brazil.

Restatements of comparative balances

For the purpose of the financial statement comparability, the Company reclassified balances related to the

credit assignment operation (forfaiting) with foreign suppliers from the balance sheet within “Trade accounts

payable, contractors and freight” to “Accounts payable - Forfaiting”, in the balance sheet and cash flow as of

December 31, 2015.

(a) Balance sheets

Consolidated

12/31/2015

Originally issued Reclassification Restated

Total Assets 27,758,332 - 27,758,332

Trade accounts payable, contractors and freight 1,187,274 (366,703) 820,571

Accounts payable 587,458 366,703 954,161

Other accounts payablecurrent and noncurrent 10,989,743 - 10,989,743

Total Liabilities 12,764,475 - 12,764,475

Total Shareholders’ Equity 14,993,857 - 14,993,857

Total Liabilities and Shareholders’ Equity 27,758,332 - 27,758,332

229


2015

The standards and interpretations issued which are significant for the Usiminas, but not yet adopted until the

date of issuance of the Company’s financial statements are presented below. The Usiminas companies

intend to adopt these standards, if applicable, where applicable, as they go into effect.

IFRS 9 –

Financial

Instruments

In July 2014, the IASB issued a final version of IFRS 9 – Financial

Instruments, which reflects all phases of the project of

financialinstruments and supersedes IAS 39 – Financial Instruments:

Recognition and Measurement. The standard introduces new

requirements on the classification and measurement, impairment and

hedge accounting. The statement also introduce new guidance in

addition to the existing guidance regarding the recognition and

derecognition of financial instruments in accordance with IAS 39.






disclosures.

IFRS 15 –

Revenue from

contracts with

customers

The IFRS 15 requires that the entity recognize its revenue based on

amount that is expected to receive in exchange for the control of goods

and services. The new standard supersedes significant parts of the

existing IFRS for a more detailed guidance regarding the revenue

recognition per IFRS as well as the Generally Accepted Accounting

Principles in the United States (“U.S. GAAP”), when adopted.


or thereafter January 1, 2018.

Early adoption is being allowed,


cumulative effects. The Company

is currently evaluating the impact

of IFRS 15 on its financial

statements and disclosures.

Additionally, the Company does not expect the following new standards or changes to currently existing

standards to have a significant impact in the consolidated financial statements.

IFRS 14 - Regulatory Deferral Accounts (Ativos e Passivos Regulatórios);

Changes to CPC 19 / IFRS 11 - Accounting for Aquisitions of Interests in Joint Operations;

Changes to CPC 27 / IAS 16 e CPC 04 / IAS 38 - Acceptable Methods of Depreciation and Amortisation;

Changes to CPC 36 / IFRS 10 e CPC 18 / IAS 28 - Sale or Contribution of Assets Between an Investor and its Associate or Joint Venture;

Other updates to IFRSs issued from 2012 through 2014 – various standards;

Changes to CPC 36 / IFRS 10, CPC 45 / IFRS 12 e CPC 18 / IAS 28 - Investment Entities: Consolidation Exception; e

Changes to CPC 26 / IAS 1 - Disclosure Initiative.

The Company reclassified balances related to the credit assignment operation (forfaiting) with

suppliers for better presentation purpose. These balances were originally presented in the balance sheet

within “Trade accounts payable, contractors and freight” and were reclassfied into “Other accounts payable”.

Additionally, the Company reclassified the balances of “Payables to affiliates” into “Accounts payable” and

“Trade accounts payable, contractors and freight”, based on the nature of the transaction.

For comparability purposes, balances as of December 31, 2014 were reclassified as follows:

230

(a) Balance sheets

Consolidated

12/31/2014

Originally issued Reclassification Restated

Total Assets 30,484,062 - 30,484,062

Trade accounts payable, contractors and freight 1,948,744 (277,204) 1,671,540

Payables to affiliates 338,357 (338,357) -

Accounts payable - 615,561 615,561

Other accounts payablecurrent and noncurrent 9,435,346 - 9,435,346

Total Liabilities 11,722,447 - 11,722,447

Total Shareholders’ Equity 18,761,615 - 18,761,615

Throughout 2015 and 2014, the Company made several purchases of raw materials with domestic suppliers,

mainly iron ore and fuel. These suppliers entered into factoring agreements with financial institutions through

credit assignments agreements. The receivables are sold to the bank based on a non-recourse factoring

agreement, in exchange for an interest rate ranging from 1% p.a. to 1.6% p.a. As of December 31, 2015, the

liabilities related to such transactions amounted to R$587,458 on both the company and the consolidated

balance sheet (R$615,561 as of December 31, 2014 on both th Company and the consolidated balance

sheet). The average term of these credit assignments is 180 days.

The Brazilian FASB (CPC) has not issued new standards or made changes to the effective standards related

to all recently issued IFRS standards. Therefore, the early adoption of these new standards is not permited

for entities issuing their financial statements in accordance with accounting principles adopted in Brazil.

b) Significant effects of changes in accounting practices

There was no change in the accounting practices adopted by the Company in the fiscal years ended

December 31, 2017, 2016 and 2015.

c) Qualifications and emphases present in the auditor's report

The Company has no qualification in its Financial Statements related to the Financial Statements for 2017,

2016 and 2015.

The independent auditors' opinion related to the Financial Statements of December 31, 2017, presented no

emphasis.

Regarding the Financial Statements of December 31, 2016, the independent auditors' opinion presented the

following emphasis " We draw attention to Note 17, which describes certain conditions that must be complied

with by June 30, 2017 if early redemption of certain significant loans is to be avoided. Our conclusion is not

qualified in respect of this matter. "

Regarding the Financial Statements of December 31, 2015, the opinion of the independent auditors

presented the following emphasis: " Without qualifying our opinion, we draw attention to Note 1 in the

financial statements, which describes the action plan defined by local management to equalize the financial

obligations to the Company's cash generation, which reported a loss for the year ended December 31, 2015,

and as of that date, the excess of its current liabilities over current assets. These conditions, along with the

risk of not achieving the plan described, indicates the existence of a material uncertainty that may cast

significant doubt about the Company´s ability to continue as a going concern."

231

10.5. The directors shall indicate and comment on critical accounting policies adopted by the issuer,

by exploring, in particular, accounting estimates made by the administration on issues uncertain and

relevant to the financial situation and the results, which require subjective or complex decisions

such as: provisions, contingencies, revenue recognition, tax credits, assets of long-term, life of

active non-circulating, pension plans, adjustments to conversion into foreign currency, costs of

environmental recovery, criteria for testing of recovery of assets and financial instruments

JUDGMENTS

The preparation of the Company’s financial statements requires management to make professional

judgments, estimates and adopt assumptions that affect the reported amounts of revenues, expenses,

assets and liabilities, as well as the disclosure of contingent liabilities. Upon applying the Usiminas

Companies’ accounting practices, management made the following judgments that have most significant

effect on the amounts recognized in the financial statements:

Segregation of interest and monetary variation related to short-term investments and local loans

The Company segregates the Extended Consumer Price Index (IPCA) of loans and financing and of short-term investments, the contracted index of which are the Interbank Deposit Certificate (CDI) and the Long-Term Interest Rate (TJLP). Therefore, the portion referring to IPCA is segregated of interest on loans and financing and of short-term investment yield, and included in account “Monetary effects”, under Financial income (expense), see Note 31. Classification of investment control

The Company classifies its investments under the terms provided for in CPC 18 (R2) - Investments in

Affiliates, Subsidiaries and Joint Ventures and by CPC 19 (R2) - Investment in Joint Venture, the

classification of which is subject to judgment in determining the control and significant influence of

investments.

ESTIMATES AND ASSUMPTIONS

Key assumptions concerning sources of uncertainty in future estimates and other important sources of

estimation uncertainty at the balance sheet, involving significant risk of causing a material adjustment to the

carrying amount of assets and liabilities in the next financial year are discussed below.

Impairment of nonfinancial assets

Yearly, Usiminas Companies test goodwill for impairment as well as other long-term assets. The recoverable

amounts of CGUs were determined based on calculations of the value in use and net sales price, based on

estimates (Note 17). For the purposes of assessing impairment, assets are grouped at the lowest levels for

which there are separately identifiable cash flows (i.e., cash-generating units - CGUs).

Income and social contribution taxes

Usiminas Companies are subject to income tax in various countries in which they operate. Significant

judgment is required in determining the provision for income taxes in these countries. In many transactions,

232

the final determination of the tax is uncertain. Usiminas Companies also recognize provisions due to events

in which it is probable that additional tax amounts will be owed. The Company regularly reviews the deferred

tax assets in terms of recoverability, considering historical profit generated and projected future taxable

profits, according to technical feasibility studies.

Fair value of derivatives and other financial instruments

The fair value of financial instruments that are not traded in active markets is determined by using valuation

techniques. Usiminas Companies use their professional judgment to choose various methods and define

assumptions that are mainly based on market conditions existing at the balance sheet date.

Revenue recognition

Subsidiary Usiminas Mecânica uses the Percentage-of-Completion Method (PoC) to record the revenue from

orders in transit agreed at a fixed price. The use of PoC method requires that the services performed up to

the balance sheet date be estimated as a proportion of the total services contracted.

Retirement plan benefits

The current amount of liabilities deriving from retirement plans depends on a series of events that are

determined based on actuarial calculations, which uses a number of assumptions. Among the assumptions

used in determining the net cost (revenue) for the employees’ retirement plans, the discount rate is also

used. Usiminas Companies calculate the appropriate discount interest rate at year end, to determine the

present value of estimated future cash outflows. Other significant assumptions for retirement plan obligations

are partially based on current market conditions. Further information is disclosed in Note 24.

Provision for litigation

As described in Note 23, Usiminas Companies are parties to various legal and administrative proceedings.

Provisions are set up for all litigation referring to legal proceedings that represent probable loss. Assessment

of the likelihood of loss includes analysis of available evidence, including the opinion of internal and external

legal advisors of Usiminas Companies.

Provision for environmental restoration

As part of its mining activities, the Company recognizes in the consolidated financial statements a provision

to cover environmental restoration obligations. Upon determining the provision amount, assumptions and

estimates are made in relation to the discount rates, at the cost expected for restoration and at the time

expected for such costs.

Rates of useful lives of PP&E

Depreciation of property, plant and equipment is calculated by the straight-line method according to the

useful lives of assets. The useful life is based on reports of engineers of Usiminas Companies and external

advisors, reviewed on an annual basis.

233

10.6. The directors shall describe the relevant items not disclosed in the financial statements of the

issuer, indicating:

a) The assets and liabilities held by the issuer, directly or indirectly, that do not appear on its balance sheet

(off-balance sheet items), such as:

i. Operating market leases, assets and liabilities

The company has the following operational leases agreement:

- Mineração Usiminas S.A. (MUSA) has a contract with the MBL – Materiais Básicos Ltda., signed in July

2011, the contract value is estimated at US$300 million for the lease of mineral rights in the area of Sierra

Azul, Minas Gerais. The lease duration is 30 years, counted from October 15, 2012, date on which the lease

was authorized by the National Department of Mineral Production (DNPM) or until exhaustion of mineral

reserves.

ii. Portfolios of receivables downloaded on which the entity keep risks and responsibilities, indicating their

respective liabilities

There are none.

iii. Contracts for future purchase and sale of products and services

The Company has the following operational contracts relevant to future purchases:

Contracts for the Supply of Iron Ore

The main supplier of iron ore to Usiminas in 2017 was Mineração Usiminas S/A – MUSA. The contract

between the parts is valid from January 2011 until December 2048. Until the year of 2016 there was an

obligation of 4 million tons of iron ore consume per year. In 2017, the contract was renegotiated to an

obligation of acquisition of 2.4 million ton per year, which was fulfilled. From 2018 until the end of 2021 the

annual take or pay volume becomes 2.3 million tons, according to the notice to the market released on

December 5, 2017. As from 2022 this volume shall be defined annually by mutual agreement.

In addition to the volume contracted with Mineração Usiminas – MUSA to suplly the Company’s demand for

iron ore, Usiminas negotiated spot purchases with third parties, highlighting in 2017 Vallourec, Bemisa and

Itaminas.

In addition, Usiminas maintained in 2017 an agreement for the transportation of ore with VLI in the amount of

approximately R$180 million.

Contracts for the Supply of Coal and coke

The mineral coal* used in steelmaking activities comes only from abroad due to the lack of coal with the ideal

specifications to be used in the steelmaking process in Brazil.

Usiminas has signed long-term contracts and spot purchases of imported coal and national coke (CVP) in

the calendar year of 2017, corresponding to approximately 2.3 million tons, equivalent to 100% of the volume

of coal provided for the supply of the activities of the two steel mills in Ipatinga until December 2017. The

purchase of coke in the national and international market, coal injection (PCI) and the anthracite are

computed in the data.

234

Among the main suppliers of coal, anthracite and coke in the year of 2017, stand out Blackhawk, Petrobrás

Distribuidora, Contura e Jellinbah (Lake Vermont), responsible for approximately 70% of the supply of coal

and CVP to Usiminas in that period.

In 2017, the approximate total amount of coal purchases, anthracite and PCI totaled R$811 million, and for

the purchases of FMC (Coke) the approximate value was R$178 million.**

In 2017, Usiminas did not purchase any imported metallurgical coke cargo, because with the current

production scenario the Ipatinga plant is self-sufficient in coke.

* Mineral Coal = coal for coking coal injection (PCI) and anthracite for sintering.

** FOB values without taxes and financial charges.

Contracts for the Supply of Electrical Energy

In June 2007, the Company signed with the CEMIG GT an electricity supply contract for the period starting

01/01/10 to 12/31/14, of approximately 320 MW average annual.

At the end of 2009, the Company initiated the renegotiation of the contract to review the contractual

conditions and extend the contract’s deadline for 10 years (January 01, 2010 to 31 December 2019).

As a result of this renegotiation,there were signed two new documents: the first is a contract with the CEMIG

GT in that Usiminas buys about 320 MW annual average for the period 2010 to 2012, reducing to 120 MW

the annual average from 2013 to 2019. The second document is a “supplier” term in that Cemig GT leases

to the Company part of its purchase agreement signed with the Santo Antonio Energia S. A - SAESA. By this

second document, Usiminas receives from SAESA, from 2013 until 2019, the average amount of 200 MW

per year.

