CORPORATE PRESENTATION September 2012
Timeline CSN Share Ownership June 30, 2012 VICUNHA 47.9% RIO IACO CBS 4.0% 0.9% 1946 1.9% BNDESPAR 1974/1989 3 Expansions in Volta Redonda Steel Mill ADRs 25.5% Bovespa 19.8% 1993 CSN privatization 1996/2002 CSN invested US$2.4 Billion in technological advances 2005 Casa de Pedra and Itaguaí Terminal expansions begin 2007 First iron ore export shipment 2008 Sale of 40% of NAMISA 2009 Cement plant Start - Up 2012 Acquisition of SWT 1941 Operational start-up CSN is founded 2 2
Competitive Advantages Fully integrated business model: high quality operations (steel, mining and cement) with logistic infrastructure and self-sufficiency in energy generation; Low cost structure and high profitability; Pricing power based on a large and diversified customers portfolio; Exposure to different business segments and diversified product portfolio; Strong presence in Brazilian steel market (one of the highest average price worldwide); Growing exposure to the iron ore market (very consolidated base of suppliers with strong pricing power); Strong liquidity and cash generation; Resilient performance in adverse market conditions; Experienced management team. 3 3
CSN - Key Business Areas Steel Mining Cement Logistics Energy Flat Steel Long Steel Casa de Pedra NAMISA & Tecar Cement Plant MRS Railway & Transnordestina Itaguaí Logistics Platform Tecon Thermal & Hydro Electric Plants Net Revenues % of 2011 55% 35% 10% Key Business Highlights 5.6 mt of flat steel (2011 capacity). # 2 flat steel producer in Brazil Focus on high margin products. Acquisition of German long-steel producer SWT, with annual production of 1.0 mt of steel profiles. # 6 globally in iron ore production (29 mt in 2011). CSN is self-sufficient in iron ore production. CSN has the concession to operate TECAR, from which CSN exports iron ore and imports coke and coal. Operations started in May 2009. Uses CSN's blast furnaces byproducts and own limestone reserves. Current sale capacity: 2.4 mtpy Developed transport infrastructure, from iron ore mines to steel mills and ports MRS Railway connects the Volta Redonda Steel Mill to Casa de Pedra and terminals at Itaguaí Port, which handles steel exports. CSN has the concession to operate TECON, one of the largest container terminals in Brazil. Apart from containers, TECON also handles CSN s steel products and general cargo. CSN is selfsufficient in energy production. Total energy capacity available: 428 MW (average). 4 4
CSN, an Integrated Company Self-sufficiency in practically all relevant raw materials for steel production, specially captive iron ore mines and power plants, along with equity participation or operating concessions of outstanding infrastructure assets, positions CSN not only as a truly low-cost producer but also one of the most independent and profitable steel producer worldwide. Lime & Dolomite mine (Arcos) 260 miles Iron Ore mines (Casa de Pedra & NAMISA) 200 miles MRS railway (equity of 33%) Brazil MG RJ São Paulo (Brazilian largest market) 270 miles Angra Port FCA MRS Volta Redonda Steel Facility Rio de Janeiro Rio de Janeiro Port 80 miles Itaguaí Port 60 miles Iron ore & Coal Terminal and Container Terminal (controled by CSN) 5 5
