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1Q08
2
Agenda
Global View
Usiminas
Investments
J. Mendes
Financials
Corporate Governance and Social Responsability
3
Agenda
Global View
Usiminas
Investments
J. Mendes
Financials
Corporate Governance and Social Responsability
4
327 350 372 395 428 456
147 135 153 141 146210
225 220246 255 260259
297 353384
428477
126
757164596052
2003 2004 2005 2006 2007P 2008F
Other USA/Canada LATAM Europe China
Steel Consumption - World(million t)
Source: IISI - 2008
Substantial growth in the past few years,mainly coming from China ...
9741,079
1,1391,242
1,3231,414
5
31.533.842.848.651.653.172.4
98.2120.2
489.2
World Steel ProductionWorld Steel Production
Brazil is the 9th largest producer...
Source: International Iron and Steel Institute - IISI - 2008
2007(million t.)
China Japan USA Russia India S. Korea Germany Ukraine Brazil Italy
6
410
464445442432421415408387370348342
303299
Brazil
Austra
lia
India
Mexico CIS
Canad
aUSA In
tegEas
tern
Eur
ope
China
USA Mini
Wes
tern
Europ
e
South
Kor
ea (I
nteg
)
Japa
n
Globa
l Ave
rage
Source: WSD, Nov. 2007
Brazil has the lowest production cost in the world
Cost competitivenessCost competitiveness
Production Cost USD / ton(Slabs – Nov. 2007)
7
Agenda
Global View
Usiminas
Investments
J. Mendes
Financials
Corporate Governance and Social Responsability
8
Usiminas System is the 36th largest producer in the world and 1st flat steel
producer in Latin America
Brazilian Steel ProductionBrazilian Steel Production
Top Brazilian Steel
Producers - 2007(33.8 million ton = Brazil’s crude
steel production)
Gerdau 21.5%
ArcelorMittal 30.3%
Usiminas 25.7%
Others6.7%
CSN 15.8%
Major Producers 2007(crude steel production - million t.)
20.2
20.5
22.8
22.9
26.5
28.6
32.8
33.8
34.5
116.4
8.736 - USIMINAS
10 - Wuhan
9 - US Steel
8 - Tangshan
7 - Jiangsu Shagang
6 - Tata Steel
5 - Baosteel
4 - Posco
3 - JFE
2 - Nippon Steel
1 - Arcelor Mittal
Source: IBS - 2008 and Metal Bulletin - 2008
9
iBoard of Directors from solid Brazilian and foreign groups
iLong-term commitment
iExcellence and experience of management
Excellence of the main shareholdersShareholderShareholder StructureStructure
Free Float50.2%
Previ5.2%
Free Float12.9%
Votorantim / Camargo
Corrêa Group11.5%
Usiminas Pensions Fund
5.0%
VALE2.9%
Nippon Group12.3%
Co
ntr
ol
Gro
up
31
.9%
Total CapitalDecember, 2007
PN´s - 50.2%ON´s - 49.8%
Free Float25.8%
Previ10.4%
Nippon Group24.7%
Usiminas Pensions Fund
10.1%
VALE5.9%
Votorantim / Camargo
Corrêa Group23.1%
Co
ntr
ol
Gro
up
63
.9%
Voting CapitalDecember, 2007
ON´s
10
InvestmentsInvestments
Steel business
Ternium
- Usiminas’ Stake: 14.25% of total capital
- Controlled by Techint Group
- Annual shipments: ~ 12 million tons
- Latin America’s leader in finished steel shipments
www.ternium.com for additional information
Other relevant assets
- Revenues: US$ 8.2 billion
- EBITDA: US$ 2.2 billion
*FY/2007
Capacity:~2 million (E)
Products: Flat
Capacity.:~3 million (E)
Products: Flat
Capacity.:~4 million (E)
Products: Flat & Long
30%60%70% 61%
Capacity:~4 million (E)
Products: Flat & Long
100%
11
InvestmentsInvestments
Railroad - Shareholder participation:
20% of voting capital and participation in control group
- Revenues (Gross): R$ 2.5 billion
- EBITDA: R$ 1.0 billion
- Debt (net): R$ 326.6 million
- Products: 126.3 million tons transported in 2007 (general cargo)
*FY/2007
Other relevant assets
www.mrs.com.br for additional information
12
Close to main markets
2 ports
Railroad (MRS)
RAILROADHIGHWAY
CVRD
ESPÍ
RITO
SAN
TO
SÃO PAULO
BAHIA
MINAS GERAIS
ATLANTIC OCEAN
Itabira
Vitória
Port of Praia Mole
Santos
RIO DE
JANEIRO
Belo HorizonteUsiminas
Headquarters
Sepetiba Port
Rio de JaneiroSão Paulo
Cubatão Plant
IpatingaPlant
Usiminas is strategically locatedUsiminas is strategically located
Cosipa Port
13
No
vo
lip
ets
k
Ta
ta S
tee
l
Ma
gn
ito
go
rsk
Ev
raz
Gro
up
SA
IL
Ch
ina
Ste
el
An
ga
ng
Su
mit
om
o M
eta
lS
SA
B
Sa
lzg
itte
r A
G
Ge
rda
u S
.A.