For the years from 2017 to 2030 an energy supply agreement was signed between White Martins and

Usiminas with Intervention of Cemig GT. The assignment term was the result of a commercial agreement

made in the negotiation of the TOP of the cryogenic contract of the Cubatão Plant. The contract volume of

65,408 average MW is required to withdraw 32 average MW (48.92% of the contracted energy) with

exclusive use of the Cubatão Plant.

At auctions held on 07/12/17 and 03/01/18 a total of average 100 MW of energy was purchased for the

period 2020-2022 with CTG and Engie, in which case the average 50 MW of each company was acquired for

the Ipatinga Power Plant.

Except for the term of assignment made between White Martins and Usiminas with Cemig GT's intervention,

the other mentioned contracts have 100% take or pay, ie, there is an obligation to consume the entire

contracted amount, however, any surpluses are resold in the market. These contracts amount to

approximately R$ 6.9 billion for the period from 01/01/2010 to 12/31/2030.

Gas Supply Contract with the COMGAS

USIMINAS and COMGAS concluded on 05/13/2002 the contract for the supply of firm natural gas for its

plant in Cubatao. This contract was renewed from 06/01/2017 until 05/31/2018 with the supply forecast of

200.000M ³ /day of natural gas for consumption in processes and blast furnaces. In the 2017 R$ 81 million

were spent with this contract (values without recoverable taxes).

Gas Supply Contract with the Gasmig

Usiminas and Gasmig have an agreement with a contracted volume of 235,000 m³ / day. The agreement

was celebrated on 09/01/2017 and has automatic renewals. Eventually and according to availability,

Usiminas celebrates spot gas purchases for exclusive use in Blast Furnace. In 2017, R$107 million (amounts

without recoverable taxes) were disbursed with natural gas supplied by Gasmig.

235

Service Contract with MRS

Mineração Usiminas S.A. (MUSA) has a contract with MRS Logistica S.A. (signed on January 1, 2011) to rail

transport services of iron ore from the cargo terminals to the Cubatão Plant in SP and the Port Terminals in

RJ, effective until November 30, 2026. This agreement was renegotiated with MRS, excluding the take or

pay conditions, which generated an obligation of payment of 10 annual installments of R$31.5 million,

starting on January 30, 2017, and totaling R$ 315.5 million. For accounting purposes this indemnity was

recorded at the amount of R$163.0 million in December 31, 2015, equivalent to the present value of the

payment flow mentioned, on December 31, 2016 this amount was equivalent to R$ 184.1 million and in

December 31, 2017 equivalent to R$174.7 million.

Gas Supply Contract with the White Martins

Usiminas and White Martins held several contracts for the suplly of industrial gases to all companies of the Usiminas group.

For the Ipatinga’s Plant the contract signed on April 04, 1996 is valid for 21.5 years, with an estimated value of R$ 2.8 billion. This contract refers to the supply of gases to be used in the production of steel and it’s under renovation process for another 15 years. The gas plant in Ipatinga was made up of WM and Usiminas equipment, and in the negotiation, Usiminas equipment was sold to WM for R$ 70 million. Transaction completed in 2016

For the Cubatão’s Plant there are two contracts to the supply of gases to be used in the steel production process, signed on August 13, 2000 and September 1, 2009 and valid for 21.5 and 23 years respectively. The estimated value for both contracts is R$ 1 billion. Due to the shutdown of the primary areas in Cubatão, the gas supply contract for the blast furnaces had its closure anticipated and an adjustment was made in the gas contract for the entire plant.

The Usiminas’s group hels a corporate contract for bottled gas supply, liquid and gas. This contract was signed in October 10, 2009 and remained effective until November 09, 2015. In October 2015, Usiminas settled a new partnership with WM for continuity of gas supply to all companies at Usiminas group valid for the next 5 years. The stimated value for the supply of bottled gases is R$ 18 million.

v. Uncompleted construction contracts

The Company has various contracts related to investments in its mills and in Mineração Usiminas, which

aggregate the amount of R$19,4 million.

v. Contracts of future receipts of funding

None.

b) other items not disclosed in the financial statements

None.

10.7. In relation to each of the items not disclosed in the financial statements listed in item 10.6, the

directors should comment on:

a) How such items change or could change the revenues, expenses, operating income, financial expenses

or other items in the financial statements of the issuer

236

The costs of the contract for operating leases referenced above are appropriate for the monthly operating

results of the Company for the term of the contract.

The costs of supply contracts are added to the result as they are used in the production process.

The sales revenue related to contracts of Usiminas Mecânica, are added to the result as the development of

each built item.

b) Nature and purpose of operation

The purpose of the Company to maintain these contracts is to ensure that supplies needed for the

production process.

c) The nature and amount of obligations and rights in favor of the issuer as a result of the operation.

As mentioned in item 10.6.

10.8. The directors shall indicate and comment on the main elements of a business plan from the

issuer, specifically expanding on the following topics:

a) Investments

i. Description of quantity and level of quality of the investments in progress and of planned investments

The total volume of investments of Usiminas and of the subsidiaries in the year of 2017 was R$196 million

(R$225 million in 2016 and R$784 million in 2015).

Main investments of the Company concluded in 2017:

Ipatinga – Replacement of Rolling Bridge 8 - Continuous casting of the steelworks 2 - Replacement of the

crane handling handling of liquid steel pans at Machining 2 of loading of continuous casting machines. The

new bridge will have a capacity of 260 t. Start of operation: Jan/2017.

Ipatinga - Steelworks 02 - Installation of frontal gate in Converters 4 and 5 - Design, manufacture and

installation of front gates to converters 4 and 5, aiming for greater safety and better dedusting efficiency. -

Start of operation: Mar/2017.

Ipatinga - LTQ - Replacement of Thickness Gauge and Finisher Train Output Profile - New thickness gauge

and fixed and mobile x-ray profile guaranteeing the operational continuity of LTQ providing an improvement

in process control - Beginning of operation: nov / 2017.

Ipatinga - Converter 5 - Replacement of the housing and cooling of the ring - Replacement of the casing of

the Converter 5 and installation of air cooling system for the ring aiming Operational continuity of the

Steelworks; Maintenance of productive capacity; Security of people; Increased service life with the

installation of air cooling system for the ring. Start of operation: Mar/2017.

Ipatinga – Oven pot Nº02 - Installing Powder Injection System: The project consists of the injection of

desulphurizing agents (CaO) in the pots sent to the oven pot of the Steelworks 02. For this, it will be

necessary to adapt the existing system (previously used for addition of other material) in order to make it

suitable for receiving, storing and injecting powder directly into liquid steel. Start of operation: Jan / 2017.

237

Ipatinga - AF 3 - Electrical Room 3 (1st floor) - Maintenance and replacement of MT / BT panels and trains:

The upgrade of the Electric Room 3 (1st floor) of the Furnace 3 of the Ipatinga Power Plant consists of

replacing the medium panels voltage and low voltage, in order to increase the reliability and operation of the

substation. In addition, transformers that are already at the end of life, cable / duct reassembling, air

conditioning / positive pressurization installation, detection system and fire alarm, as well as gate and

overhead installations of the room. Start of operation: Jan / 18.

- Coal Patio - Substation 2: Great electrical repair of the electric room 2 of the Coal Patio,

including: civil suitability floor, channels and cable ducts, electrical design, exchange of panels of 3.45kV and

protection system, project of calculation memory with relay adjustments and selectivity study, installation of

microprocessor relays with network communication with PLC for the media panels. Purchase of

withdrawable medium and high voltage circuit breakers. Hiring of labor for the execution of the panel and

traf. Start of operation: Feb / 18.

Ascarel - Stage 2: Substitution and destination of 80 PCB transformers (Ascarel) at the Cubatão Plant, 2nd

stage, in compliance with the commitment signed with CETESB and the Public Prosecution Service (TAC)

and State Law 12288 (SP) . Start of operation: nov / 2017.

Cubatão - AVCB - Santos: Adequacy of the necessary facilities for the certification of the Inspection Auto of

the Military Fire Brigade of the State of São Paulo in the areas of the Cubatão Plant located within the

municipality of Santos / SP, as indicated in State Decree nº 46.076 , of August 31, 2001. Beginning of

operation: Feb / 2017.

Cub Cubatão - Optimization of the Steam System: Acquisition of a New 20t / h Boiler - At the Cubatão Plant

there are 4 boilers of 77t / h + 2 of 100t / h for steam production at 42kgf / cm² at 440ºC power the turbo

blowers and turbo generators. Part of this steam is distributed to the process (15 kgf / cm² at 230 ° C). With

the shutdown of the primary areas the demand for steam to process significantly reduced from 90t / h to 20t /

h. This demand is being met through the boilers of 77t / h. These equipment are oversized for new demand

and have high operating costs and low efficiency. Start of operation: Feb / 2017.

The investments planned for 2018, according to the Company's business plan, focus on the operational

maintenance and adequacy of the plants to meet environmental and safety standards, in the reform of the

High Furnaces, Steelworks (Ipatinga Power Plant) , electrical rooms and implementation of automation and

industrial management systems aiming at improving productivity.

The main investments in progress are:

- Acquisition and exchange of 32 stave coolers at levels B1 (Staves), B2 (3 Staves), B3 (6 Staves), S1 (4

Staves) and S2 ( 9 Staves) and acquisition of 4 spare Staves at levels B3 (2 Staves) and S1 (2 Staves) for

Blast Furnace 3 at the Ipatinga Plant. Refurbishment of AF3 housing cooling system; Maintenance of the

safety and physical integrity of workers from the AF3 area; Maintenance of the thermal stability of the AF3

and operational control. Prediction of start of operation in the second half of 2018.

Ipatinga - Return of the AF1 from Ipatinga to the Operation - Repair of all the necessary equipment to give

the same operational condition to the AF 1 when its operational stop (without considering any improvement

or increase of capacity). This project will return the AF1 in operational gear for resuming production of Gusa.

Prediction of start of operation in the first half of 2018.

Ipatinga - AF2 - Modernization of Electrostatic Precipitator No. 2, Realization of modernization and major

electro-mechanical repair of PE-02 - Realization of modernization and great electromechanical repair of the

washing tower and Electrostatic Precipitator 2, in order to adjust the level of particulate at the exit of PE-02 to

<= 15mg / Nm3. Increasing the cleaning efficiency of the BFG, targeting <= 15mg / Nm3 of particulate in the

PE outlet and particle level at the exit of the header of 141mg / Nm3. Currently we have 223mg / Nm3;

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Greater stability and operational safety of the gas cleaning plant; Better operational expectation of equipment

consuming BFG; Improvement in the pressure control of the top of the Furnaces nº 1 and 2. Prediction of

beginning of operation in the second semester of 2018.

Ipatinga - Hot Recovery of the Regenerator Combustion Chamber HS8 AF3 - Emergency repair of the

refractory in the hot air outlet region and in the regenerator ceramic burner 8. The first two rows of the

ceramic burner and one layer of the refractory wall, internal side of the hot air ring. Benefits: Avoid

interruption of operation of HS8, which would jeopardize the operation of AF3. Increase in the life of the

regenerator, elimination of the risk of regenerator loss due to refractory drop of the repaired region.

Prediction of start of operation in the second half of 2018.

Ipatinga - Adequacy of Coke's BFG System 3 - The project should adapt the entire BFG gas supply system

of coke oven 3, including the control of the gas injection in the batteries and also the flow and pressure

values required for correct operation two ovens. Benefits: Preservation of refractory furnaces of the batteries

- to guarantee useful life - due to the better thermal distribution in the chambers of the furnaces; Reduction of

the emission of particulate material in the chimney; Improvement in coke quality (CSR parameter) and

increased COG gas generation. Predicted start of operation in the second half of 2019.

Ipatinga - Continuous Casting 1, 2 and 3 - Replacement of Beam Shed Beams EF: Replacement (fabrication

+ assembly) of 9 bearing beams in the EF span of the Steelworks 2 of the Ipatinga plant. Prediction of start

of operation in the second half of 2018.

Ipatinga - Energy - Adequacy of the Substation of the Steelworks nº1 - Adequacy of the Steelworks

Substation nº1 and technological update of the electrical panels aiming at the safety of the employees in

accordance with the current technical and safety standards (NR 10 / ABNT NBR 14039: 2005), better

process control and operational continuity. Prediction of start of operation in the second half of 2020.

Ipatinga - LTQ - F1 Cycleconverser Drive Upgrade - The project consists of upgrading the cycloconverter

system of the F1 chair of the LTQ Finisher Train, motivated by obsolescence and unavailability of spare parts

of the current equipment, jeopardizing the operational continuity of the line. Replacement of control panel

and drive panel components will be replaced by modern technologies, whose spare parts are available in the

market. Prediction of start of operation in the second half of 2018.

Ipatinga - Sinterization - Drum Exchange Mixer of Sinter Machines 1 and 2 - Drum Change Mixer of Sinter

Machines 01 and 02 of Ipatinga plant due to end of life. The main benefits of the project are: Preserving the

continuity of the business avoiding total paralysis of the production of plates; Preserve the operation of the

MS 01 & 02 lines and sinter supply for the AF's (Prevent drum collapse); Improvement of wear properties

due to abrasion and corrosion and homogenization and microbalance functions. Prediction of start of

operation in the second half of 2018.

Ipatinga - Energy - Adequacy of Substation H - The scope consists of the adaptation of the substation H of

the Energy and technological update of the electrical panels according to the norms NR10 and ABNT NBR

14039, aiming at the physical security of the employees and the installation in order to guarantee the

operational continuity and process control. Installed since 1965, substation H is located at 14th street and

receives power at 69kV from the Main Substation (Circuit Breaker 52F15). This substation mainly feeds LTQ

loads at 3.3 kV and 11 kV, water recirculation (CRATIF and ENA) and restaurant. Prediction of start of

operation in the second half of 2018.

Ipatinga - Quality - Centralization of the chemical laboratories of the Steelworks 1 and 2 (Step 1) - Transfer of

the chemical laboratory facilities of the Steelworks 2 to a safe location - Casa Azul. Benefits: Transfer teams

to more secure locations; Adequacy of facilities at NRs - Restoration of safe working conditions (ergonomics

and accessibility); Greater agility in the analyzes by the optimization of layout and preparation of samples;

Greater availability of space in the laboratory for future enlargements. Predicted start of operation in the

second half of 2019.

Ipatinga - PRL44 - Replacement of the drives of the main and auxiliary elevations - Replacement of the

electrical system to drive the main and auxiliary elevations of the crane bridge L44 of Ipatinga Steelworks 1.

Benefits: Operational continuity and risk reduction of unplanned shutdowns of the Steelworks 1. Prediction of

start-up in the second half of 2018.