STEEL 6 6
2.7 3.4 3.4 3.0 6.0 6.4 Steel Figures Apparent Consumption of Steel Products in Brazil (Mt) Brazil's Imports of Steel (Mt) 5.39 22.1 24.0 26.1 25.1 3.78 16.7 16.5 16.0 9.7 9.5 9.8 7.0 7.0 6.1 18.3 16.8 11.0 10.2 7.3 6.6 18.5 11.1 7.4 13.4 13.9 10.1 8.7 18.6 10.7 7.8 15.3 14.7 10.8 10.4 0.75 1.00 1.51 2.26 2.23 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2005 2006 2007 2008 2009 2010 2011 Total Steel Products Flat Products Long Products Apparent Consumption of Steel Products Brazil (Mt) - 2012 Brazil's Imports of Steel (Mt) - 2012 1.00 0.97 0,0 1Q12 2Q12 Total Steel Products Flat Products Long Products 1Q12 2Q12 Source: IABr 7 7
Import Parity - Different FX Scenarios Hot Rolled Sheet Import Parity (USD/t) FOB Price 540 540 540 Ocean Freight 45 45 45 Insurance 2 2 2 CIF Price 587 587 587 Import Tax 147 147 147 FMM Tax 11 11 11 Port Expenses 24 24 24 Other Costs 15 15 15 All-in price of imported Steel 784 784 784 Hot Rolled Price in Brazil (R$) Commodity Grade without Extras 1,500 1,500 1,500 FX 1.95 2.00 2.05 Domestic Price in USD 769 750 732 Premium (2%) (4%) (7%) 8 8
Steel Sales Volume and Net Revenues Sales Volume Net Revenues (Thousand t) (BRL MM) 4,891 4,110 4,796 4,896 10,566 8,201 9,926 9,478 4,157 497 237 2008 3,243 413 454 2009 4,135 484 177 2010 4,216 497 183 2011 1,322 1,035 260 27 1Q12 1,412 1,040 327 45 2Q12 2008 2009 2010 2,399 2011 1Q12 2,652 2Q12 Domestic Market Overseas Subsidiaries Exports Sales by Products 1H12 Sales by Segment 1H12 (t) 13% 10% (t) 13% 9% 15% 36% 26% 15% Tin Plate Galvanized Cold Rolled Hot Rolled Steel Profiles 41% Steel Packaging Distribution 22% Automotive Construction/Infrastructure Home Appliance/OEM 9 9
CSN is currently constructing its first long steel plant in Volta Redonda; Production capacity of 500,000 tons/year of long steel; Increase of Steel Capacity CSN will benefit from the existing infrastructure and utilities in Volta Redonda steel mill; The total investment in long steel production will be of approximately R$ 1.2 billion (R$0.9 billion of which was already invested), including expansion and acquisition of an electric furnace. 10 10
158 142 241 220 SWT Key Figures Production, Sales & EBITDA Margin 102.000 105.000 108.000 111.000 114.000 117.000 120.000 123.000 126.000 129.000 132.000 135.000 138.000 141.000 144.000 147.000 150.000 153.000 156.000 159.000 162.000 165.000 168.000 171.000 174.000 177.000 180.000 183.000 186.000 189.000 192.000 195.000 198.000 201.000 204.000 207.000 210.000 213.000 216.000 219.000 222.000 225.000 228.000 231.000 234.000 237.000 240.000 243.000 246.000 249.000 252.000 255.000 258.000 261.000 264.000 267.000 270.000 273.000 276.000 279.000 282.000 285.000 288.000 291.000 294.000 297.000 300.000 303.000 306.000 309.000 312.000 315.000 318.000 321.000 324.000 327.000 330.000 333.000 336.000 339.000 342.000 345.000 348.000 12.000 15.000 18.000 21.000 24.000 27.000 30.000 33.000 36.000 39.000 42.000 45.000 48.000 51.000 54.000 57.000 60.000 63.000 66.000 69.000 72.000 75.000 78.000 81.000 84.000 87.000 90.000 93.000 96.000 99.000 3.000 6.000 9.000 0 10.8% 1Q12* 2Q12 9.4% Crude Steel Production (kt) Sales (kt) EBITDA Margin * In 2Q12, SWT s results were fully consolidated, whereas in 1Q12 consolidation was proportional to the 2 months of operation following its acquisition on 31/01/2012 11 11