Nu
cor
PO
SC
O
JFE
Ho
ldin
gs
Me
che
l O
AO
Se
ve
rsta
l
Wu
ha
n S
tee
l
Ra
uta
ruu
kk
i O
yj
Nip
po
n S
tee
l
Azo
vst
al
Ba
ost
ee
l
Arc
elo
r M
itta
l
Vo
est
alp
ine
AG
Un
ite
d S
tate
s S
tee
l
Nis
shin
Ste
el
Ma
an
sha
n S
tee
l
Be
ng
an
g S
tee
l
Ta
ng
sha
n
Pa
nzh
ihu
a
Hu
na
n V
ali
n
Ha
nd
an
Ste
el
Blu
eS
cop
e
Th
yss
en
Kru
pp
An
ya
ng
Laig
an
gB
ao
tou
Ste
el
Be
ijin
g S
ho
ug
an
g
Erd
em
ir
Ko
be
Ste
el
AK
Ste
el
Usi
min
as
CS
N
0
10
20
30
40
50
60 Operating Profit Margins % - 2006
High quality, value-added products (from slabs to coated products)
Among the lowest cost producers in the world
Source: Integer Research, 2007
Cost competitivenessCost competitiveness
14
Major consumers
Heavy plate 1,000,000 1,000,000
Hot coil 3,550,000 2,100,000
Cold coil 2,500,000 1,200,000
-
-
Capacity (tonnage/year)
360,000
480,000
Slab 5,000,000 4,500,000
Electrogalvanized coil
Hot dip galvanized coil
Pipelines, pressure vessels,shipbuilding, general structures.
Agricultural machinery, pipe and tube,chassis, gas cylinders, containers,general structures.
Auto industry, household appliances, packaging.
Auto industry, household appliances.
Auto industry, household appliances,civil construction.
Rolling mills.
IpatingaPlant
CubatãoPlant
Products Products Complete product lines: from slabs to coated products
Un
coate
dC
oate
d
15
SalesSales
(million ton. )(million ton. )
Domestic market is a priority
As of March, 2008
81%
77%
67%
72% 69% 70%
67%
19%
23%
33%
28%31%30%
33%
2002 2003 2004 2005 2006 2007 1Q08
7,722 7,7108,062
7,3487,945
Domestic Market Foreign Market
7,990
1,886
16
SalesSales
Domestic Market(Volume: 1.532 million t. - 1Q08)
Combination of market leadershipand diversified customer base
reduces market risk
Spain12%
Argentina16%
USA11%
Indonesia4%
Bolivia3%
Mexico6%
Taiwan9%
South Korea11%
Chile11%
Germany5%
Others12%
Distributors23%
Autoparts18%
Auto Industry
13%
Civil Construction
6%
Household Appliances
2%
Industrial Equipment
9%
Elect-Equipment
4%
Packaging1%
Pipelines6%
Others10%
Small Diam. Tubes8%
International Market(Volume: 0.354 million t. - 1Q08)
Diversified geographic sales
As of March, 2008
17
MarketMarket ShareShareDomestic Market (%) - 1Q08Domestic Market (%) - 1Q08Combination of market leadership and diversified customer base reduces market risk
* Flat Steel market: Usiminas System, CSN, Acesita and Arcelor Brasil.