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Ipatinga - UIP4UA0001 - Energy - Adequacy of the Electrical Room of the House of Pumps n ° 2 - Adequacy

of the electric room of the pump house 2 and technological update of the electrical panels aiming at the

safety of the employees in accordance with the current technical and safety standards (NR 10 / ABNT NBR

14039: 2005), better process control and operational continuity - Prediction of start-up in the second half of

2020.

Ipatinga UIP4HS0002 - AVCB - Adequacy of the Power Plant to the inspection of the Fire Department - 3rd

Stage - - Adequacy of offices, laboratories and workshops of the Ipatinga Power Plant to the fire and panic

safety conditions established in Law 14,130, dated December 19, / 2001 and Decree 44.746, of 02/29/2008,

which provide for the prevention of fire and panic in the State of Minas Gerais, in order to be able to obtain

the AVCB - Inspection Auto of the Fire Department - Prediction of beginning in the first half of 2020.

Ipatinga - LCG - New Thickness, Crown and Length Meter at FM Output: New thickness gauge, crown and

length of the FM output, aiming at maintaining Usiminas' productive capacity and applying new technology,

bringing significant gains in the warranty of quality of products. Predicted start of operations in the first half of

2018.

Ipatinga - Reform of the Carbochemical Substation: Reform of the substation of the carbochemical products

and electric room of the lighting of the tar plant and technological update of the electric panels aiming at the

safety of the employees in compliance with the current technical and safety standards (NR 10 / ABNT NBR

14039: 2005), better process control and operational continuity. Prediction of start of operation in the second

half of 2018.

Ipatinga - Adequacy of the electric room 6 and the electrical installations of the preparation area of pans -

Steelworks 2: Adjust the Electric Room 6 and area of the pottery preparation room of the Steelworks # 2 of

Ipatinga Power Plant to the current technical and safety standards , since the equipment and facilities of the

area are in disagreement with NR10 (Norma Regulamentadora 10 of the Ministry of Labor) and ABNT

standards for electrical installations. Prediction of start of operation in the second half of 2018.

Cubatão - Change of trains ascarel of the Cubatão Plant (3ª Step) - The project consists of the Substitution /

Withdrawal and destination of 134 PCB equipments (Ascarel) that compose the scope of the 3rd stage of the

project, in compliance with the commitment signed with CETESB and Public Prosecutor's Office (TAC) and

State Law 12288 (SP). In 2006, State Law SP 12288 determined that natural or legal persons who use or

have in their custody transformers, capacitors and other electrical equipment containing PCBs, as well as

oils or other materials contaminated by PCBs, would be obliged to provide for their progressive elimination

by 2020. The initial liability for PCB equipment at the Cubatão plant was 360 equipment. Step 1 and 2

contemplated a total of 226 transformers. Prediction of start of operation in the second half of 2020.

Cubatão - Energy - Adequacy of 88 kV EM # 9 and SE # 1 substations - Adequacy of the 88 kV substations

(EM # 9 and SE # 1) of the Cubatão Plant consisting of replacing 88 kV circuit breakers, current

transformers), disconnectors, rectifier and battery bank and protection and control system of the substations

aiming at technological updating of equipment, employee safety, better process control and operational

continuity. Predicted start of operations in the first half of 2019.

Cubatão - UCB4LP0003 - Inspection of the Dredging of the Piaçaguera Channel, Dique C and UDC -

Bathymetric Survey; Topographic Survey; Technical support of projects; Environmental tests; Own labor and

Labor of outsourced for inspection - Prediction of start of operation in the second half of 2019.

ii. Sources of financing of investments

The investments are made with Usiminas’ resources and/or through resources captured in the market, when

the investment analysis indicates it as a need.

iii. Relevant divestments in progress and planned divestitures

In the year 2017 there were no relevant in progress and planned divestments.

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b) Provided it has been already disclosed, it indicates the purchase of plants, equipment, patents, or other

assets that should materially influence the productive capacity of the issuer

In the year 2017 there were no acquisitions of plants, equipment, patents, or other relevant assets that

should materially influence the productive capacity of the company.

c) New products and services

i. Description of researches in progress that have been already released

The development of; steel with high resistance for the automotive industry, including steel cold-rolled and

coated steels, along with the development of its engineering application. Development of steel for

shipbuilding and offshore platforms and its engineering application. Development of special steel for large

diameter pipes for gas and oil pipelines. Support for the industrial Development of steel for ballistic purposes.

Development of engineering application steel for the civil construction industry. Development of steel coated

with zinc alloy with improved characteristics of resistance to atmospheric corrosion. Development of steel

with special metallic coating to adapt to heat and its application in engineering. Development of new

products hot dip galvanized. Development of new methods and experimental techniques aiming to support

both to the development of new products and its use by customers.

ii. Total amounts spent by the issuer in research for development of new products or services

In 2017, the Company invested approximately R$ 6.24 million in the research of activities listed above.

iii. Projects in development already disclosed

The business strategy of a company can be measured by its ability to generate new products that are

aligned with the needs of the market. With Usiminas it is no different, which has required a constant

monitoring of the market and its demands, as well as a careful observance of the competition.

The products that had their development projects completed in 2017 and became part of the Usiminas

product portfolio are described below:

Cold-rolled Steels

Dual Phase 490 Steel for Cover Panels High strength steel 490 MPA grade, cold-rolled, for the automotive industry, mainly to cover panels

such as doors, hood, roof, fenders, etc.

Dual Phase 1000 Steel Hole Expansion > 50%

Ultra-high strength cold rolled steel for the automotive industry targeting, mainly, the increase in

vehicle safety. This particular product brings together, in addition to the high mechanical strength,

good performance on parts subjected to stretching efforts (hole expansion greater than 50%).

USIGALVE-ESQ Steel

Family of four steels, differentiated by hardness, developed to provide characteristics more suitable

for the manufacture of doors and windows.

Hot-rolled Steels

Complex Phase 800 Hole Expansion Steel HR

Complex Phase hot rolled 800 MPa advanced high strength steel (AHSS), with minimum mechanical

strength of 800MPa. The product also features hole expansion performance higher than 50%, which

makes it suitable for structural parts of the vehicle, especially suspension components.

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USI-SAC-300-GC Steel HR Weathering steel 300MPa grade, for small diameter pipes, which shows good ERW weldability and corrosion resistance along the weld line, Grooving Corrosion (GC).

USI-SAC-300-M Steel Weathering steel 300MPa grade, with high silicon content and superior resistance to atmospheric corrosion. It has been used in parts damaged by corrosive / erosive processes, replacing the ferritic stainless steel of the AISI 400 series (ASTM A240 UNS-S410 03).

Plate Steels

Synchro BHS 485W Structural 485 MPa grade and high tenacity, this steel meets all the technical requirements of ASTM

A709 HPS 70W Standard. Designed for civil construction segment, in particular, bridge steel and

industrial heavy machinery segment.

10.9. Factors that influenced the relevant operational performance, and that were not identified or

commented on other items.

2017

During the year of 2017, the Company completed some important actions as the adaptation of financial disbursements, the prioritization of operating cash generation, and the strict management of working capital and capital investments. Among the concluded actions in 2017, highlight events related to the process of debt restructuring initiated in 2016, as follows:

Approval on March 3, 2017, of a capital reduction at the subsidiary Mineração Usiminas in the amount

of R$1,000,000, of which R$700,00 was delivered to Usiminas on May 19, 2017;

Payment was made in the amount corresponding to 50% of the balance of notes issued by

subsidiary Usiminas Commercial Ltd. in pro-rata form, for the purpose of partial amortization of

Usiminas debts with each one of its creditors, in the total amount of US$89.9 million.

Full payment of the Notes issued in 2008 was made in January 2018, in the amount of US$400.0

million, of which approximately US$220.0 million returned to the Company’s cash position by reason

of a repurchase of part of the Notes issued in 2013.

With these events, Usiminas has overcome an important stage of its financial restructuring process with

creditors, with the objective of generation of sustainable results for the Company.

2016

During the year of 2016, some important actions that were being implemented by the Company were completed. These actions focused on adaptation of financial disbursements, prioritization of operating cash generation, and strict management of working capital and capital investments. One of the completed actions was the Company’s capital increase, through issuance of new common and preferred shares, in the amount of R$ 1,050,294,935.04. On June 03, 2016, the Board of Directors approved the capital increase with the subscription of 39,292,918 class "A" preferred shares, identical to the existing shares of this kind and class, at the issue price of R$ 1.28 per share, amounting to R$ 50,295,000. On July 19, 2016, at the Special Shareholders’ Meeting, the capital increase was homologated with the subscription of 200,000,000 common shares at the issuance price of R$5.00 per share, totalizing the amount of R$1,000,000,000.00. Thus, since July 2016, the Company’s capital was increased by R$ 13,200,295 thousand divided into 1,253,079,108 shares, and 705,260,684 are common shares, 547,740,661 Class A preferred shares, and 77,763 Class B1 preferred shares, book-entry and with no par value. Another completed action was the debt restructuring. On September 12, 2016, the Company concluded the signing of all of the definitive debt restructuring documents, which marked the conclusion of the process of financial restructuring with its creditors (representing approximately 92% of the Company's total

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indebtedness) which - in Management’s view - preserves its financial and operational capacity, adapting its debt profile to the short-, medium- and long-term perspectives.

2015

On May 18, 2015 the Executive Board decided to temporarily interrupt operations in a blast ffurnaces at the Ipatinga plant –MG. In addition, the Mining Unit, due to the successive falls in the international price of iron ore reduced its level of production and negotiated the suspension of the transportation contract with MRS Logística S.A., which imposed conditions on take or pay. In this context, in October 2015, Management decided to temporarily interrupt the primary activities at the plant of Cubatão/SP. The intermittent activities in the plant include the decommissioning of the sintering process, coke plants, ovens (of which one had already been decommissioned in May 2015) and steel works, as well as all activities related to equipment on the referred areas. The referred intermittent activities aim to reposition Usiminas on a new scale of production and increase its competitiveness on a context of an increasingly difficult steel making market. Under such circumstances, the plan of Cubatão is no longer producing plates, well as its port related activities. The production line of thick laminated steel continues temporarily interrupted. In 2015 the Company recorded an impairment loss for its mining segment amounting to R$2.1 billion, as a reclect of the worsening of the expectations about the future price of iron ore. On February 17, 2016 the Company signed a “Private Instrument of Mutual Assumption of Negative Covenant and Other Covenants‟ (“Standstill Agreement”) with its main financial creditors, namely, Banco do Brasil S.A., Banco Bradesco S.A., Itaú Unibanco S.A., Banco Santander (Brasil) S.A. e Banco Nacional de Desenvolvimento Econômico e Social – BNDES. It was also executed a similar Private Instrument with the Japanese financial creditors, namely, the Japan Bank for International Cooperation – JBIC, The Bank of Tokyo Mitsubishi UFJ Ltd., Mizuho Bank Ltd. e Sumitomo Mitsui Banking Corporation.

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Standardized financial statements form - DFP Filed at CVM on

02/09/2018

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USINAS SIDERÚRGICAS DE MINAS GERAIS S/A - USIMINAS

CNPJ/MF 60.894.730/0001-05

NIRE 313.000.1360-0

Publicly Traded Company

Minutes of the Meeting of the Audit Committee of Usinas Siderúrgicas de Minas

Gerais S/A - USIMINAS, held at the Company´s office, in São Paulo/SP, at Av. do

Café, 277, Tower A, 9th floor, Jabaquara, on February 7th, 2018, at 10AM.

Attendance – Hironobu Nose – Committee´s Coordinator. Other members:

Wanderley Rezende de Souza, Marcelo Hector Barreiro and Glauco Sabatini Bodini

(by email).

Also present Messrs. Shun Sasaki and Hiroaki Miyanishi, as the Coordinators´

assistants; Fábio Abreu and Fabiana Ximenes as representatives of the Independent

Auditors (PwC); Julio Mendez Arroyo, Adriane Vieira Albuquerque, Lucas Marinho

Sizenando Silva, Eduardo Moreira Pereira and José Junior as representatives of

Finance Vice-Presidency; Ana Cristina Albuquerque, Alvaro Igrejas and Eduardo

Burlamaqui de Mello, as representatives of the Willis Towers Watson; Andre Vitoria

as the representative of the Internal Audit Department; César Augusto Espíndola

Bueno, as the representative of the IT Department; and Bruno Lage de Araujo

Paulino, as General Counsel and Secretary.

Agenda:

I – Feasibility Study for the Recovery of Deferred Tax Asset, Management

Report, 2017 Financial Statements and Destination of the 2017 Results -

The Committee reviewed the Feasibility Study for the Recovery of Deferred Tax

Asset; the Management Report; the Financial Statements, of the fiscal year ended

December 31st, 2017; and, the proposal of the destination of the 2017 results

(including the Capital Budget) and recommended their approval by the Board of

Directors, in accordance with the material available at the Board Portal (as adjusted

during the meeting).

Adjournment: There being no further business the Meeting was adjourned and

these minutes drawn-up in Book CM-01, duly signed by the present members and

by the Secretary. São Paulo, February 7th, 2018.

Hironobu Nose

Coordinator

Wanderley Rezende de Souza Marcelo Hector Barreiro

Glauco Sabatini Bodini

Bruno Lage de Araujo Paulino

Secretary

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EXHIBIT 4 - INFORMATION REQUIRED BY EXHIBIT 9-1-II TO CVM RULING No

481/2009 AND PROPOSAL OF CAPITAL BUDGET FOR THE FISCAL YEAR OF

2018

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ANEXO 9-1-II

DESTINAÇÃO DO LUCRO LÍQUIDO DO EXERCÍCIO FINDO EM 31/12/2017

(Em milhares de reais, exceto quando indicado de outra forma)

Em atendimento à Instrução CVM nº 481, de 17 de dezembro de 2009, a Usinas

Siderúrgicas de Minas Gerais S.A. – USIMINAS descreve, a seguir, as informações

requeridas no Anexo 9-1-II da mencionada Instrução.

