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So PauloSo Paulo July 24, 2008July 24, 2008
UsiminasUsiminasSSpeedingpeeding up its Investment Programup its Investment Program
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AgendaAgenda
Steel Outlook
Usiminas speeding up its Investment Program
Financial Highlights
Market trends 2008
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SteelSteel outlookoutlook
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2.2
2.8
3.6
4.9
4.4
5.0 4.9
3.7
0.0
1.0
2.0
3.0
4.0
5.0
6.0
'01 '02 '03 '04 '05 '06 '07 '08(e)
Inflation (%)Global GDP (Growth %)
EconomyEconomy
4.2
3.53.7 3.6 3.7 3.6
3.9
4.7
0.0
1.0
2.0
3.0
4.0
5.0
6.0
'01 '02 '03 '04 '05 '06 '07 '08(e)
Global Steel IndustryGlobal Steel Industry
The world is undergoing a new phase withsustainable growth and inflation under control
Source: IMF - July 2008
Average 2.9
Average 4.8
Average 3.7
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0%
2%
4%
6%
8%
10%
12%
'03 '04 '05 '06 '07 '08
(e)
'09
(e)
'10
(e)
'11
(e)
0
200
400
600
800
1,000
1,200
1,400
1,600
1,800
Global Production Chinese Production
Global Variation
Global Steel IndustryGlobal Steel Industry
With positive effects for the steel industry
15% 19%31%
48%58%
85% 81%69%
52%42%
0%
10%
20%
30%
40%
50%
60%
70%
80%90%
100%
'70 '80 '90 '00 '10(e)
Emerging Markets OECD
Source: CRU International; World Steel Dynamics
Obs: 2005: ~ 50%/ 50%
Global Production x ChinaMillion tons
Transfer of ProductionDeveloped x Emerging (Countries)
Consolidation% of production of the 15 largest
Steel IndustrySteel Industry
Source: IISI
Source : IISI
26%29%
34%
0%
5%
10%
15%
20%
25%
30%
35%
40%
94 '00 '07
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Global Steel IndustryGlobal Steel Industry
A recent phenomenon is once againchanging the outlook
Coal Iron Ore Scrap (Japan)
Raw MaterialsRaw Materials Price ChangesPrice Changes
US$/tUS$/t US$/tUS$/t US$/tUS$/t
Souce : Tex ReportSouce : Tex ReportSouce: Metal Bulletin
3238
65
7785
141
0
20
40
60
80
100
120
140
160
'03 '04 '05 '06 '07 '08
217
269
210
287
395
734
0
100
200
300
400
500
600
700
800
'03 '04 '05 '06 '07 Jul '08
4757
125115
98
300
0
50
100
150
200
250
300
350
'03 '04 '05 '06 '07 '08
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Brazilian Steel IndustryBrazilian Steel Industry
The country outlook is similar
Source: IBGE , Bacen
Inflation (%) - IPCABrazilian GDP (Growth %)
EconomyEconomy
1.3
2.7
1.1
5.7
3.2
3.8
5.4
4.8
0.0
1.0
2.0
3.0
4.0
5.0
6.0
'01 '02 '03 '04 '05 '06 '07 '08(e)
6.8
8.5
14.7
6.6 6.9
4.23.6
4.8
0.0
5.0
10.0
15.0
'01 '02 '03 '04 '05 '06 '07 '08(e)
Average 7.3
Average 4.5
Average 1.7
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Usiminas
26%
Gerdau
22%
CSN
16%
Others6%
ArcelorMittal
30%
Brazilian Steel IndustryBrazilian Steel Industry
The country outlook is similar
(33.8 million tons. = Brazilian crude steel production)
Source: IBS - 2008 e Metal Bulletin - 2008
ConsolidationLargest steel producers - 2007
Flat Steel Demand (million tons)
Steel IndustrySteel Industry
9.29.9
11.7
12.9
0
2
4
6
8
10
12
14
2005 2006 2007 2008(e)
+17.8%
+10.7%
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350 375 336 342402 430
342 375 342287
358
256 259331
443
722
606 562
689
1,174
0
250
500
750
1,000
1,250
90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 Jun
08
Steel IndustrySteel Industry
Steel prices follow raw materials prices
Prices in US$/ton in the US (spot market) - HRC
Source: CRU Monitor - Steel
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UsiminasUsiminas within this contextwithin this context
In order to face this scenario of transformation, Usiminas soughtits integration
Source: Usiminas
MiningSerra Azul MinesLimestone Mine
EnergyIpatinga Power PlantsCubato Power Plants
SteelmakingInt. Cmara PlantJ. Bonifcio Plant
Santana do ParasoTernium
Capital Goods
UMSA
LogisticsMRSUsifast
Praia Mole PortCubato PortIng Terminal
Distribuition/ ServicesFasalDuferRio Negro
Usiparts
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UsiminasUsiminas within this contextwithin this context
Today, its HRC production cost is among the 7%most competitive in the world
Hot Rolled Coil (US$/ton.)