MINING 12 12
World Mining Figures Source: Platts, TSI, Metal Bulletin, The Baltic Exchange and Umetal 13 13
(Million t) 29.3 25.3 Iron Ore Sales Volume and Net Revenues Sales Volume (1) Net Revenues (2) 5% (BRL MM) 6% 22.4 3,615 18.5 3% 2,085 94% 95% 1,964 21% 97% 6.7 6.1 3% 79% 3% 97% 97% 5,942 1,194 1,143 2008 2009 2010 2011 1Q12 2Q12 Domestic Market Exports (1) Total sales volume reflects 100% of NAMISA sales. (t) Sales by Products (3) 1H12 7% 5% 13% (t) 2008 2009 2010 2011 (2) Net revenues are consolidated, considering 60% of NAMISA sales since Dec/08, given the acquisition of 40% of NAMISA by the Asian Consortium. Exports Destination (3) 1H12 16% 1Q12 27% 2Q12 14% 75% 22% Lump Ore Pellet Feed Sinter Feed Concentrate (3) 100% of NAMISA China 21% Middle East Europe Japan Singapore 14 14
Iron Ore Project Expansion Mining Casa de Pedra Mine Current capacity : 21 mtpy CSN Consumption: 7 mtpy Future capacity: 50 mtpy NAMISA (60% ownership) Current capacity: 6.8 mtpy Future capacity: 33 mtpy Acquisition from third-parties: 6.0 mtpy Future sales: 39 mtpy Logistics Itaguaí Port TECAR: exports iron ore and imports coke and coal Current capacity: iron ore shipments of 30 mtpy and coal and coke unloading capacity of 4 mtpy Future capacity: iron ore shipments of 84 mtpy and coal and coke unloading capacity of 8.5 mtpy Railway MRS (33.27% ownership) Namisa/ Sarzedo Namisa/ Engenho CSN Casa de Pedra Steel Railway - MRS São Paulo Cosipa z Santos Belo Horizonte CSN Itaguaí Port Nova Lima Gerdau - Açominas Volta Redonda Steel Mill Cosigua Rio de Janeiro Usiminas Acesita MRS EFVM CST Vitória Namisa/ Fernandinho Atlantic Ocean CSN/ NAMISA Facilities LOADING TERMINALS VALE S MINES CITIES STEEL MILLS 15 15
CEMENT 16 16
Cement Figures Apparent Consumption in Brazil Consumption Per Capita* 60,008 64,692 1,380 51,571 51,892 39,710 38,912 38,873 34,884 35,734 37,666 41,027 45,062 1,023 976 232 224 220 195 197 205 221 240 272 271 311 332 645 643 485 350 311 223 178 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 Kt Per Capita (kg/inhabitant) China Vietnam South Korea Turkey Egypt World Russia Brazil USA India *Figures from 2010 17 17
Cement Figures CSN began producing and selling cement in May/09; The Company takes advantage of the limestone reserves in Arcos and the slag generated by CSN s blast furnaces; (Thousand t) Sales Volume 1,755 Apart from the plant in Volta Redonda which has an annual grinding capacity of 2.4 mt, CSN plans to expand 992 grinding capacity to 5.4 mtpy; Target clinker capacity expansion is 3.0 mtpy, from a 338 466 456 current capacity of 0.8 mtpy; Until June 2012, R$0.8 billion was already invested. 2009 2010 2011 1Q12 2Q12 Net Revenues (R$ MM) 333 202 60 87 93 2009 2010 2011 1Q12 2Q12 18 18
LOGISTICS 19 19