1. Informar o lucro líquido do exercício 2017 2016 2015 2014

Lucro líquido (prejuízo) do exercício 233.015 (669.952) (3.236.105) 129.552

2. Informar o montante global e o valor por ação dos dividendos, incluindo dividendos

antecipados e juros sobre capital próprio já declarados 2017 2016 2015 2014

Dividendos a pagar

Montante global 55.341 30.769

Valor por ação ON R$0,043211 R$0,029698

Valor por ação PN R$0,047532 R$0,032668

Em 31 de dezembro de 2017 e de 2014, exercícios em que foi apurado lucro líquido, não houve a distribuição antecipada de dividendos e juros sobre capital próprio declarados. 3. Informar o percentual do lucro líquido do exercício distribuído 2017 2016 2015 2014

Porcentagem sobre a base de cálculo dos dividendos em relação ao lucro líquido do exercício 25%

25%

Em 31 de dezembro de 2016 e de 2015, não foram distribuídos dividendos ou juros sobre capital próprio, uma vez que a Companhia apresentou prejuízo na sua demonstração do resultado do exercício.

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4. Informar o montante de global e o valor por ação de dividendos distribuídos com base em lucro de exercícios anteriores

Informação não aplicável, uma vez que os dividendos integralmente distribuídos nos quatro últimos exercícios sociais referem-se à totalidade dos dividendos mínimos obrigatórios apurados na demonstração do resultado de cada exercício. Portanto, não há a distribuição de dividendos com base em lucro de exercícios anteriores. 5. Informar, deduzidos os dividendos antecipados e juros sobre capital próprio já

declarados: a. O valor bruto de dividendo e juros sobre capital próprio, de forma segregada, por

ação de cada espécie e classe 2017 2016 2015 2014

Valor bruto de dividendo a pagar

Montante global 55.341 30.769

Valor bruto de dividendo - ação ON 26.353 14.652

Valor bruto de dividendo - ação PN 28.988 16.117

Em 31 de dezembro de 2016 e de 2015, não foram distribuídos dividendos ou juros sobre capital próprio, uma vez que a Companhia apresentou prejuízo na sua demonstração do resultado do exercício. b. A forma e o prazo de pagamento dos dividendos e juros sobre capital próprio Forma de pagamento Os acionistas que mantêm domicílio bancário no Bradesco ou outros bancos, que comunicaram essa condição, possibilitam que os seus créditos sejam lançados automaticamente no primeiro dia do pagamento e recebem o aviso de crédito. Os demais acionistas que estiverem com endereço devidamente cadastrado e não informaram domicílio bancário para recebimento, recebem via correio o formulário AVISO PARA RECEBIMENTO - PROVENTOS DE AÇÕES ESCRITURAIS, devendo, para o recebimento, apresentarem-se na Agência Bradesco de sua preferência, munidos, além do formulário, de documento de identidade e CPF - Cadastro de Pessoa Física. Caso o acionista não receba o AVISO DE CRÉDITO ou AVISO PARA RECEBIMENTO, deverá dirigir-se a uma agência Bradesco para receber o crédito e atualizar seus dados cadastrais. Prazo de pagamento O prazo de pagamento de dividendos e juros sobre capital próprio é proposto pela Administração da Companhia e submetido à aprovação em Assembleia Geral Ordinária. De acordo com o Estatuto da Companhia, o direito ao recebimento de dividendos e juros sobre capital próprio prescreve em três anos a contar da data de início do seu respectivo pagamento.

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2017 2016 2015 2014

Data de início do pagamento 30/05/2018 26/06/2015

Em 31 de dezembro de 2016 e de 2015, não foram distribuídos dividendos ou juros sobre capital próprio, uma vez que a Companhia apresentou prejuízo na sua demonstração do resultado do exercício. c. Eventual incidência de atualização e juros sobre os dividendos e juros sobre

capital próprio Informação não aplicável sobre os dividendos e juros sobre capital próprio da Companhia. d. Data da declaração de pagamento dos dividendos e juros sobre capital próprio

considerada para identificação dos acionistas que terão direito ao seu recebimento 2017 2016 2015 2014

Data de declaração de pagamento aos acionistas (AGO) 25/04/2018 28/04/2015

Em 31 de dezembro de 2016 e de 2015, não foram distribuídos dividendos ou juros sobre capital próprio, uma vez que a Companhia apresentou prejuízo na sua demonstração do resultado do exercício. 6. Caso tenha havido declaração de dividendos ou juros sobre capital próprio com

base em lucros apurados em balanços semestrais ou em períodos menores Informações não aplicáveis, uma vez que a Companhia não declara dividendos e juros sobre capital próprio com base em lucros apurados em balanços semestrais ou em períodos menores. a. Informar o montante dos dividendos ou juros sobre capital próprio já declarados b. Informar a data dos respectivos pagamentos 7. Fornecer tabela comparativa indicando os seguintes valores por ação de cada

espécie e classe: a. Lucro líquido do exercício e dos 3 (três) exercícios anteriores 2017 2016 2015 2014


Lucro líquido do exercício / total de ações ON (- Em tesouraria) R$0,0003 R$0,0003

Lucro líquido do exercício / total de ações PN (- Em tesouraria) R$0,0004 R$0,0003

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b. Dividendo e juro sobre capital próprio distribuído nos 3 (três) exercícios anteriores 2017 2016 2015 2014

Dividendos a pagar

Valor global 55.341 30.769

Valor por ação ON R$0,043211 R$0,029698

Valor por ação PN R$0,047532 R$0,032668

8. Havendo destinação de lucros à reserva legal a. Identificar o montante destinado à reserva legal 2017 2016 2015 2014

Constituição da reserva legal (5%) (11.651) (6.478)

b. Detalhar a forma de cálculo da reserva legal A reserva legal é constituída na base de 5% do lucro líquido de cada exercício até

atingir 20% do capital social.

2017 2016 2015 2014


Constituição da reserva legal (5%) (11.651) (6.478)

Base de cálculo dos dividendos 221.364 123.074

9. Caso a companhia possua ações preferenciais com direito a dividendos fixos ou

mínimos Informações não aplicáveis, uma vez que a Companhia não possui ações preferenciais com direito a dividendos fixos ou mínimos. a. Descrever a forma de cálculos dos dividendos fixos ou mínimos b. Informar se o lucro do exercício é suficiente para o pagamento integral dos

dividendos fixos ou mínimos c. Identificar se eventual parcela não paga é cumulativa d. Identificar o valor global dos dividendos fixos ou mínimos a serem pagos a cada

classe de ações preferenciais e. Identificar os dividendos fixos ou mínimos a serem pagos por ação preferencial de

cada classe

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10. Em relação ao dividendo obrigatório a. Descrever a forma de cálculo prevista no estatuto A seguir, a transcrição, na íntegra, do Parágrafo 5º: “Do lucro líquido do exercício, ajustado na forma das alíneas a seguir elencadas, serão destinados 25% (vinte e cinco por cento) para pagamento de dividendos aos acionistas, sendo que os titulares de ações preferenciais receberão dividendos 10% (dez por cento) maiores do que os atribuídos às ações ordinárias; i) o acréscimo das seguintes importâncias: - resultantes da reversão, no exercício, de reservas para contingências, anteriormente formadas; - resultantes da realização, no exercício, de lucros que tenham sido transferidos anteriormente para a reserva de lucros a realizar; ii) o decréscimo das importâncias destinadas, no exercício, à constituição da reserva legal, de reservas para contingências e da reserva de lucros a realizar. O valor assim calculado poderá, a critério da Assembleia Geral ou do Conselho de Administração, conforme o caso, ser pago por conta do lucro que serviu de base para o seu cálculo ou de reservas de lucros preexistentes.” b. Informar se ele está sendo pago integralmente Conforme apresentado no Item 3 do presente Documento, quando apurado lucro líquido no exercício social, o dividendo mínimo obrigatório é pago integralmente. c. Informar o montante eventualmente retido Informação não aplicável, uma vez que a Companhia não retém dividendo mínimo obrigatório. 11. Havendo retenção do dividendo obrigatório devido à situação financeira da

companhia Informações não aplicáveis, uma vez que não há a retenção de dividendo obrigatório devido à situação financeira da Companhia. a. Informar o montante da retenção b. Descrever, pormenorizadamente, a situação financeira da companhia, abordando,

inclusive, aspectos relacionados à análise de liquidez, ao capital de giro e fluxos de caixa positivos

c. Justificar a retenção dos dividendos

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12. Havendo destinação de resultado para reserva de contingências Informações não aplicáveis, uma vez que não há a destinação de resultado para reserva de contingências. a. Identificar o montante destinado à reserva b. Identificar a perda considerada provável e sua causa c. Explicar porque a perda foi considerada provável d. Justificar a constituição da reserva 13. Havendo destinação de resultado para reserva de lucros a realizar Informações não aplicáveis, uma vez que não há a destinação de resultado para reserva de lucros a realizar. a. Informar o montante destinado à reserva de lucros a realizar b. Informar a natureza dos lucros não-realizados que deram origem à reserva 14. Havendo destinação de resultado para reservas estatutárias a. Descrever as cláusulas estatutárias que estabelecem a reserva De acordo com o Estatuto Social da Companhia, CAPÍTULO VI, art. 24, parágrafo 3º,

as cláusulas estatutárias determinam:

“O Conselho de Administração poderá propor, e a Assembleia deliberar, deduzir do lucro líquido do exercício, após a constituição da reserva legal, uma parcela em montante não superior a 50% (cinquenta por cento) para a constituição de uma Reserva para Investimentos e Capital de Giro, que obedecerá aos seguintes princípios: a) sua constituição não prejudicará o direito dos acionistas em receber o pagamento do dividendo obrigatório previsto no parágrafo 4°, infra; b) seu saldo não poderá ultrapassar a 95% do capital social; c) a reserva tem por finalidade assegurar investimentos em bens do ativo permanente, ou acréscimos do capital de giro, inclusive através de amortização das dívidas da Companhia, independentemente das retenções de lucro vinculadas ao orçamento de capital, e seu saldo poderá ser utilizado: i) na absorção de prejuízos, sempre que necessário; ii) na distribuição de dividendos, a qualquer momento; iii) nas operações de resgate, reembolso ou compra de ações, autorizadas por lei; iv) na incorporação ao Capital Social, inclusive mediante bonificações em ações novas. “

252

b. Identificar o montante destinado à reserva (i) Pela destinação de 50% do lucro líquido do exercício ajustado pela reserva legal,

conforme previsto no estatuto da Companhia. A reserva de investimentos e capital de giro não poderá ultrapassar 95% do capital social, e seu saldo, poderá ser utilizado na absorção de prejuízos, distribuição de dividendos, resgates, reembolso ou compra de ações ou, ainda, capitalizado. Em 31 de dezembro de 2017, o valor destinado à constituição dessa reserva foi de R$110.683.

(ii) Pela destinação do montante de R$55.341, nos termos do artigo 196 da Lei nº

6.404/76, com base em orçamento de capital aprovado em Reunião do Conselho de Administração realizada em 08 de fevereiro de 2018.

c. Descrever como o montante foi calculado 2017 2016 2015 2014

Destinações do lucro líquido do exercício:

Reserva Estatutária (50% da base de cálculo legal) (110.683) (61.537)

Orçamento de Capital (artigo 196 - Lei 6.404) (55.341) (30.769)

(166.024) (92.306)

Outras destinações que não transitaram pelo lucro líquido do exercício:

Dividendos prescritos - (258)

Ganho atuarial com benefícios de aposentadoria - 19

Alienação de ações em tesouraria - (223)

Plano de opção de ações (6.708) (8.730)

Realização do ajuste do IAS 29 no ativo imobilizado (17.825) (23.930)

(24.533) (33.122)

Total destinado à Reserva para investimento e Capital de Giro: (190.556) 125.428

15. Havendo retenção de lucros prevista em orçamento de capital a. Identificar o montante da retenção 2017 2016 2015 2014

Montante retido (166.024) (92.306)

253

b. Fornecer cópia do orçamento de capital 22 ORÇAMENTO DE CAPITAL DE 2018 - Custeado pela retenção dos resultados de 2017

Em milhares de Reais

Substituição dos Staves do Alto Forno #3 Ipatinga (2ª troca) 55.622

Retorno do Alto Forno #1 Ipatinga 41.012

Adequações das Salas Elétricas 30.209

Modernização PE02 Alto Forno #2 13.426

Sustaining (*) 25.755

Investimento em ativo fixo 166.024

Fontes

Recursos Próprios 166.024

(*) Investimento para a manutenção da capacidade produtiva

16. Havendo destinação de resultado para a reserva de incentivos fiscais Informações não aplicáveis, uma vez que não há a destinação de resultado para a reserva de incentivos fiscais. a. Informar o montante destinado à reserva b. Explicar a natureza da destinação

(documento original assinado)

Ronald Seckelmann

Vice-Presidente de Finanças, Relações com Investidores e Tecnologia da Informação

254

EXHIBIT 5 – INFORMATION REQUIRED BY ARTICLE 12 OF CVM RULING

481/2009 (ITEM 13 OF THE REFERENCE FORM)

255

13. Compensation of Managers

13.1. Describe the policy or practice of compensation of the board of directors, statutory and non-

statutory directors, supervisory board, statutory, audit, risk, financial and compensation committees,

addressing the following aspects:

a) Objectives of the policy or practice of compensation

The Board of Directors, based on the recommendation of its Human Resources Committee, annually reviews

the compensation for the members of the Board of Directors and the Statutory Officers. The compensation

policy is based on market practices, which take into account the creation of value for the Company, its

shareholders and other stakeholders, determined by meeting the quantitative and qualitative targets linked to

the overall performance of the Company. Your goal is to properly recognize the contribution of each member

of the Board of Directors, Statutory and Non-statutory Officers in view of the achievement of strategic

objectives, in line with best market practices.

There is no compensation for the members of the Committees of Usiminas.

b) Composition of compensation, stating:

i. Description of the compensation elements and objectives of each:

For Statutory Officers: the total value of the fixed and variable annual compensation is determined by

decision of the Board of Directors, on the recommendation of its Human Resources Committee, as the

market study submitted annually. Fixed compensation is paid monthly throughout the year. The variable

compensation linked to the achievement of quantitative and qualitative goals related to the overall

performance of the Company is paid as a bonus after final determination of performance parameters based

on the audited balance sheet and approved by the Board of Directors. The Company also has a plan of

share-based compensation to its Statutory Officers. Additionally, it has automobile and driver benefits,

medical and dental plans, life insurance and private pension plans, presented as direct and indirect benefits

(fixed compensation) in the compensation tables of item 13.2.

For Board of Directors members: fixed compensation according to budget approved at the Annual General

Meeting. There is no variable compensation practice.