Productions costs ( w/ COGS)Productions costs ( w/ COGS) -- 160 producers in the world160 producers in the world
Source: WSD World Steel Dynamics - May 2008
72
100
147
-10
10
30
50
70
90
110
130
150
170
Usiminas Average(basis = 100)
Maximum
Average globalproduction cost
is 38% aboveUsiminas
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0
200
400
600
800
2000 2001 2002 2003 2004 2005 2010E 2015E
USA, Japan & EU-15
China
Rest of world
Steel DemandSteel Demand
The outlook is for continued growth
Source: IBS April 2008Source: WSD
Global Apparent Steel Consumption Brazilian Demand (Flat Steel)
Consumption and DemandConsumption and Demand
Million Tons
8.48.6 8.6 8.9
10.19.2
9.9
11.7
13.0
15.216.1
17.118.2
19.220.3
21.5
0
5
10
15
20
25
00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15
Million Tons
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Speeding upUsiminas Investment
Program
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ValueValue creationcreation forforshareholdersshareholders,,
customerscustomers andand communitycommunity
UsiminasUsiminasAcceleratingAccelerating
Goals
Consolidate its leadership in the domesticflat steel market
Create solid basis for future international
steps
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Increase steelmaking and rolling capacity
Increase iron ore extraction and processingcapacity
Technology updating, cost savings and
environmental control
UsiminasUsiminasAcceleratingAccelerating
The investment program has strategic focus:
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US$ 14.1 billion
UsiminasUsiminasAcceleratingAccelerating
Investments will target:
New slab plant (Santana do Paraso)
Intendente Cmara Plant (Ipatinga)
Jos Bonifcio Plant (Cubato)
Mining assets
Logistics assets
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US$ 14.1 billion
UsiminasUsiminasAcceleratingAccelerating
Investments will target:
New slab plant (Santana do Paraso)
Intendente Cmara Plant (Ipatinga)
Jos Bonifcio Plant (Cubato)
Mining assets
Logistics assets
U i iU i i A l tiA ele ti
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UsiminasUsiminasAcceleratingAcceleratingNewNewSlabSlabPlantPlant(Santana do Para(Santana do Paraso)so)
Usiminas airportarea = 4.2 km2
(flat)
Industrial areaoccupied by
Usiminas today= 4.0 km2
Outstanding location Synergy with existing structure
Flat land / Abundant water Labor with a vocation
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UsiminasUsiminasAcceleratingAcceleratingNewNewSlabSlabPlantPlant(Santana do Para(Santana do Paraso)so)
Production capacity5 million tons/yr
Start of works1st Half 2009
Start up2.5 million t/yr in 2011
2.5 million t/yr in 2012
Coke plant2.0 million t/yr
Power plant250 MW
TOTALTOTAL InvestmentsInvestments: US$ 5.7: US$ 5.7 billionbillion **
* Does not include investment in thermoelectric powerplant of approximately US$ 400 million
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UsiminasUsiminasAcceleratingAcceleratingNewNewSlabSlabPlantPlant(Santana do Para(Santana do Paraso)so)
Location in Santana do Paraso proves to be more adequate whencompared to the previous plan
Potential for higherPotential for higherreturnreturn