Logistics Railways and Port MRS Railway Itaguaí Port Nova Transnordestina MRS Logística is a publicly held company with a concession to operate Brazil s Southeastern railway system CSN holds directly and indirectly 33.27% of MRS total share capital, sharing control with Vale, Usiminas and Gerdau Net Revenues: R$ 2,862m in 2011 EBITDA: R$ 1,186m in 2011 EBITDA Margin of 41.4% in 2011 Net Income: R$ 521m in 2011 Total carloads: 152.4 mt in 2011 Concession: November 1996 Concession Maturity: October 2026 (30 years renewable) TECON: exports CSN s steel products and export third-party containers Current capacity: general cargo and steel products (2 mtpy) and containers (480 K TEUpy); Future capacity: general cargo and steel products (6 mtpy) and containers (610 K TEUpy). Legend CSN owns 74% of the total share capital (in June 2012) 1,728 km of track will be built creating the Nova Transnordestina When completed, the railroad will connect the northeastern cerrado to Pecém/CE and Suape/PE Ports The railroad will transport mainly grains, fertilizers, ores and fuels Locomotives: 100 (current) Cars: 1,700 (current) Existing Railway Nova Transnordestina Railway in process of remodeling PA PA SÃO LUÍS Sobral Porto de Pecém FORTALEZA MA TERESINA CRATEÚS Limoeiro do Norte CE PIQUET CARNEIRO Jucurutú RN NATAL Tecon Balsas Uruçuí PI Ribeiro Gonçalves Eliseu Martins Crato MISSÃO VELHA ARARIPINA PARNAMIRIM SALGUEIRO PE C.Grande PB Caruarú JOÃO PESSOA RECIFE Porto de Suape PETROLINA AL MACEIÓ Tecar Barreiras BA Propriá Potential for 85 million annual tons SE (15.4 million ha) 1/4 of the Brazilian Agricultural Frontier Source: MRS Logística 20 20
ENERGY 21 21
Self-sufficiency in Energy Thermoelectric Power Plant CSN owns a thermoelectric power plant at Volta Redonda steel mill, which provides approximately 60% of its electrical energy needs. The plant processes steam and blown air from CSN s blast furnaces. Currently CSN is building a Top Recovery Turbine which will provide additional capacity of 17MW. Total CAPEX: US$ 30 million. Hydroelectric Power Plants CSN owns indirectly 29.5% of Itá hydroelectric facility, which has an installed capacity of 1,450 MW. Additionally, CSN owns 17.9% of a consortium that operates Igarapava hydroelectric facility with an installed capacity of 210 MW. CSN Total Capacity: 428 MW Average Utilized Capacity (%) 238 MW Thermoeletric Power Plant 2011 2010 94 90 Concession Maturity* Renewable Itá Oct 2000 Oct 2030 Yes 167 MW 23 MW Itá Hydroelectric Power Plant Igarapava Hydro Power Plant 2009 81 Igarapava Dec 1998 Dec 2028 Yes * 30 years 22 22
FINANCIALS 23 23
Strong Revenue Growth Net Revenue by Business Segment Net Revenue by Market (R$ MM) (R$ MM) 16,520 10% 16,520 14,003 10% 15% 10,978 14,451 9% 24% 35% 14,003 23% 10,978 14,451 29% 37% 11% 17% 26% 75% 72% 67% 55% 3,896 10% 30% 60% 4,137 11% 27% 62% 77% 74% 71% 63% 3,896 39% 61% 4,137 40% 60% 2008 2009 2010 2011 1Q12 2Q12 2008 2009 2010 2011 1Q12 2Q12 Steel Mining Other Domestic Market Foreign Market 24 24
1,529 1,773 1,703 1,463 1,113 1,120 Performance Adjusted EBITDA (R$ MM) & Adjusted EBITDA Margin (%) 40% 41% 40% 35% 29% 27% 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 Adjusted EBITDA EBITDA Margin 25 25
Adjusted EBITDA by Segment 1H12 EBITDA by Segment Mining Adjusted EBITDA (R$ MM) 8% 2% 1% Steel Adjusted EBITDA (R$ MM) 590 607 466 471 1Q12 2Q12 50% 39% 1Q12 2Q12 Steel Mining Logistics Energy Cement 26 26
Visit our website: www.csn.com.br/ir Investor Relations: (+55 11) 3049-7588 / 3049-7592 / 3049-7591 invrel@csn.com.br 27 27