For Supervisory Board members: a monthly compensation of active members is fixed at ten percent (10%) of

the value of the fixed compensation average paid to Statutory Officers of the Company, pursuant to

paragraph 3 of Article 162 of Law No. 6404/76. There is no variable compensation practice.

ii. The proportion of each element in total compensation - according to the above

Fiscal Year Ended 12/31/2015

For Statutory Officers: the composition of total compensation, assuming the achievement of 100% of the

goals that define the variable compensation, as set out in the annual plan (target value) is:

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- For Chief Executive Officer: 33.33% related to fixed remuneration, 33.33% referring to variable remuneration and 33.34% referring to stock-based compensation.

- For Vice President: 36.92% related to fixed remuneration, 36.92% referring to variable remuneration and 26.16% referring to stock-based compensation. - To the Boards of Directors and Supervisory Board, fixed compensation is set at 100%

Fiscal Year ended 12/31/2016

For Statutory Officers: The composition of total compensation, assuming 100% of the targets that define the

variable compensation, as established in the annual plan (target value) is:

- For Chief Executive Officer 40.00% referring to fixed remuneration, 20.00% for variable remuneration and

40.00% for stock-based compensation.

- For Vice President: 45.28% related to fixed remuneration, 22.64% referring to variable remuneration and

32.08% referring to stock-based compensation.

- To the Boards of Directors and Supervisory Board, fixed compensation is set at 100%

Fiscal Year ended 12/31/2017

For Statutory Officers: The composition of total compensation, assuming 100% of the targets that define the

variable compensation, as established in the annual plan (target value) is:

- For Chief Executive Officer 40.00% referring to fixed remuneration, 20.00% for variable remuneration and

40.00% for stock-based compensation.

- For Vice President: 45.28% related to fixed remuneration, 22.64% referring to variable remuneration and

32.08% referring to stock-based compensation.

- To the Boards of Directors and Supervisory Board, fixed compensation is set at 100%

iii. Calculation methodology and adjustment of each compensation element

Fixed Compensation - the methodology used for calculation/adjustment of the fixed compensation of the

Company management (Board of Directors and Statutory Officers) is based on the review of market

practices and prevailing economic conditions. This methodology ensures that the policy adopted by the

Company is competitive and is in line with the market and the interests of the shareholders of Usiminas.

Variable Compensation (Statutory Officers) - the methodology applicable to the variable compensation is

based on the establishment of economic, financial, quantitative and qualitative indicators linked to the

Company's overall performance in compliance with collective and individual targets. Annually, the Board of

Directors, on the recommendation of its Human Resources Committee, revises the set of indicators and

targets in order to adapt them to market practices, the global economic situation, the interests of

shareholders and also, aiming to encourage the sustainable performance of the Company in the long term.

Additionally, the Company has share-based compensation plan, as detailed in Section 13.4.

257

iv. Reasons for the compensation composition

The Company believes that the compensation of its executives composes by fixed and variable portions

meets market principles and allows the evaluation of its executives’ performance in line with the Company's

overall performance, that with the share-based compensation share, the company creates a sense of

identity, commitment and results orientation for their executives.

v. The existence of unpaid members by the issuer and the reason for that fact

There are no members that are not remunerated by the issuer in the Statutory and Non-Statutory Offices,

Board of Directors and Fiscal Council. The members of the Usiminas Committees receive no remuneration

for this purpose.

c) Key performance indicators that are taken into consideration in determining each compensation element

The fixed compensation takes into account market values obtained by specialized consultants, in

accordance with best market practices.

The short-term variable compensation takes into consideration quantitative and qualitative indicators,

determined annually based on market studies and situational aspects of the global economy. Examples of

quantitative indicators are: EBITDA Margin, Cost of Production, among others. Qualitative indicators are

linked to the specific contribution of each director to the Company's results.

The long-term variable compensation takes into account the strategic objectives of the Company in

accordance with the best market practices, in connection with the Company performance against the

financial market.

d) How compensation is structured to reflect the evolution of performance indicators

The Company understands that the compensation policy linked to the fulfillment of quantitative and

qualitative targets (as explained in the previous section) allows an adequately measurement of evolution of

each of its interests based on performance indicators to which weights are assigned for performance

evaluation and determination of variable compensation. The relative weighting of each performance indicator

is allocated annually by the Board of Directors, on the recommendation of its Human Resources Committee

which takes into account economic factors such weighting distributed in groups of indicators of the Usiminas

Group, indicators of the Business Units and Individual Indicators that will add value to the Company.

e) How the policy or practice of compensation is aligned with the issuer’s interests in the short, medium and

long term

The compensation policy is aligned:

Short term: compensation is based on monitoring the market base salary of each position according to

similar companies operating in its area of expertise, ensuring adequate compensation.

Medium term: aligned with performance targets set annually for each business and aimed at leveraging the

overall performance of the Company. The targets are reset annually.

Long term: as of 2011 the Company adopted the Plan for Granting Stock Options issued by the Company.

The plan aims to align the long-term interests in view of the potential appreciation of stocks in the search of

258

results by the Company. The Stock Option Plan issued by the Company was approved at the Extraordinary

General Meeting of 4/14/2011.

f) Existence of compensation supported by subsidiaries or direct or indirect parent companies

Some officers receive compensation paid by Controllers of the Company, as detailed in section 13.15.

g) Any compensation or benefit related to the occurrence of certain corporate events, such as the transfer of

equity control of the issuer

No compensation or benefit is related to the occurrence of certain corporate events, such as the sale of

Company equity control.

Usiminas Headquarters

Rua Prof. José Vieira de Mendonça, 3.011 Engenho Nogueira | 31.310-260

Belo Horizonte - MG

T 55 31 3499-8000

F 55 31 3499-8899 www.usiminas.com

259

13.2. Regarding compensation recognized in the last 3 fiscal years and planned for the current fiscal year, the Board of Directors,

the Statutory Officers and the Supervisory Board, prepare a table with the following content:

Fiscal year ended 12/31/2015

Amounts in reais

Board Number of

Members

Fixed Annual Compensation Variable Compensation

Post-

Employment

Benefits

Benefits

Generated

by Expiry of

Mandate

Share-based

Compensation

(***)

Total Salary or

Management

Fees (*)

Direct and

Indirect

Benefits

Compensation for

Participation in

Committees

Others (**) Bonuses (****) Profit

Sharing

Compensation for

Participation in

Meetings

Committees Others (**)

Statutory

Officers 5.00

6,833,814.53 1,042,922.59 N/A 1,716,962.83 2,121,091.44 N/A N/A N/A 336,784.59 N/A N/A 2,788,054.88 14,839,630.86

Board of

Directors

8.17 3,735,388.29 0.00 N/A 571,773.34 - N/A N/A N/A - N/A N/A N/A 4,307,161.63

Supervisory

Board

5.00 579,559.25 0.00 N/A 115,911.85 - N/A N/A N/A - N/A N/A N/A 695,471.10

Total 18.17 11,148,762.07 1,042,922.59 N/A 2,404,648.02 2,121,091.44 N/A N/A N/A 336,784.59 N/A N/A 2,788,054.88 19,842,263.60

- Number of Members: equivalent to the number of members of the board, all members are remunerated

* Refers to fees

** Refers to social charges payable by the company

*** The amount of share-based compensation refers to the cost of the benefit of the plan to grant stock options of the Company, calculated on the fair value of the options granted according to

the Black-Scholes model.

**** Corresponds to the bonuses paid in 2015, calculated on the performance evaluation for the fiscal year 2014.

The number of members on each board corresponds to the annual average number of members on each board determined monthly, with two decimal places.

Total compensation accounted for in 2015, including provision of variable compensation with social charges payable in 2016, amounted to R$ 27.4 million.

http://www.usiminas.com/



Belo Horizonte - MG

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Amounts in reais

Board Number of

Members


Post-

Employment

Benefits

Benefits

Generated

by Expiry of

Mandate

Share-based

Compensation

(***)

Total

Salary or

Management

Fees(*)

Direct and

Indirect

Benefits

Compensation for

Participation in

Committees

Others (**) Bonus (****) Profit

Sharing

Compensation

for Participation

in Meetings


Statutory

Officers

5.00

6,115,480.93

519,642.83 N/A

1,521,797.20 - N/A N/A N/A

- N/A N/A

907,148.77 9,064,069.73

Board of

Directors

10.67

3,838,126.59

3,152.03 N/A

579,605.99

- N/A N/A N/A

- N/A N/A N/A 4,420,884.61

Supervisory

Board

5.00

622,993.55

- N/A

112,117.96

- N/A N/A N/A

- N/A N/A N/A 735,111.51

Total

20.67

10,576,601.07

522,794.86 N/A

2,213,521.15

- N/A N/A N/A

- N/A N/A

907.148,77

14,220,065.85

* Refers to fees


*** The amount of share-based compensation refers to the cost of the benefit of the plan to grant stock options of the Company, calculated on the fair value of the options granted according to



The number of members on each board corresponds to the annual average number of members on each board determined monthly, with two decimal places. All members are remunerated

Total compensation accounted for in 2016, including provision of variable compensation with social charges, amounted to R$ 14.2 million.

As approved at the Annual General Meeting held on April 28, 2016, the overall maximum amount of management compensation provided for the period between the Annual General Meeting

(AGM) AGM 2016 and 2017 is R$ 19.3 million.




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Amounts in reais

Board Number of

Members


Post-

Employment

Benefits

Benefits

Generated

by Expiry of

Mandate

Share-based

Compensation

(****)

Total

Salary or

Management

Fees(*)

Direct and

Indirect

Benefits

Compensation for

Participation in

Committees

Others (**) Bonus (***) Profit

Sharing

Compensation

for Participation

in Meetings


Statutory

Officers

4.25

5,759,832.08

95,963.88 N/A

1,493,973.47

- N/A N/A N/A

- N/A N/A 212,082.10 7,561,851.53

Board of

Directors

11.00

3,787,083.41

7,169.34 N/A

744,250.00 - N/A N/A N/A - N/A N/A N/A 4,538,502.75

Supervisory

Board

5.00

682,072.54

- N/A

136,414.50 - N/A N/A N/A - N/A N/A N/A 818,487.04

Total

20.25

10,228,988.03

103,133.22 N/A

2,374,637.97

- N/A N/A N/A

- N/A N/A

212.082,10

12,918,841.32

* Refers to fees


*** Corresponds to the bonuses paid in 2017, calculated on the performance evaluation for the fiscal year 2016.

**** The amount of share-based compensation refers to the cost of the benefit of the plan to grant stock options of the Company, calculated on the fair value of the options granted according to



Total compensation accounted for in 2017, including provision of variable compensation with social charges payable amounted to R$ 12.9 million.

As approved at the Annual General Meeting held on April 27, 2017, the overall maximum amount of management compensation provided for the period between the Annual General Meeting

(AGM) AGM 2017 and 2018 is R$ 19.8 million.




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Estimated Remuneration for the fiscal year ending 12/31/2018

Amounts in reais

Board Number of

Members


Post-

Employment

Benefits

Benefits

Generated

by Expiry of

Mandate

Share-based

Compensation

(****)

Total

Salary or

Management

Fees

Direct and

Indirect

Benefits

Compensation for

Participation in

Committees

Others (**) Bonus(***) Profit

Sharing

Compensation

for Participation

in Meetings


Statutory

Officers

6.00

8,467,212.00

1,864,117.80 N/A

2,370,819.36

8,467,212.00 N/A N/A N/A

1,693,442.40 N/A N/A

- 22,862,803.56

Board of

Directors

11.00

3,900,000.00

- N/A

780,000.00 - N/A N/A N/A - N/A N/A N/A 4,680,000.00

Supervisory

Board

5.00

705,601.00

- N/A

141,120.20 - N/A N/A N/A - N/A N/A N/A 846,721.20

Total

22.00

13,072,813.00

1,864,117.80 N/A

3,291,939.56

8,467,212.00 N/A N/A N/A

1,693,442.40 N/A N/A

-

28,389,524.76

* Refers to fees


*** Corresponds to bonuses, calculated on with basis on the achievement of target

**** The amount of share-based compensation refers to the cost of the benefit of the plan to grant stock options of the Company, calculated on the fair value of the options granted according to



The Usiminas Human Resources Committee recommended to the Board of Directors the analysis of the approval of Budget for the Statutory Officers in the maximum amount of R$

30,297,084.00 in the next meeting. The amounts mentioned in the table "Estimated Remuneration for the fiscal year ending 12/31/2018" are supported by this amount to be approved.



Rua Prof. José Vieira de Mendonça, 3.011

Engenho Nogueira | 31.310-260 Belo Horizonte - MG

T 55 31 3499-8000

F 55 31 3499-8899

www.usiminas.com

263

13.3. The variable compensation for the last three fiscal years and planned for the current fiscal year of the

Board of Directors, the Statutory Officers and the Supervisory Board, prepare a table with the following

content:

Fiscal year ending 12/31/2015

Statutory Officers Board of Directors (**) Supervisory Board (**)

Number of members(***) 5.00 8.17 5.17

Bonus

Minimum amount provided for in the compensation plan None. It is related to the achievement of

targets.

N/A N/A

Maximum amount provided for in the compensation plan (*) R$ 45,500,000.00 N/A N/A

Amount provided for in the compensation plan - if the

targets established are met

None. It is related to the achievement of

targets.

N/A N/A

Amount effectively recognized (****) R$ 2,121,091.44 N/A N/A

Profit sharing

Minimum amount provided for in the compensation plan N/A N/A N/A

Maximum amount provided for in the compensation plan N/A N/A N/A



N/A N/A N/A

Amount effectively recognized N/A N/A N/A

N/A = not applicable, since no such payment was made.

* Variable Compensation is always paid based on targets exceeded, on a continuous scale starting at zero. The total annual funds were defined in the Ordinary General

Meeting, which in 2014 is R$ 45,5 million.

** Variable Compensation is not paid to the Supervisory Board and to the Board of Directors.*** The number of members on each board corresponds to the annual

average number of members on each board determined monthly, with two decimal places. All members are remunerated

*** The number of members on each board corresponds to the annual average number of members on each board determined monthly, with two decimal places. All

members are remunerated


- Determination of the amounts corresponding to the period from January to December, said amount relates to the period between the Meetings.





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Number of members*** 5.00 10.67 5.00

Bonus


targets. N/A N/A

Maximum amount provided for in the compensation plan (*) R$19,301,310.00 N/A N/A




targets. N/A N/A

Amount effectively recognized R$ 0.00 N/A N/A

Profit sharing





N/A

N/A N/A



* Variable Compensation is always paid based on targets exceeded, on a continuous scale starting at zero. The total annual funds were defined in the Ordinary General Meeting.