LowerLowerimplementation risksimplementation risks
Opening up of futureOpening up of futureoptionsoptions
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Greater steel expansion without significant capexincrease
Maintenance of existing synergies
Cost minimization for elimination of physicalinterferences with current operations
UsiminasUsiminasAcceleratingAcceleratingNewNewSlabSlabPlantPlant(Santana do Para(Santana do Paraso)so)
Location in Santana do Paraso proves to be more adequate whencompared to the previous plan
Potential for higherPotential for higherreturnreturn
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Expectation of lower environmental restriction
Lower risk of delay due to reduced interferenceswith current operations
UsiminasUsiminasAcceleratingAcceleratingNewNewSlabSlabPlantPlant(Santana do Para(Santana do Paraso)so)
Location in Santana do Paraso proves to be more adequate whencompared to the previous plan
LowerLowerimplementation risksimplementation risks
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UsiminasUsiminasAcceleratingAcceleratingNewNewSlabSlabPlantPlant(Santana do Para(Santana do Paraso)so)
Location in Santana do Paraso proves to be more adequate whencompared to the previous plan
New site supports additional slabs and rollingmills expansions, according to future demand
Opening of futureOpening of futureoptionsoptions
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UsiminasUsiminasAcceleratingAcceleratingNewNewSlabSlabPlantPlant(Santana do Para(Santana do Paraso)so)
The slabs will be absorbed by Usiminas rolling mills andremainder will be exported
Premium slabs to serve selected, highvalue-added markets
40%40%
60%60%ExportsExports
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US$ 14.1 billion
UsiminasUsiminasAcceleratingAccelerating
Investments will target:
New slab plant (Santana do Paraso)
Intendente Cmara Plant (Ipatinga)
Jos Bonifcio Plant (Cubato)
Mining assets
Logistics assets
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UsiminasUsiminasAcceleratingAcceleratingIntendenteIntendenteCmaraCmaraPlant (Plant (IpatingaIpatinga))
LINEVOLUMEthsd tons
START UPFORECAST
PROJECTAMOUNT
UNIGAL II(Galvanized)
550 1st Half 2011 US$ 460 million
Heavy Plates 500 2nd Half 2010 US$ 500 million
Hot Rolled Coils 150 1st Half 2011 US$ 130 million
Other US$ 1.0 billion
Total Investments
Technology updating, cost savings and
environmental control, with highlight for CokePlant 3 (+750kt/yr) and thermolectric powerplant(60 MW) in 2008
US$ 2.1 billion
Investments
Investments to serve high value-added markets
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Usiminas AcelerandoUsiminas AcelerandoGalvanizedGalvanizedSteelSteel--Unigal IIUnigal II
Greater capacity in Brazil to supply sophisticated steel withadvanced technology
Quality & Excellence
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UsiminasUs asAcceleratingcce e at gIntendenteIntendenteCmaraCmaraPlant (Plant (IpatingaIpatinga))
Usiminas will be qualified to supply heavy plates with even morestringent specifications
Sole Latin American company to detain accelerated cooling technology,enabling Usiminas to meet new market demands for sophisticated
products.