48% Market share *
88%
29%
67%
66%
61%
14%
42%
47%
52%
60%
0,0% 20,0% 40,0% 60,0% 80,0% 100,0%
Distributors
Packaging
Civil Construction
Shipbuilding
Elect. Equipment
Household Appliances
Pipelines
Small Diam. Tubes
Autoparts
Auto Industry
TOTAL
OthersIpatinga and Cubatão Plants
48%
53%
40%
58%
39%
86%
33%
71%
100%
34%
12%
Flat Steel
As of March, 2008
18
Brazil’s outlook - 2008Brazil’s outlook - 2008
i Flat steel demand is expected to exceed 9%
Vehicle production may reach 3.240 million (Anfavea - Jan/08)
Industrial segment should outperform, growth to exceed 10%
Civil Construction growing activities
Source: IBS / Usiminas / Anfavea (Jan/08)
8,576 8,90810,109
9,229 9,902
11,66912,750
2002 2003 2004 2005 2006 2007 2008E
+18%1,793 1,828
2,2102,528 2,611
2,9733,240
2002 2003 2004 2005 2006 2007 2008E
+14%
Vehicle Production (1,000 vehicles)Flat Steel Demand (1,000 t.)
+9%
+9%
19
Investments & TechnologyInvestments & Technology
Commitment to the best technology
Partnership with Nippon Steel assures access to state-of-the-art technologyin steel production, including high value-added products
6th Technology Transfer Agreement with Nippon Steel, valid until 2009
425 received patents, of which 23 are international
150 researchers
Usiminas sells US$ 2 for each US$ 1of acquired technology.
20
Agenda
Global View
Usiminas
Investments
J. Mendes
Financials
Corporate Governance and Social Responsability
21
Major ProjectsMajor Projects Ongoing and new investments
* Note: It includes new Raw Material Yards, Sinter Plant, Coke Plant, Power Plant, Blast Furnace,Continuous Casting Machine and utilities.
2013 - 2015(1) (2) (3)
Ipatinga Plant Cubatão Plant To be defined
ExpansionIpatinga Mill Expansion (+3.2 million tons/yr) *
Revamping of Cont. Casting Machine nr.3 (+325,000 tons/yr)
3.0 million tons/yr in the Company’s installed capacity
Revamping of Hot Rolling Mill (+150,000 tons/yr)
New Hot Rolling Mill (+2.3 million tons/yr)
Revamping of Heavy Plate Mill (+500,000 tons/yr) New Galvanizing line (+500,000 tons/yr) New Steel Shop (+5.0 million tons/yr)
Dredging of Cubatão Port Canal
New Coke Plant (+750,000 tons/yr)
New Power Plant (75 MW)
New Power Plant (60MW) Top Blowing Turbine (12 MW)Technology Updating Program Technology Updating ProgramEnvironmental Protection Program Environmental Protection Program
Total Investment:
US$ 5.2 billion US$ 2.0 billion US$ 2.7 billion
Mix Improvement
Cost Reduction
2008 - 2012
22
Agenda
Global View
Usiminas
Investments
J. Mendes
Financials
Corporate Governance and Social Responsability
23
J. Mendes is the last sizeable mining asset available in the Quadrilátero Ferrífero,a major iron ore province in Brazil
The acquired company is comprised of four mining sites with total expectedresources of 2.7 to 3.0 Bt and expected reserves of 1.1 to 1.8 Bt
Expected mine useful life of at least 25 years
Expected iron content between 46 and 48%
Current production level at roughly 6 MMt/year
J. Mendes brief overviewJ. Mendes brief overview
Somisa Global/Camargos J Mendes Pau de Vinho
24
Relative location of J MendesRelative location of J MendesJ. Mendes mines are close to existing railway lines(MRS – 28km and FCA – 15km), with access to the ports of Cosipa and Sepetiba
(Minas Gerais)
(São Paulo) (Rio de Janeiro)
(Espírito Santo)
Brazil
Praia MoleTubarão
RJPortSepetiba
CosipaPort
São Paulo
BeloHorizonte
FCAEFVMMRS
CubatãoPlant
IpatingaPlant
J Mendesmines
25
0.9
1.1
1.3
1.5
1.7
1.9
2.1
0.6 0.8 1.0 1.2 1.4 1.6 1.8 2.0 2.2 2.4 2.6 2.8 3.0
Usiminas acquired J. Mendes with a phased cash disbursement schedule• Upfront payment of US$ 925 MM• Subsequent payments over the next two years, subject to confirmation of
reserves size and iron content (drilling audit process)• Maximum total disbursement is limited to US$ 1,900 MM (for example, in case
of minimum proven reserves of 1.4Bt with at least 47% of iron content)• No additional cash will be paid for proven reserves in excess of 1.4Bt
What was the acquisition price?What was the acquisition price?