** Variable Compensation is not paid to the Supervisory Board and to the Board of Directors.

*** The number of members of each body corresponds to the annual average of the number of members of each body determined monthly, with two decimal places. All







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Number of members *** 4.25 11.00 5.00

Bonus


targets.

N/A N/A





targets.

N/A N/A

Amount effectively recognized R$ 0.00 N/A N/A

Profit sharing





N/A N/A N/A












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Estimated Variable compensation for the year 2018



Number of members *** 5.00 11.00 5,00

Bonus


targets.

N/A N/A





targets.

N/A N/A

Amount effectively recognized R$ 3,442,368.00 N/A N/A

Profit sharing





N/A N/A N/A







13.4. Shares based compensation plan for the Board of Directors and the Statutory Officers, in force in the

last fiscal year and planned for the current fiscal year.

The Company stock option plan was approved at the Extraordinary General Meeting on April 14th, 2011. In 2011,

Statutory Officers, other Officers and General Managers of the Company were eligible for the stock option plan.





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For fiscal year 2017 the stock option plan, approved on April 14th, 2011 is still in force.

a) General terms and conditions

The general plan rules are formally approved by the shareholders. Once approved, the plan is managed by the Board

of Directors, supported by the Human Resources Committee for this purpose. The Board of Directors and the Human

Resources Committee are advised on technical and operating aspects by the human resources, legal and financial

areas of Usiminas, or external consultants. Only the Board of Directors has decision-making powers on the plan,

within the limits approved by the shareholders.

All executives and employees are potentially eligible for the plan. However, those actually elected to receive grants

must be approved by the Board of Directors, on the recommendation of the Human Resources Committee.

The plan has annual grants of options (programs), subject to the rules and especially the authorized capital (number

of shares) by the shareholders. All annual programs shall be approved by the Board of Directors.

b) The main objectives of the plan

- Alignment of interests between executives and shareholders

- Encourage sustainable value creation

- Attraction and retention of key professionals for the business

- Competitiveness with market practices

c) How the plan contributes to these objectives

The plan is considered as the link between the Management goals and those of the Company.

d) As the plan is included in the issuer’s compensation policy

The plan is an integral part of Usiminas’ total compensation strategy, and it is an important element to maintain the

the Company's competitiveness on the market, as well as a tool to attract and retain key professionals for the

business.

e) How the plan aligns the short-, medium- and long-term interests of managers and the issuer

The stock option plan grants the right to buy Usiminas shares at a price (the exercise price of the options) and time

(grace period for purchase of shares) determined. The predetermined price aligns the interests of share valuation and

timing of release to ensure solid purchase decisions in search of medium- and long-term results.





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f) Maximum number of shares covered

The maximum total number of shares subject to be granted to all eligible employees is 50,689,310 preferred shares

(USIM5), representing 5% of the total capital of Usiminas in 6 programs to be carried out from 2011 to 2016.

g) Maximum number of options to be granted

The maximum number of options granted in each year to the total eligible managers was as follows:

2011 Grant - 1,638,515 options, representing 0.162% of total shares issued by the Company.




In 2015, 2016, 2017 there was no granting of options.

h) Conditions for acquisition of shares

The Option shall be exercised through the acquisition or subscription of the underlying shares against payment to the

Company corresponding to the value corresponding to the Exercise Price pursuant to the Option Agreement.

i) Criteria for determining the purchase or exercise price

The Board of Directors sets the exercise price ("Exercise Price") of each option at the time the exemption is granted,

which is equivalent to the weighted average closing price of the Preferred Shares applicable on BM&FBOVESPA -

Bolsa de Valores, Mercadorias e Futuros S.A. ("BM & FBovespa") in the month prior to the date of grant of the

options.

j) Criteria for determining the exercise period

The Board of Directors may set a time from which the Option will be exercisable ("Grace Period") and may also

provide that the Option will be exercisable in installments. Unless decided otherwise by the Board of Directors, (i) one

third (1/ 3) of the options will become exercisable one year after the date of grant, (ii) one third (1/ 3) of the options will

be exercisable two years after the date of grant and (iii) one third (1/ 3) of the options will become exercisable three

years after the date of grant.

The Board of Directors may determine the maximum period subsequent to grant date during which the Option may be

exercised ("Exercise Period"), and the Options may not be exercised after seven (7) years from the date of grant.

k) Form of settlement

The exercise price for each share subject to the option will be paid in cash in full on the date chosen by the employee

exercising the option, i.e., the execution of the Purchase and Sale Agreement between the elected employee and

Usiminas or the signature of the respective subscription list, as appropriate.





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l) Restrictions on transfer of shares

During the Exercise Period, Participants are prohibited from selling the options granted to them or create any burden

on these options.

m) Criteria and events that, when found, will cause the suspension, amendment or termination of the plan

The Board of Directors can suspend amendment or terminate the plan or part of it at any time as long as it is

accordingly to the legal devices and applicable regulation. The suspension, amendment or termination of the plan

takes place before the termination of employment relationship between the Company and the party eligible to the

stock-based compensation to the Company program as same criteria/events described in the item below.

n) Effects of the withdrawal of the issuer’s manager on his rights under the share-based compensation plan

(a) Termination Without Cause - In case of termination of the Participants by the Company or its Subsidiaries,

upon termination of his employment contract without cause or dismissal from his position as manager not

motivated by events that, in case of an employment relationship, would be a termination for cause under the

labor law, the Participants may exercise their options now exercisable within thirty (30) days as from the

respective Date of Termination, after which all Options granted to the Participants will be automatically

canceled and cease to have any effect. (b) Termination for Cause - In case of the Participants’ termination for

cause by the Company or its Subsidiaries, upon termination of the employment contract for cause or

dismissal from his position as manager motivated by events that, in case of an employment relationship,

would be a termination for cause under the labor law, all non-exercised options, whether exercisable or not,

will be extinguished by operation of law and canceled on the respective Date of Termination or the date of the

event giving rise the termination or removal of the Participant, whichever occurs first. (c) Voluntary

Termination - In the event of voluntary termination of any Company’s or its Subsidiaries’ Participants, the

Participants may exercise their options now exercisable within thirty (30) days of the respective Date of

Termination, after which all Options granted to the Participants will be automatically canceled and cease to

have any effect. (d) Termination by Retirement - In the event of Retirement, the Participants may exercise

their options now exercisable within thirty (30) days of the resepctive Date of Termination, after which all

Options granted to the Participants will be automatically canceled and cease to have any effect. (e) Death -

On the death of a Participant, the right to exercise all options granted to the Participant will be anticipated and

their heirs or successors, by legal or testamentary succession, may exercise them during the period of twelve

(12) months subsequent to the date of Termination, after which all Options granted to the Participant will be

automatically canceled and cease to have any effect. (f) Termination for Permanent Disability - If a Participant

is on continuous and authorized leave caused by permanent disability, the right to exercise all options granted

to the Participant will be accelerated and these may be exercised within 12 (twelve) months after the Date of

Termination, after which all Options granted to the Participant will be automatically canceled and cease to

have any effect. (g) Withdrawal After Disposal of Company’s Controlling Equity - In case of disposal, whether

direct or indirect, of controlling stock of Usiminas, the Participant who, in the first twelve (12) months following

the disposal of Usiminas’ controlling equity, is terminated without cause or removed from a manager position

not motivated by events that, in case of an employment relationship, would be a termination for cause under

the labor law, shall be entitled to the early exercise of all options granted to him and can exercise them within

30 days following the Date of Termination, at the end of which all Options granted to the Participant will be

automatically canceled and cease to have any effect.





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13.5. Stock-based compensation recognized in P&L for the last 3 fiscal years and planned for the current

fiscal year, the Board of Directors and the Statutory Officers.

The Company recognizes expenses from the plans to grant stock options pursuant to the Accounting Standards CPC

10 (R1) and ICPC05 options, guiding the determination and registration according to the grace period in which the

option becomes exercisable.

Share-based compensation for fiscal years ended 2015, 2016 and 2017

2015 Program

There was no granting of options in the year of 2015.

2016 Program


2017 Program






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Movement of options granted for the last 3 fiscal years

Statutory

Officers Board of Directors* Total

Fiscal year ended 2015

a Outstanding options at the beginning of the fiscal year 2,429,423 242,957 2,672,380

2015 Grant Program - - -

b Options lost during the fiscal year - - -

c Options exercised during the fiscal year - - -

d Options expired during the fiscal year - - -

Outstanding options at the end of the fiscal year 2,429,423 242,957 2,672,380



2016 Grant Program - - -

b Options lost during the fiscal year (824,894) - (824,894)

c Options exercised during the fiscal year - - -





2017 Grant Program

b Options lost during the fiscal year - - -

c Options exercised during the fiscal year (93,522) (53,004) (146,526)



Oustanding exercisable options ** 1,511,007 189,953 1,700,960

Outstanding non-exercisable options

- - -

*Grant due the fact that it is Company Employee and not as a Member of the Board

** Includes balance of options from program before 2014.

The expenses for Board of Directors members recognizes in 2015, 2016 and 2017 fiscal years and the amount

estimated for 2018 are informed in 13.2 item.





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13.6. Options outstanding of the Board of Directors and the Statutory Officers at the end of the last fiscal

year.

Related to the 2015 Program






13.7 Options exercised and shares delivered relating to stock-based compensation of the Board of Directors

and the Statutory Officers for the past 3 fiscal years.

In the fiscal years of 2015 and 2016, stock options were not exercised. In the year of 2017 53.004 options were

exercised by the Board of Directors as 93.522 option were exercised by the Statutory Officers, with the total amount of

146.526 exercised options.

13.8 Summary of information necessary for understanding the data disclosed in items 13.6 to 13.8, and the

explanation of the pricing of shares and options, including at least:

The key assumptions used in accordance with the Black-Scholes pricing model of granting programs were as follows:

2015 Grant


2016 Grant


2017 Grant


i. Method used and the assumptions made to incorporate the effects of expected early exercise

Black-Scholes methodology. There is no early exercise of options, vesting is 33% per year after the 1st, 2nd and 3rd

years of the grant date of the plan.

ii. Method of determining the expected volatility

To calculate the adjusted volatility, the adjusted history of 36 months preceding the grant was considered.





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iii. If any other option feature was incorporated into the fair value measurement

There was no other feature incorporated into the fair value measurement.

13.9. State the number of shares or units of interest directly or indirectly held in Brazil or abroad, and other

securities convertible into shares or units of interest issued by the issuer, its direct or indirect controlling

members, controlled by or under common control companies, members of the board, the statutory officers or

supervisory board, grouped by board, at the close of the last fiscal year

Number of securities at 12/31/2017

Company Security

Board of Directors

(*) Statutory Officers

Supervisory Board

(*)

Usiminas Common share - - -

Usiminas Class A preferred share 102,542 43.789 500

* The balance of shares includes the effective and deputy members of the board of Directors and of the Supervisory Board.

** The options granted and not exercised are not included in the above table.

- All effective members of the Statutory Board, Board of Directors and Fiscal are remunerated

13.10. Pension plans in effect granted to the members of the Board of Directors and Statutory Officers.

Retirement plans in force granted to members of the Board of Directors and Statutory Officers

Board No. Members Plan Name

Amount of

managers who

meet the

conditions for

retirement

Conditions to

retire in advance

Updated Value of

accumulated

contributions in the

pension plan until the

end of the last fiscal

year, deducting the

portion related to the

contributions made

directly by managers

Total accumulated

value of

contributions made

during the last

fiscal year,

deducting the

portion related to

the contributions

made directly by

managers (*)

Possibility of early

withdrawal and

applicable

conditions (**)

Board of Directors 0 N/A N/A N/A R$ - R$ - N/A

Statutory Officers

2 USIPREV 2 N/A R$ 2,081,712.11 R$ 229,650.12 None of the

Management

members

(*)Considered only the monthly contributions for the scheduled benefits that were payed during the period of March/2017 to December/2017 by the monthly

reversal of the resources at the Reserve Found. The past monthly risk contributions, administrative and services expenses were not considered because they are

a collective account.

(**)Early redemption may be required only by participants who have ceased their employment relationship and are not yet in their benefit payout phase.

Withdrawal corresponds to 100% of the participant’s reserve balance plus a percentage applicable on the sponsoring employer’s account balance, ranging from

10 to 80% of the employer’s portion reserve depending on the time of enrollment with the plan (10% vested after 3 full years, increased by 10% every year up to

80% as from 10 years of enrollment).






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13.11. In the form of a table, indicate for the past 3 fiscal years, for the Board of Directors, Statutory Officers

or the Supervisory Board: board, number of members, value of highest individual income, lowest individual

income and average individual income.

The information presented in this item is in agreement with the data reported in item 13.2.

Amounts in reais

Statutory Officers Board of Directors Supervisory Board

12/31/2017 12/31/2016 12/31/2015 12/31/2017 12/31/2016 12/31/2015 12/31/2017 12/31/2016 12/31/2015

Number of members 4.25 5.00 5.00

11.00 10.67 8.92

5.00 5.00 5.00

Value of the highest

income (real)

2,660,052.00 2,256,000.00 5,072,757.05 900,000.00 900,000.00 899,865.60 153,608.76 124,806.72 139,758.28

Value of the lowest

income (real)

1,161,432.00 996,084.00 1,915,926.95 300,000.00 300,000.00 389,169.60 153,608.76 124,806.72 138,651.52

Average income

(real)

1,536,087.00 1,248,067.20 2,967,926.17 360,000.00 360,000.00 483,046.17 153,608.76 124,806.72 139,094.22

Comments:

(a) The number of members on each board corresponds to the annual average number of members on each board, monthly determined, with two decimal places.

(b) The value of the smallest annual individual income was calculated with the exclusion of members who held the position for less than 12 months.


13.12. Describe contractual arrangements, insurance policies or other instruments which are mechanisms of

remuneration or compensation for management in the event of dismissal or retirement, indicating the

financial consequences for the issuer

Two Executive Board members have in their contracts non-competition clauses that forbid the performance of duties

in the flat steel industries in Brazil, for a 12 month period, after the employment termination. Due to this restriction, the

Company agreed to pay a compensation amount in favor of those Executives equivalent to 12 times the value of the

monthly compensation to one of them, and 3 times the monthly compensation per year as an Executive member of

the Company to the other one.

13.13. Compared to the last 3 fiscal years, indicate the percentage of total compensation of each body

recognized in the issuer relating to members of the Board of Directors, Statutory Officers or the Supervisory

Board who are directly or indirectly related to the controlling shareholders, as defined in accounting rules on

this matter.