North AmericaNorth AmericaOregonOregon SteelSteel
CISCISSeverstalSeverstal
AsiaAsiaNipponNippon SteelSteel
JFEJFEPoscoPosco
BaosteelBaosteelChinaChina SteelSteel
EuropeEurope
AcelorMittalAcelorMittalDillingerDillingerRaultaruukiRaultaruuki
MannesmannMannesmann
RivaRivaSSABSSABThyssenThyssen
VAIVAI
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US$ 14.1 billion
UsiminasUsiminasAcceleratingAccelerating
Investments will target:
New slab plant (Santana do Paraso)
Intendente Cmara Plant (Ipatinga)
Jos Bonifcio Plant (Cubato)
Mining assets
Logistics assets
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LINEVOLUME
thsd tons
START UP
FORECASTPROJECT VALUE
Hot Strip Mill 2,300 / 4,800 1st Half 2011 US$ 1.0 billion
BF1 Revamping 3.5 thsd/day => 4.5 thsd/day Concluded US$ 170 million
Continuous Casting
Machine+350 / ano Concluded US$ 140 million
Other US$ 1.1 billion
Total Investments
Technology updating, cost savings andenvironmental control
US$ 2.4 billion
ggJosJosBonifBonifciocioPlant (Plant (CubatoCubato))
Investments
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TechnicalTechnicalconfigurationconfigurationofofthetheplantsplantsafterafterthetheinvestmentinvestmentprogramprogram
TheThe secondsecond expansionexpansion phasephase inin slabsslabs (3(3 millionmillion t/t/yryr) to) to bebe executedexecuted,,
withwith Cubato as 1Cubato as 1stst optionoption,, willwill dependdepend onon marketmarket demanddemand
Current After Current After
Slabs 5.00 5.00 4.50 4.80
Hvy Plate 1.00 1.50 1.00 1.00
Hot Strip 3.60 3.80 2.10 4.40 / 6.10
Cold Strip 2.50 2.50 1.20 1.20
EG 0.36 0.36 - -
HDG 0.48 1.03 - -
Intendente Cmara Plant
million tons
Jos Bonifcio Plant Santana do Paraso
New Plant
-
-
5.00
-
-
-
Source: Usiminas
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US$ 14.1 billion
UsiminasUsiminasAcceleratingAccelerating
Investments will target:
New slab plant (Santana do Paraso)
Intendente Cmara Plant (Ipatinga)
Jos Bonifcio Plant (Cubato)
Mining assets
Logistics assets
UsiminasUsiminasAcceleratingAccelerating
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MiningMiningAssetsAssets
With the goal of eliminating risks / dependency, Usiminasacquired iron ore assets in February 2008
J.MendesJ.Mendes GlobalGlobal SomisaSomisa PauPau dede VinhoVinho
Current production capacity
5 million tons/yrFuture production capacity
29 million tons/yr (2013)*Reserves
1.1 to 1.8 billion tons
DownpaymentDownpayment ofofUS$ 925US$ 925 millionmillion. T. Totalotal disbursement limited todisbursement limited to
US$ 1.9 billionUS$ 1.9 billion,, dependingdepending onon reserves andreserves and qualityquality underunderdrillingdrilling
processprocess.. MaximumMaximum reservesreserves consideredconsidered : 1.4: 1.4 billionbillion tons.tons.
