usiminas acelerando webcast ingl

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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


5/535

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


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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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)


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 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


The investment program has strategic focus:


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US$ 14.1 billion


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






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

UsiminasUsiminas AcceleratingAccelerating


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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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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



Potential for higherPotential for higherreturnreturn



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Expectation of lower environmental restriction

Lower risk of delay due to reduced interferenceswith current operations



LowerLowerimplementation risksimplementation risks



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New site supports additional slabs and rollingmills expansions, according to future demand

Opening of futureOpening of futureoptionsoptions



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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






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

Usiminas AcelerandoUsiminas Acelerando


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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






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

Usiminas 2013Usiminas 2013


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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






Mining assets

Logistics assets



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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.

Usiminas AcelerandoUsiminas Acelerando


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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


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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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

UsiminasUsiminasAcceleratingAcceleratingMi i A


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Capacity7 million tons

InvestmentUS$ 750 million

Start up of operations2013


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






Mining assets

Logistics assets

UsiminasUsiminasAcceleratingAcceleratingL i tiL i ti A tA t


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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

UsiminasUsiminasAcceleratingAcceleratingL i tiLogistics A tAssets


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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



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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



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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


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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