Acquisition Price(as a function of proved reserves through drilling audit)
EffectivePrice tobe Paid(US$ B)
Proven Reserves (Bt) (assumption: 47% of ore content)
Maximum priceto be paid is
US$ 1.9 B for1.4Bt ofreserves
26
Iron ore production capacity will be expanded to 29.2 MMt/year in two stages• First stage – increase in current production from 6 MMt/year to 13 MMt/year
with marginal capex commitments - (Estimated US$ 150 MM)• Second stage – increase production to 29.2 MMt/year from 2013 on with the
addition of a new production plant - (Estimated US$ 600 MM)
With a 29.2 MMt/y production rate, the mine should operate for at least 25 yearsOpportunities to speed-up production ramp-up under evaluation
What is the production plan?What is the production plan?
Expected Production Ramp-up (MMt)
16 16
6 9 9 11
29 29
13135
2008 2009 2010 2011 2012 2013 LT
Start-up ofnew plant
Drillingphase
Ramp-up phase Steady-stateproduction phase
New Plant
27
With the mine expansion plan, Usiminas will be fully hedged against ironore price fluctuations
• Cosipa plant expected to be mostly supplied by J. Mendes through MRS• Although Ipatinga is not logistically positioned to be supplied by J. Mendes, it
will be fully hedged against iron ore prices fluctuations
Production excess to be sold on contracts/spot basis – almost 60% of thetotal production will be exported through Sepetiba and Cubatão
What is the commercialization plan?What is the commercialization plan?
Macro-Volume Distribution
(1) besides receiving 10.3 MMt from J. Mendes, Cosipa will also receive an additional 2.0 MMt from other suppliers
29.2 (MMt)
J. Mendes(iron ore production)
12.8 (MMt)
Usiminas(iron ore consumption
after expansion)
16.7 (MMt)
Iron Ore Exports
2.2 (MMt)
Other(Domestic Market)
10.3 (MMt)1
Cosipa(84% of the iron ore
needs after expansion)
Supply
Hedge 2.0 (MMt)
Cosipa(16% of the iron ore
needs after expansion)
28
Usiminas secured financing to maintain current liquidity levels• Usiminas has a firm commitment from an international first class bank, HSBC,
to finance such acquisition- Bridge Facility: US$800 MM- Revolving Facility: US$700 MM for a period of 2 years of drawdowns
Usiminas’ investment grade rating kept by rating agencies
How was the financing structured?How was the financing structured?
Fitch views the potentialacquisition positively from abusiness perspective, asUsiminas will become lessreliant on higher cost third-partysources for the iron ore used inthe production of steel
Usiminas’ Ratings UnaffectedBy Acquisition Negotiations
We expect Usiminas to maintaina very conservative financialstrategy and credit measures forthe rating category, despite theacquisitions.
From a margin volatilitystandpoint, the acquisition ofJ. Mendes would furtherimprove Usiminas' businessprofile by creating a naturalhedge for its iron ore costs...