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MiningMiningAssetsAssets
Low level of P (phosphorus 0.05%)
Low level of Al203 (alumina 1.0%)
Sinter feed generation of 4.5% to 5.0% of SiO2 (silica)
Pellet feed generation for pellets for BF and DRI
Favorable logistics (close to MRS & FCA railroads) andfuture Ing Maritime Terminal
Iron ore mines highlights:
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0
10
20
30
2008 2009 2010 2011 2012 2013 2014
Pellet Feed
Sinter Feed
Lump
MiningMiningAssetsAssets
Production - million tons
Source: Usiminas
5.2 5.8
8.8 9.010.5
27.729.2
13.0
2.2
14.0
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MiningMiningAssetsAssets
Although Ipatinga and Santana do Paraso do not have logisticsaccess to be supplied by its mines on Serra Azul, Usiminas willhave the benefit of full hedge against iron ore price fluctuations
Mining29.2 MM t/yr
J. Bonifcio Plant
10.3 MM t/yr
Dom. Mkt. Sales
2.2 MM t/yr
Exports16.7 MM t/yr
Supply
IntendIntend. Cmara. Cmara PlantPlant
8.0 MM t/8.0 MM t/yryr
Santana do ParaSantana do Parasoso
8.0 MM t/8.0 MM t/yryr
JosJos BonfBonfciocio PlantPlant2.0 MM t/2.0 MM t/yryr
HedgeHedge
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Capacity7 million tons
InvestmentUS$ 750 million
Start up of operations2013
MiningMiningAssetsAssets
Aiming to add value to iron ore, Usiminas will build a PELLETPLANT
TOTALTOTAL investmentsinvestments inin miningmining::
US$ 3.5US$ 3.5 billionbillion
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US$ 14.1 billion
UsiminasUsiminasAcceleratingAccelerating
Investments will target:
New slab plant (Santana do Paraso)
Intendente Cmara Plant (Ipatinga)
Jos Bonifcio Plant (Cubato)
Mining assets
Logistics assets
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Start of operations2012
LogisticsLogisticsAssetsAssets
Usiminas acquired land in Sepetiba Bay where it will build amaritime terminal
Area will be a benchmark from the environmental point of view
Amount estimated for environmental recovery - up to R$ 40 million
Price
R$ 72 million
Land850 thousand m
Shipping capacity25 million tons of Iron Ore,in addition to other products
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LogisticsLogisticsAssetsAssets
With the new terminal, the iron ore export corridor will beimproved for Usiminas mines at competitive costs
BrazilBrazil
(Minas Gerais)
(So Paulo)(Rio de Janeiro)
(Esprito Santo)
Praia MoleTerminal
IngTerminal
Cubato
Terminal
So Paulo
BeloHorizonte
MRS
J. BonifJ. Bonifciocio
PlantPlant
Int. CmaraInt. CmaraPlantPlant
IronIron OreOreMinesMines
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gg
Total Investments of:
US$ 14.1 billion
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FinancialFinancial HighlightsHighlights
UsiminasUsiminasFinancialFinancial HighlightsHighlights
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530 734 657831
999
1,9222,269
2,010
2,581
721
31%
35%32%
35% 35%
46%42%
35% 36% 35%
0
1,000
2,000
3,000
4,000
5,000
1999 2000 2001 2002 2003 2004 2005 2006 2007 1Q08
Ebitda Ebitda Margin
FinancialFinancialHighlightsHighlights
Over the last few years, Usiminas has prepared itself for this new phase
US$ Million
March, 2008
UsiminasUsiminasFinancialFinancial HighlightsHighlights
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FinancialFinancialHighlightsHighlights
Over the last few years, Usiminas has prepared itself for this new phase
US$ Million
March, 2008
2,491 2,334
1,317
860
355 387(537)
3.12.3
0.7 0.4 0.2 -0.2 0.1
0
1,000
2,000
3,000
4,000
5,000
2002 2003 2004 2005 2006 2007 1Q08
Net Debt Net Debt / Ebitda
UsiminasUsiminasFinancialFinancial HighlightsHighlights
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FinancialFinancialHighlightsHighlights
The Investment Program foresees the following funding:
Capital
Markets
Commerc'l
Banks
ECAs
Own Funds
~ 50%
Type
Amount
US$ million
Amount
R$ million
Term
Years
BNDES - 400 6
BNDES - 500 6
Eurobond 400 - 10
Debentures - 500 4 / 5