Board

Fiscal year ended

(2016)

Fiscal year ended

(2015)

Fiscal year ended

(2014)

Board of Directors 40% 74% 80%

Supervisory Board 51% 53% 60%

Statutory Officers 6% 21% 62%





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13.14. Compared to the last 3 fiscal years, indicate the amounts recognized in the issuer’s P&L as

compensation to members of the board of directors, the statutory officers or supervisory board, grouped by

board, for any reason other than the position they hold, such as commissions and consulting or advisory

services.

Amounts in reais

Board Fiscal year ended (2016) Fiscal year ended (2015) Fiscal year ended (2014)

Board of Directors 81,945.98 205,604.93 198,395.29

Supervisory Board - - -

Statutory Officers - - -

13.15. Compared to the last 3 fiscal years, indicate the amounts recognized in the majority shareholders’ P&L,

whether direct or indirect, companies under common control and subsidiaries of the issuer, as compensation

for members of the Board of Directors, Statutory Officers or the Supervisory Board of the Issuer, grouped by

body, specifying that such amounts were paid to these individuals.

Amounts in reais

2016

2015

2014

Board of Directors 27,243,870.72 43,319,775.26 37,597,071.07

Supervisory Board 637,217.22 505,913.71 463,408.61

Statutory Officers 803,177.00 - -

Values converted to real at the exchange rate ruling on 05/24/2016.

No amounts were paid by subsidiaries or companies under common control.

13.16 Other Information that the Company deems significant.

Management members abroad will be entitled to exercise total stock options granted according to the Company’s

stock option plan, within no longer than 30 (thirty) days as from the end of their employment relationship. (Clause 10.1

of the stock option plan will not be applied), as approved by the Board of Directors.




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EXHIBIT 6 – INFORMATION ON THE CANDIDATES TO THE BOARD OF

DIRECTORS (ITEMS 12.5 to 12.10 OF THE REFERENCE FORM)

1 – Candidates to the Board of Directors appointed by the Controlling

Shareholders

- Effective Members

a. name Ruy Roberto Hirschheimer

b. date of birth 10/07/1948

c. occupation Business administrator

d. CPF or passport number 385.211.488-87

e. elective position Effective Member of the Board of Directors

(Upon approval by the Annual Shareholders´ Meeting)

f. date of election 04/25/2018


g. date of investiture 04/25/2018


h. term of office Until the Annual Meeting of 2020

i. other positions or functions practice at

the issuer

Holds no other position or job at the Company

j. indication if it was elected by the

controlling shareholder or not

Yes

k. if is an independent member and, if so,

what was the criteria used by the issuer

to determine the independence

Yes, he is an independent member having in

view that does not fulfill any of the events of

impairment of his independency provided and

suggested in item 2.2.1 of the Brazilian Code

of Corporate Governance, as well as any other

events that are similar to the situations

described therein.

l. number of consecutive mandates Not applicable

m. information about: ---




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i. major professional

experiences during the last 5

years, indicating:

---

• company name and

activity sector

a) Electrolux AB, Stockholm

Activity sector: Appliances

b) Pinacoteca do Estado de São Paulo

Activity sector: Museums

c) Museum of Modern Art of São Paulo

Activity sector: Museums

• position a) Electrolux AB, Stockholm

1998 until 2016

Position: Board Member; Chief Executive

Officer of Latin America


2014 until the date hereof

Position: Board Member




• if the company is part of

(i) the economic group of

the issuer, or (ii) is

controlled by the issuer’s

shareholder which holds

a direct or indirect equity

equal to or higher than

5% of one same class or

kind of issuer’s securities

a) Electrolux AB, Stockholm

Not part of the economic group and neither of

the controlled



the controlled




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the controlled

ii. indication of all management

positions that it holds in other

companies or third sector

organizations

a) Pinacoteca do Estado de São Paulo


Position: Director, Board of Directors

b) Museum of Modern Art of São Paulo


Position: Director, Board of Directors

n. description of any of the following

events that have occurred during the last

5 years:

---

i. any criminal conviction There is no criminal conviction.

ii. any conviction in CVM

administrative proceedings and

penalties applied

There is no conviction in CVM's administrative

proceedings.

iii. any unappealable conviction

in the legal or administrative

spheres, which has suspended

or prevented it from exercise

any professional or business

activity

There is no unappealable conviction in the

legal and administrative spheres.

a. name Kazuhiro Egawa


c. occupation Businessman

d. CPF or passport number TZ1250757



f. date of election 04/25/2018 (Upon approval by the Annual Shareholders´




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Meeting)

g. date of investiture 04/25/2018 (Upon approval by the Annual Shareholders´

Meeting)



the issuer




Yes




No

l. number of consecutive mandates 2 mandates




years, indicating:

---


activity sector

a) NIPPON STEEL & SUMITOMO METAL

CORPORATION

Activity Sector: Steel industry

b) NS BlueScope Pte Ltd


c) NS BlueScope Lysaght Singapore Pte Ltd


d) NIPPON STEEL & SUMITOMO METAL

SOUTHEAST ASIA PTE. LTD.


e) Usinas Siderúrgicas de Minas Gerais -

Usiminas





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f) Nippon Steel & Sumitomo Metal

Empreendimentos Siderúrgicos Ltda.

Activity Sector: Research

g) Vallourec Soluções Tubulares do Brasil S.A.


• position a) NIPPON STEEL & SUMITOMO METAL

CORPORATION

October 2012 until March 2013

Positions: Executive Officer, General Manager

and Head of the Global Management Division

of Marketing & Planning, General Manager

and Head of the Global Management Division

of Marketing of Flat Products

April 2013 until March 2015

Position: Executive Officer

April 2015 until March 2017

Position: Executive Officer for Southeast Asia,

Asia and India

April 2017 until the date hereof

Position: Executive Officer of the Americas and

of the Usiminas Project


March 2013 until August 2017

Position: Officer


March 2013 until August 2017

Position: Officer





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April 2015 until May 2017


e) Usinas Siderúrgicas de Minas Gerais –

Usiminas


Position: Effective Member of the Board of

Directors



June 2017 until the date hereof

Position: Officer


July 2017 until the date hereof

Position: Alternate Member of the Board of

Directors











CORPORATION

Not part of the economic group and is

shareholder of the issuer.



controlled by the shareholder of the issuer.











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e) Usinas Siderúrgicas de Minas Gerais –

Usiminas

It is the issuer itself.











organizations


CORPORATION


Position: Executive Officer of Americas and of

Usiminas Project

b) Nippon Steel & Sumitomo Metal


June 2017 until the date hereof

Position: Officer

c) Vallourec Soluções Tubulares do Brasil S.A.



Directors



5 years:

---




penalties applied


proceedings.







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activity


a. name Antonio Mendes


c. occupation Lawyer










the issuer




Yes




No





years, indicating:

---


activity sector

a) Whirlpool S. A.

Activity sector: Appliances and compressors




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b) FME 23 Empreendimentos e Consultoria

Ltda.

Activity sector: Family Holding Company

c) Ecorodovias Infraestrutura e Logística S.A.

Sector: Infrastructure and Logistics

d) Usinas Siderúrgicas de Minas Gerais –

Usiminas

Activity sector: Steel industry

• position a) Whirlpool S. A.




Ltda.


Position: Partner and Administrator


March 2018 until the date hereof

Position: Independent member of the

Committee of the Board of Directors


Usiminas

July 2017 until the date hereof:


Directors









a) Whirlpool S. A.


the controlled


Ltda.





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kind of issuer’s securities the controlled



the controlled


Usiminas

It is the issuer itself




organizations

None



5 years:

---




penalties applied


proceedings.






activity



a. name Rita Rebelo Horta de Assis Fonseca


c. occupation Economist





(Upon approval by the Annual Shareholders´




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Meeting)





the issuer

Member of the Human Resources’ Committee



Yes




No





years, indicating:

---


activity sector

a) Usinas Siderúrgicas de Minas Gerais S.A –

USIMINAS

b) FEMCO – Fundação Cosipa de Seguridade

Social

c) Caixa dos Empregados da Usiminas

(current Previdência Usiminas)

d) Previdência Usiminas

• position a) Superintendent in the sector of Corporate

Planning, M&A and Investments and Member

of the Audit Committee

b) Financial Officer and Chief Executive Officer

c) Financial Officer

d) Chief Executive Officer







USIMINAS


b) FEMCO – Fundação Cosipa de Seguridade




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Social

Not part of the economic group of the issuer

c) Previdência Usiminas


shareholder of the issuer




organizations

None



5 years:

---




penalties applied


proceedings.






activity



a. name Oscar Montero Martinez


c. occupation Industrial Engineer

d. CPF or passport number AAD960333



Meeting)

f. election date 04/25/2018


Meeting)

g. date of Investiture 04/25/2018


Meeting)




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i. Other positions or functions practice at

the issuer




Yes




No

l. number of consecutive terms 2 mandates

m. information about:



years:


activity sector

a) Ternium México S.A. de C.V., Tenigal S. de

R.L. de C.V., Ternium USA Inc., Acerus S.A.

de C.V., APM, S.A. de C.V., Ternium Gas

México S.A. de C.V., Ferropak Servicios S.A.

de C.V., Ferropak Servicios S.A. de C.V.,

IMSA Monclova S.A. de C.V., Las Encinas

S.A. de C.V., Acedor S.A. de C.V., Ferropak

Comercial S.A. de C.V., Treasury Services

S.A. de C.V;

b) Consorcio Minero Benito Juarez Peña

Colorada, S.A. de C.V.

c) Ternium S.A.

• position a) Member of the Board of Directors

b) Alternate Member of the Board of Directors

c) General Officer of Planning and Operations




controlled by the issuer's





kind of issuer's securities

Not informed

ii. indication of all management Not informed




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organizations



5 years:

---




penalties applied


proceedings.






activity



a. name Guilherme Poggiali Almeida






Meeting)



Meeting)



Meeting)



the issuer




Yes



No




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years:


activity sector

a) Manucci Advogados – prestação de

serviços

b) Usinas Siderúrgicas de Minas Gerais –

USIMINAS

• position a) Partner

b) General Counsel, General Manager of Legal

Department and Commercial legal manager










a) Manucci Advogados

Not part of the economic group of the issuer

b) Usinas Siderúrgicas de Minas Gerais S.A –

USIMINAS





organizations

Not applicable



5 years:




penalties applied


proceedings.











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activity

a. name Elias de Matos Brito


c. occupation Counter










the issuer




Yes




Yes - Independence criteria set forth in Novo

Mercado Listing Regulation.





years:


activity sector

a) Brookfield Incorporações S. A., Companhia

de Seguros Aliança da Bahia, HRT

Participações em Petróleo S. A., e

PROFARMA S. A.

b) 18ª Vara Cível da Capital – RJ, na 2ª Vara

Empresarial da Capital – RJ, e na 1ª Vara

Cível da Barra da Tijuca – RJ

c) Associação dos Peritos do Estado do Rio de

Janeiro

d) Exato Assessoria Contábil Ltda.

• position a) Member of the Fiscal Council




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b) Legal Expert

c) Officer

d) Partner










No




organizations

Not informed



5 years:




penalties applied


proceedings.






activity



- Alternate Members

a. name Hironobu Nose







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e. elective position Alternate Member of the Board of Directors








the issuer

Member of the Audit Committee



Yes




No





years, indicating:

---


activity sector

a) Nippon Steel & Sumitomo Metal Corporation




Activity Sector: Research

c) Nippon Steel Brasil Investimento Ltda.

Activity Sector: Holding of Non-Financial

Institution


Usiminas




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• position a) Nippon Steel & Sumitomo Metal Corporation

March 2004 until April 2013

Position: Group Manager in the Department of

Environmental Relationships

April 2013 until January 2016

Position: General Manager of the

Administrative Division of the Unit of Kamaishi

Works, Bar & Wire Rod

January 2016 until March 2016

Position: General Manager of the Division of

Business Development Abroad




Position: Chief Executive Officer


September 2016 until the date hereof



Usiminas



Directors


















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kind of issuer’s securities controlled by the shareholder of the issuer.





Usiminas





organizations

a) Nippon Steel & Sumitomo Metal




b) Nippon Steel Brasil Investimento Ltda.





5 years:

---




penalties applied


proceedings.






activity



a. name Hirohiko Maeke






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d. CPF or passport number TK0437339



Meeting)



Meeting)



Meeting)



the issuer




Yes




No





years, indicating:

---


activity sector

Nippon Steel & Sumitomo Metal Corporation



October 2012 until February 2014

Position: General Manager and Head of Legal

Division

March 2014 until March 2016

Position: General Manager of Division of

Business Development Abroad





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Usiminas



Directors














Usiminas





organizations

a) Nippon Steel & Sumitomo Metal

Corporation





5 years:

---




penalties applied


proceedings.






activity



a. name Ichiro Sato





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d. CPF or passport number TR5017172




Meeting)


Meeting)



the issuer




Yes




No





years, indicating:

---


activity sector



b) Usinas Siderúrgicas de Minas Gerais -

Usiminas


c) Nippon Usiminas

Activity Sector: Investments in companies

d) Kimitsu Cooperative Thermal Power

Company




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Activity Sector: Energy

e) Blazers Sports Club

Activity Sector: Sports Activities


October 2012 until March 2014

Position: General Manager and Chief of the

Administrative Division

April 2014 until July 2015

Position: General Manager of the Division of

Human Resources

August 2015 until August 2016

Position: General Manager of the Sector of

Global Business Development

September 2016 until March 2017

Position: General Manager and Chief of the

Sector of Global Business Development


Position: Executive Officer, Chief of the

Division of Global Business Development


Usiminas

September 2016 until July 2017


Directors



Directors




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c) Nippon Usiminas

September /2016 until the date hereof

Position: Officer, Board of Directors


Company

July 2011 until March 2014

Position: Tax Advisor


April 2014 until July 2015

Position: Chairman














Usiminas


c) Nippon Usiminas




Company









organizations



Position: Executive Officer, Chief of the




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Division of Global Business Development

b) Nippon Usiminas


Position: Officer, Board of Directors



5 years:




penalties applied


proceedings.






activity



a. name Gileno Antonio de Oliveira


c. occupation Engineering





Meeting)


Meeting)



the issuer

General Manager of Industrial Engineering




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Yes




No





years, indicating:

---


activity sector

a) Usinas Siderúrgicas de Minas Gerais S.A. -

Usiminas

b) Previdência Usiminas

• position a) General Manager of Engineering of

Processes and General Manager of Industrial

Engineering

b) Chairman of the Advisory Board











USIMINAS


b) Previdência Usiminas






organizations

None



5 years:

---





proceedings.