29
Agenda
Global View
Usiminas
Investments
J. Mendes
Financials
Corporate Governance and Social Responsability
30
530734 657
831999
1,9222,269
2,010
2,581
721
31%35% 32%
35% 35%
46%42%
35% 36% 35%
19991.81
20001.83
20012.35
20022.92
20033.07
20042.93
20052.44
20062.18
20071.95
1Q081.74
Ebitda Ebitda Margin
AVG.R$/US$
Consolidated Consolidated EbitdaEbitda
Investment return and market conditions have allowed consistent cash generation
US$ Million
As of March, 2008
31
26
2,098
212 433160 225 243 240
25 2159
487
Cash 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018on
Debt has an adequate maturity profile
SwapCDI5%
Long79%
US$ 1,973 M
Short21%
US$ 512 M
Foreign60%
Local40%
TERM CURRENCY
“Stand by Facility” - US$ 300 million
Note: Principal Values
US$ Million
Consolidated Debt MaturityConsolidated Debt Maturity
As of March, 2008
32
387(537)
355
8601,317
2,3342,4910.1-0.20.20.40.7
2.33.1
0
1,000
2,000
3,000
4,000
20023.53
20032.89
20042.65
20052.34
20062.14
20071.77
1Q081.75
Net Debt Net Debt / Ebitda
R$/US$
Total Net DebtTotal Net Debt
And have made it possible to considerably reduce debtUS$ Million
As of March, 2008
33
Consolidated Figures
Financial HighlightsFinancial Highlights
March 31/08 Dec 31/07 Dec 31/06 Dec 31/05 Dec 31/04
Crude Steel Produc. (thsd t) 1,990 8,675 8,770 8,661 8,951Sales (thsd t) 1,886 7,990 7,945 7,348 8,062Net sales (US$ million) 2,044 7,131 5,709 5,354 4,197EBITDA (US$ million) 721 2,581 2,010 2,269 1,922Net Profit (US$ million) 372 1,607 1,156 1,609 1,033Gross Debt (US$ million) 2,485 1,693 1,628 1,685 2,033Net Debt / EBITDA 0.1 (0.2) 0.2 0.4 0.7EBITDA / Interest 16.5 20.0 16.9 11.8 11.3
34
Agenda
Global View
Usiminas
Investments
J. Mendes
Financials
Corporate Governance and Social Responsability
35
Investments in Social ResponsibilityInvestments in Social Responsibility
Environmental Protection
Community
- More than R$ 2 billion invested in Ipatinga and Cubatão plantssince 1992.
- Usiminas and Cosipa were the 2nd and 3rd steel companies in theworld to be certified with ISO 14001.
- Fresh water recirculation rate above 93%.
- Green belt in Ipatinga area is 10 times aboverecommended level (World Health Organization).
- More than R$ 139 million invested in cultural activities in thelast fifteen years (tax incentives), involving 3 thousandartists and 200 thousand spectators.
- Construction of its 2nd hospital, one of three in Brazilaccredited by ONA (National Accreditation Organization),through USIMINAS Foundation, which is self sustaining. Bothhospitals provide healthcare to a region with 600 thousandinhabitants.
- Investment in education through São Francisco Xavier School,maintained by USIMINAS foundation, teaching more than 3thousand children and young people.
- The city of Ipatinga holds a “high standard of humandevelopment”, as defined by the UN - United Nations.
36
www.usiminas.com.br
Investor Relations:Bruno Seno Fusaro (Head of IR) Luciana Valadares dos Santos Matheus Perdigão [email protected] [email protected] [email protected].: + 55-31-3499-8772 Tel.: + 55-31-3499-8619 Tel.: + 55-31-3499-8056Fax: + 55-31-3499-9357
Diogo Dias Gonçalves Gilson Rodrigues Bentes [email protected] Cosipa (São Paulo Office) Tel.: + 55-31-3499-8710 [email protected] Tel.: + 55-11-5070-8980
Declarations relative to business perspectives of the Company, operating andfinancial results and projections, and references to the growth of the Company,constitute mere forecasts and were based on Management’s expectations inrelation to future performance. These expectations are highly dependent onmarket behavior, of Brazil’s economic situation, on the industry and oninternational markets, and are therefore subject to change.
ADRLevel I