Pre Payment 600 - 5 / 7
Type
Amount
US$ million
Amount
R$ million
Term
Years
BNDES - 400 6
BNDES - 500 6
Eurobond 400 - 10
Debentures - 500 4 / 5
Pre Payment 600 - 5 / 7
EstimatedEstimated ffundingunding inin thethe amountamount ofof
~ US$ 6.0~ US$ 6.0 billionbillion upup to 2012to 2012
Main Financial Transactions
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STEELMAKING MINING TOTAL
2008 1,480 960 2,440
2009 2,550 1,060 3,610
2010 4,410 480 4,890
2011 1,830 770 2,600
2012 360 200 560
TOTAL 10,630 3,470 14,100
FinancialFinancialHighlightsHighlights
Estimated Capex for the Investment Program fits into the capitalstructure considered adequate for the company
US$ million
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MarketMarket trendstrends -- 20082008
DomesticDomestic MarketMarket 20082008DemandDemand growthgrowth
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DemandDemandgrowthgrowth
9,2299,902
11,669
12,922
2005 2006 2007 2008
(thousand tons)
+17.8%+17.8%+10.7%+10.7%
Source: IBS / Usiminas
DomesticDomestic MarketMarket 20082008DemandDemand growthgrowth byby segmentsegment
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DemandDemandgrowthgrowthbybysegmentsegment
1 OEMs = Original Equipment Manufacturer
2 - Industry: Shipbuilding/Tractors/agriculture/Highway/Industrial/Bottles/Containers/Large-diameter Tubes/OtherAppliances: Eletro-electronics/Domestic Appliances / Safes and Furniture
3 - Distribuition : Rerolling/Small-diameter tubes/DistributionCivil Construction: Civil construction/ Shapes
CONSUMER 08 / 07SEGMENTS %
1 - AUTOMOTIVE 2,677 3,198 3,636 13.7
OEMs 1,150 1,384 1,578 14.0
Autoparts 1,527 1,814 2,058 13.5
2 - INDUSTRIAL 2,337 2,706 2,918 7.8
Industry 1,541 1,842 2,049 11.2
Appliances 796 864 869 0.6
3 - SERVICE CENTERS 4,888 5,765 6,367 10.4
Distribuition 3,934 4,586 5,035 9.8
Civil Construction 954 1,179 1,332 13.0
General Total 9,902 11,669 12,922 10.7
20072006 2008
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MarketMarket trendstrends -- 20082008
International Market 2008International Market 2008OverviewOverview
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- Low inventory levels
- Imports decreasing - 10%- Exports increasing - 17%
- Stable prices
USA
- Significant demand growth
- Exports decreasing- Higher imports
- Prices increasing slightly
Latin America
- Demand increasing slightly -
Eastern Europe growing 15%
- From net exporter in 2005
to net importer
- Main exporters reducingexports
- Prices increasing slightly
Europe
- Strong demand growthpushed by energy and civil
construction sectors
- High level of imports
Middle East
- Growth in demand
- Prices increasing slighttly
- Regional transactions
- Exports barriers threats
- Growth in demand - 12%
- Production increase - 10%
- Reduction of 23% in net exports(accum. 2008)
- Stable prices
- Threat of higher export taxes
sia
China
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www.usiminas.com.br/ri
ADRLevel I
Declarations contained in this presentation in relation to the busines outlook of theComapany, operational and financial projections and references to the growth potential ofthe Comapany constitute mere forecasts and were based on the expectations of theManagement in relation to future performance.These expectations are highly dependent on market behavior, of the economic situation in
Brazil, on industry and international markets, and are, therefore, subject to changes.
Investor Relations:
Bruno Seno Fusaro (Head of IR) Gilson Rodrigues Bentes Matheus Perdigo [email protected] [email protected] [email protected] Tel.: +55-31-3499-8772 Tel.: +55-31-3499-8617 Tel.: +55-31-3499-8056Fax: +55-31-3499-9357 +55-11-5070-8980
Luciana Valadares dos Santos Diogo Dias Gonalves
[email protected] [email protected] Tel.: +55-31-3499-8619 Tel.: +55-31-3499-8710
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So PauloSo Paulo July 24, 2008July 24, 2008
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