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penalties applied






activity



a. name Pablo Daniel Brizzio


c. occupation Industrial engineer

d. CPF or passport number AAB751477



Meeting)



Meeting)



Meeting)



the issuer




Yes




No





years:


activity sector

Ternium S.A.

• position Since 2010: Chief Financial Officer

• if the company is part of No




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organizations

Not informed



5 years:




penalties applied


proceedings.






activity



a. name Mario Giuseppe Antonio Galli


c. occupation Major in Philosophy

d. CPF or passport number YA0314245



Meeting)



Meeting)






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Meeting)



the issuer




Yes




No





years:


activity sector

1. Techint Group

2. Comitê de Comunicação da Associação

Mundial do Aço

3. Tenaris

4. Tenaris Confab Hastes de Bombeio

5. Ternium Brasil S.A.

• position 1. Corporate Communication Officer

2. Chairman (2009 – 2011)

3. Corporate Communications Officer

4. Executive Officer

5. Member of the Board of Directors










Not informed




organizations

Not informed




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5 years:




penalties applied


proceedings.






activity



a. name Fernando Duelo Van Deusen

b. date of birth April 5, 1966


d. CPF or passport number 17.863.583 [Argentina]



Meeting)



Meeting)



Meeting)



the issuer




Yes




No

l. number of consecutive terms Not applicable






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years:


activity sector

Ternium

• position Legal Director (Chief Legal Officer)










Yes




organizations

Not informed



5 years:




penalties applied


proceedings.






activity



2 – Candidates to the Board of Directors appointed by Minority Shareholders,

Geração Futuro L. Par Fundo de Investimento em Ações

- Effective Member

a. name Paulo Roberto Evangelista de Lima




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c. occupation Administrator


e. elective position Efective Member of the Board of Directors


Meeting)



Meeting)



Meeting)



the issuer




No




Yes. Independence criteria set forth in Novo

Mercado Listing Regulation.

l. number of consecutive terms 01




years:


activity sector

1. Banco do Brasil S.A. Setor de atividade:

bank

2. Banco de Brasília

3. CELESC- Centrais Elétricas de Santa

Catarina

4. Caixa de Assistência dos Funcionários do

Branco do Brasil - Cassi

5. Cecrisa Revestimentos Cerâmicos S.A.

6. Usinas Siderúrgicas de Minas Gerais -

Usiminas

7. JL Rodrigues, Calos Átila e Consultores

Associados S.S.

• position 1. From July 2010 to January 2012: Director of




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Risk Management

From August 2010 to January 2012: Member

of the Board of Directors of Banco do Brasil

Securities

From August 2007 to January 2012: Member

of the Technology Committee

From July 2010 to January 2012: Coordinator

of the Risk Committee of Banco do Brasil

2. From January 2013 to October 2014:

President; Member of the Board of Directors;

Chairman of the Board of Directors of Cartão

BRB S.A. and Coordinator of the Technology

Committee

3. Since May 2008: Board Member;

Coordinator of the Legal and Audit Committee

4. Since February 2010: Fiscal Council

Member

5. Since September 2016: Fiscal Council

Member

6. Since November 2016: Fiscal Council

Member

7. Since March 2015: Partner










Not informed




organizations

Not informed



5 years:




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penalties applied


proceedings.






activity



- Alternate Member

a. name Guilherme Silva Roman






Meeting)



Meeting)



Meeting)



the issuer




No




Yes. Criteria not informed.








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years:


activity sector

Lawyer. Graduated in Law and Administration,

with almost two decades of legal experience

with major companies in the mining, telephony

and port sectors. Member of the Fiscal Council

of Tecnisa and CELESC. He was an alternate

member of the Fiscal Council of USIMINAS.

• position -










Not informed.




organizations

Not informed



5 years:




penalties applied


proceedings.






activity






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EXHIBIT 7 – INFORMATION ON THE CANDIDATES TO THE FISCAL COUNCIL

(ITEMS 12.5 A 12.10 OF THE REFERENCE FORM)

1 – Candidates to the Fiscal Council appointed by the Controlling Shareholders

- Effective Members

a. name Wanderley Rezende de Souza




e. elective position Effective Member of the Fiscal Council








the issuer

Member of the Audit and Human Resources

Committee, and member of the Board of

Directors



Yes




Yes, he is an independent member having in

view that does not fulfill any of the events of

impairment of his independency provided and

suggested in item 2.2.1 of the Brazilian Code

of Corporate Governance, as well as any other

events that are similar to the situations

described therein.






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years, indicating:

---


activity sector

a) Sete Brasil Participações S.A.

Activity sector: Oil and Gas


Usiminas

Activity sector: Steel industry

• position a) Sete Brasil Participações S.A.

July 2012 until December 2013

Position: Executive Manager


Usiminas

April 2014 until October 2014:


April 2016 until October 2016:

Position: Tax Advisor

October 2016 until the date hereof:

Board Member










a) Sete Brasil Participações S.A.


the controlled


Usiminas

It is the issuer itself

ii. indication of all management None




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organizations



5 years:

---




penalties applied


proceedings.






activity



a. name Lucio de Lima Pires


c. occupation Accountant










the issuer




Yes




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No





years, indicating:

---


activity sector

a) Previdência Usiminas

Sector: Closed Complementary Welfare

• position Manager of Comptrollership
















organizations

None



5 years:

---




penalties applied


proceedings.






activity






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a. name Paulo Frank Coelho da Rocha






Meeting)



Meeting)



Meeting)



the issuer




Yes




No





years:


activity sector

a) Demarest e Almeida – Prestação de

Serviços

b) Cravath, Swaine & Moore


b) Foreign Associate






No




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organizations

Member of the International Bar Association,

do Advisory Board do "Working Group on

Legal Opinions" da American Bar Association;

and of the Câmara de Comércio Brasil-

Estados Unidos



5 years:




penalties applied


proceedings.






activity



- Alternate Members

a. name Masato Ninomiya




e. elective position Alternate Member of the Fiscal Council








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the issuer

No



Yes




No

l. number of consecutive mandates 19 mandates (since 1999) as effective member

of the Fiscal Council




years, indicating:

---


activity sector

a) Advocacia Masato Ninomiya S/C

Activity Sector: Law Firm

• position a) Advocacia Masato Ninomiya S/C

Position: Founding partner










a) Advocacia Masato Ninomiya S/C


the controlled




organizations

None



5 years:

---




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penalties applied


proceedings.






activity



a. name Ely Tadeu Parente da Silva


c. occupation Accountant










the issuer




Yes




No






Belo Horizonte - MG

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320



years, indicating:

---


activity sector

a) Previdência Usiminas – Closed

Complementary Welfare

• position a) Manager of Compliance

Officer of Benefits
















organizations

Not applicable



5 years:

---




penalties applied


proceedings.






activity



a. name João Paulo Bueno Minetto





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the issuer




Yes




No





years, indicating:

---


activity sector

a) Demarest Advogados











No




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organizations

Not applicable



5 years:

---




penalties applied


proceedings.






activity



2 - Candidates to the Fiscal Council appointed by the Minority Shareholder

Geração Futuro L. Par Fundo de Investimento em Ações

- Effective Member

a. name Aloísio Macário Ferreira de Souza





(upon approval by the Annual Shareholders’

Meeting)



Meeting)



Meeting)

h. term of office Until the 2019 Annual Shareholders’ Meeting

i. Other positions or functions practice at Holds no other position or job at the Company




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the issuer



No









years:


activity sector

a) Usinas Siderúrgicas de Minas Gerais –

Usiminas

b) PREVI – Caixa de Previdência dos

Funcionários do Banco do Brasil

c) Guarani S.A.

d) CEMIG – Cia. Energética de Minas Gerais

• position a) Vice-President of Human Resources

(November 2014 to September 2015)

Member of the Board of Directors (May 2010

to April 2014)

b) Executive Manager (June 2004 to August

2011)

c) Fiscal Council member (since June 2009)

d) Member of the Board of Directors










Not informed.




organizations

Does not participate in third sector

organizations




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5 years:




penalties applied


proceedings.






activity



- Alternate Member

a. name Luiz Fernando Sachet












the issuer




No







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years, indicating:

---


activity sector

Luiz Fernando Sachet holds a bachelor's

degree in Law from Universidade do Vale do

ltajaí (2002). He is currently a guest lecturer -

LEX Magister Produtos Jurídicos and general

manager of litigation - Gasparino, Fabro,

Lebarbenchon, Roman, Sachet and Marchiori

Sociedade de Advs. He has 8 years of

experience in the area of Law, with emphasis

on Tax Law, Advice and Consulting, and

Litigation.

• position General Manager of Litigation - Gasparino,

Fabro, Lebarbenchon, Roman, Sachet and

Marchiori Sociedade de Advs










Not informed




organizations

Not informed



5 years:

---





proceedings.




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penalties applied






activity



Pursuant to Item 10.2.12, letter d, of Circular Notice/CVM/SEP/Nº02/2016, we hereby

inform that none of the present candidates, nominated for the positions of members of

the Board of Directors and of the Fiscal Council by the Controlling Shareholders, stated

be considered politically exposed individual, in accordance with to the definition set

forth in Article 3 - B of CVM Instruction No. 301, of April 16th, 1999, and changes

arising from the CVM Instruction No 463, of January 8th, 2008. Geração Futuro L. Par

Fundo de Investimento em Ações did not infomed if any of its candidates is politically

exposed individual.

12.6. For each one of the those who acted as a member of the board of directors

or of the fiscal council in the last financial year, inform, in table format, the

percentage of attendance in the meetings held by the respective body in the

same period, which have occurred since the investiture in office.

Board of Directors Total of meetings held % of the member

attendance

Kazuhiro Egawa 9 89%

Antonio Mendes 8 100%

Oscar Montero Martínez 18 88%

Guilherme Poggiali de

Almeida

18 94%

Elias de Matos Brito 18 100%

Rita Rebelo Hora de Assis

Fonseca

18 100%

Hironobu Nose 1 100%

Ichiro Sato 13 100%

Pablo Daniel Brizzio 1 6%




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Fiscal Council Total of meetings held % of the member

attendance

Paulo Frank Coelho da

Rocha 6 83%

Lúcio de Lima Pires 6 100%

Masato Ninomiya 6 100%

Mario Roberto Villanova

Nogueira

6 17%

Paulo Roberto Evangelista

de Lima

6 83%

12.7. Provide the information mentioned in item 12.5 in relation to the members

of the statutory committees, as well as of the audit, risk, financial and

compensation committees, even if such committees or structures are not

statutory

Not applicable.

12.8. For each one of those who acted as a member of the statutory committees

as well as of audit, risk, financial and compensation committees, even if such

committees or structures are not statutory, inform, in table format, the

percentage of participation in the meetings held by the respective body in the

same period, which have occurred since investiture in office

Audit Committee Total of meetings held % of the member

attendance

Hironobu Nose 7 100%

Wanderley Rezende de Souza

7 100%

Human Resources

Committee

Total of meetings held % of the member

attendance

Rita Rebelo Horta de Assis

Fonseca

6 83%




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Wanderley Rezende de Souza

6 100%

12.9. Inform any spousal relation, stable union or kinship up to the second

degree between

a) The members of the Board of Directors, the Board of Officers and Fiscal Council

Not applicable. Does not exist spousal relation, stable union or kinship up to the

second degree between the candidates for the positions of members of the board of

directors and of the fiscal council and the Company’s managers.

b) (i) The members of the Board of Directors, the Board of Officers and Fiscal Council

and (ii) the members of the Board of Directors, the Board of Officers and Fiscal Council

of companies directly or indirectly controlled by the issuer



directors and of the fiscal council and the members of the Board of Directors, the Board

of Officers and Fiscal Council of companies directly or indirectly controlled by the

issuer.

c) (i) the members of the Board of Directors, the Board of Officers and Fiscal Council of

the issuer and its direct or indirect controlling shareholders



directors and of the fiscal council and the Company’s direct or indirect controlling

shareholders

d) (i) the members of the Board of Directors, the Board of Officers and Fiscal Council

and (ii) the members of the Board of Directors, the Board of Officers and Fiscal Council

of the issuer’s direct and indirect controlled companies






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directors and of the fiscal council and the members of the Board of Directors, the Board

of Officers and Fiscal Council of the issuer’s direct and indirect controlled companies.

12.10. Inform on subordination, service or control relations, during the last three

fiscal years, between the issuer’s members of the Board of Directors, the Board

of Officers and Fiscal Council and:

a) Company directly or indirectly controlled by the issuer, except for those in which the

issuer holds, directly or indirectly, the entire capital

Not applicable. Does not exist subordination, service or control relations, during the last

three fiscal years, between the candidates for the positions of members of the board of

directors and of the fiscal council and Company directly or indirectly controlled by the

issuer.

b) the issuer’s direct or indirect controlling person

(i) The candidate to effective member of the Board of Directors Antonio Mendes,

maintains a service rendering agreement with Nippon Steel & Sumitomo Metal

Steel Empreendimentos Ltda.;

(ii) The candidate to effective member of the Board of Directors Oscar Montero

Martinez, holds the position of General Officer of Planning and Operations Ternium

S.A. and also is Member of several Ternium S.A.’s subsidiaries Board of Directors;

(iii) The candidate to effective member of the Board of Directors Guilherme Poggiali

Almeida is partner at the law firm Manucci Advogados, which maintains a law

service rendering agreement with the companies of Ternium Group, since June,

2015;

(iv) The candidate to alternate member of the Board of Directors Pablo Daniel

Brizzio holds the position of Chief Financial Officer of Ternium S.A., controlling

company of Ternium Investments S. à r.l.;




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(v) The candidate to alternate member of the Board of Directors Mario Guiseppe

Antonio Galli maintains working relationships with certain subsidiaries of Tenaris

S.A., also is Corporate Communication Officer of Tenaris S.A., Member of the

Board of Directors of Ternium Brasil S.A. and Executive Officer of Tenaris Confab

Hastes de Bombeio;

(vi) The candidate to alternate member of the Board of Directors Fernando Duelo

Van Deusen, holds the position of Chief Legal Officer of Ternium S.A.,

(vii) The candidate to alternate member of the Fiscal Council Masato Ninomiya,

maintains a service rendering agreement with Nippon Steel & Sumitomo Metal

Steel Empreendimentos Ltda.;

c) If relevant, supplier, client, debtor or creditor of the issuer, its controlled company or

controlling shareholders or controlled companies of any of these people

Not applicable.
