As filed with the Securities and Exchange Commission on April 30, 2025
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM
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REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934 |
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| ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended |
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| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
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SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Commission File Number |
COMPANHIA
SIDERÚRGICA NACIONAL
(Exact name of registrant as specified in its charter)
NATIONAL
STEEL COMPANY
(Translation of registrant’s name into English)
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THE
FEDERATIVE REPUBLIC OF BRAZIL
(Jurisdiction
of incorporation or organization)
Phone: +
(Address of principal executive offices)
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Securities registered or to be registered pursuant to Section 12(b) of the Act.
| Title of each class | Trading symbol | Name of each exchange on which registered |
| Common Shares without Par Value | * | NYSE |
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* Not for trading purposes, but only in connection with the registration of American Depositary Shares pursuant to the requirements of the U.S. Securities and Exchange Commission.
Securities registered or to be registered pursuant to Section 12(g) of the Act:
None
Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act:
None
Indicate the number of outstanding shares of each of the issuer’s classes of capital or common stock as of December 31, 2024:
Common Shares without Par Value
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
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If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.
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Yes ☑
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
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Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
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Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or an emerging growth company. See definition of “large accelerated filer,” “accelerated filer” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| Accelerated filer ☐ | Non-accelerated filer ☐ | Emerging growth company |
If an emerging growth company that prepares its financial statements in accordance with U.S. GAAP, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards† provided pursuant to Section 13(a) of the Exchange Act.
† The term “new or revised financial accounting standard” refers to any update issued by the Financial Accounting Standards Board to its Accounting Standards Codification after April 5, 2012.
Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report.
If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements.
☐ Yes
Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b).
☐ Yes ☐ No
Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing:
| U.S. GAAP ☐ | Other ☐ |
If “Other” has been checked in response to the previous question, indicate by check mark which financial statement item the registrant has elected to follow:
Item 17 ☐ Item 18 ☐
If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
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Yes
TABLE OF CONTENTS
INTRODUCTION
Unless otherwise specified, all references in this annual report to:
| · | “we,” “us,” “our” or “CSN” are to Companhia Siderúrgica Nacional and its consolidated subsidiaries; |
| · | “Brazil” are to the Federative Republic of Brazil; |
| · | “Brazilian government” are to the federal government of Brazil; |
| · | “real,” “reais” or “R$” are to Brazilian reais, the official currency of Brazil; |
| · | “U.S. dollars” or “US$” are to United States dollars; |
| · | “EUR” or “€” are to euro, the official currency of most countries in the European Union; |
| · | “km” are to kilometers, “m” are to meters, “mt” or “tons” are to metric tons, “mtpy” are to metric tons per year, “MW” are to megawatts, “MWh” are to megawatt hours and “MWavg” are to average megawatts; |
| · | “TEUs” are to twenty-foot equivalent units; |
| · | “dmt” are to dry metric ton; |
| · | “consolidated financial statements” are to our audited consolidated financial statements prepared in accordance with International Financial Reporting Standards, or IFRS Accounting Standards, as issued by the International Accounting Standards Board, or IASB, as of December 31, 2024 and 2023 and for the years ended December 31, 2024, 2023 and 2022, together with the corresponding report of our independent registered public accounting firm; and |
| · | “ADSs” are to the American depositary shares and “ADRs” are to the American depositary receipts representing our common shares. |
FORWARD-LOOKING STATEMENTS
This annual report includes forward-looking statements, within the meaning of Section 27A of the U.S. Securities Act of 1933, as amended, or the Securities Act, and Section 21E of the U.S. Securities Exchange Act of 1934, as amended, or the Exchange Act, principally under the captions “Item 3. Key Information,” “Item 4. Information on the Company,” “Item 5. Operating and Financial Review and Prospects” and “Item 11. Quantitative and Qualitative Disclosures About Market Risk.” We have based these forward-looking statements largely on our current beliefs, expectations and projections about future events and financial trends affecting us. Although we believe these estimates and forward-looking statements are based on reasonable assumptions, these estimates and statements are subject to several risks and uncertainties and are made in light of the information currently available to us.
Many important factors, in addition to those discussed elsewhere in this annual report, could cause our actual results to differ substantially from those anticipated in our forward-looking statements, including, among others:
| · | general economic, political and business conditions in Brazil and abroad, especially in China, which is the largest world steel producer and main consumer of our iron ore; |
| · | demand for and prices of steel, iron ore and cement products; |
| · | developments relating to and affecting global financial markets; |
| · | changes in competitive conditions and the general level of demand and supply for our products; |
| · | our liquidity position and leverage and our ability to obtain financing on satisfactory terms; |
| · | management’s expectations and estimates concerning our future financial performance, financing plans; |
| · | availability and price of raw materials and increased fuel prices; |
| · | changes in international trade or international trade regulations, including protectionist measures and changes in reciprocal tariffs imposed by the United States, Brazil and other countries; |
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| · | our capital expenditure plans, including in order to address our physical risks and transition risks relating to climate change; |
| · | inflation, interest rate levels and fluctuations in foreign exchange rates; |
| · | our ability to develop and deliver our products on a timely basis; |
| · | lack of infrastructure in Brazil; |
| · | energy, natural gas and water shortages and government responses to these; |
| · | downgrades in Brazil’s credit ratings; |
| · | changes in laws and regulations affecting mining companies and steel and cement producers, including laws and regulations relating to climate change and other environmental matters; |
| · | increased operating costs, including labor costs, and increased tariffs, taxes or social contribution costs; |
| · | availability of adequate insurance coverage for our operations; and |
| · | the risk factors discussed under the caption “Item 3. Key Information—3D. Risk Factors.” |
We caution you that the foregoing list of significant factors may not contain all of the material factors that are important to you. The words “aim,” “anticipate,” “believe,” “continue,” “estimate,” “expect,” “intend,” “may,” “plan,” “will” and similar words are intended to identify forward-looking statements. Forward-looking statements include information concerning our possible or assumed results of operations, business strategies, financing plans, competitive position, industry environment, potential growth opportunities, the effects of regulation and the effects of competition, among other things.
Forward-looking statements speak only as of the date they were made, and we undertake no obligation to publicly update or to revise any forward-looking statements after we distribute this annual report because of new information, future events or other factors. In light of the risks and uncertainties described above, the forward-looking events and circumstances discussed in this annual report might not occur and are not an indication of future performance. As a result of various factors, including those set forth above, undue reliance should not be placed on these forward-looking statements.
PRESENTATION OF FINANCIAL AND OTHER INFORMATION
Our audited consolidated financial statements as of December 31, 2024 and 2023 and for the years ended December 31, 2024, 2023 and 2022 included elsewhere in this annual report have been presented in thousands of reais and prepared in accordance with IFRS Accounting Standards as issued by the IASB. See note 2.a. to our audited consolidated financial statements included elsewhere in this annual report.
We have translated some of the Brazilian real amounts contained in this annual report into U.S. dollars solely for the convenience of the reader at the rate of R$6.1923 to US$1.00, which was the U.S. dollar selling rate as of December 31, 2024, as reported by the Central Bank of Brazil, or the Central Bank. As a result of fluctuations in the real/U.S. dollar exchange rate, the U.S. dollar selling rate as of December 31, 2024 may not be indicative of current or future exchange rates. The U.S. dollar equivalent information presented in this annual report should not be construed as implying that the real amounts represent, or could have been or could be converted into, U.S. dollars at such rates or at any other rate.
Certain figures included in this annual report have been subject to rounding adjustments. Accordingly, figures shown as totals in certain tables may not represent an arithmetic sum of the figures that precede them.
PART I
Item 1. Identity of Directors, Senior Management and Advisors
Not applicable.
Item 2. Offer Statistics and Expected Timetable
Not applicable.
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Item 3. Key Information
3A. [Reserved]
3B. Capitalization and Indebtedness
Not applicable.
3C. Reasons for the Offer and Use of Proceeds
Not applicable.
3D. Risk Factors
An investment in the ADSs or our common shares involves a high degree of risk. You should carefully consider the risks described below before making an investment decision. Our business, financial condition and results of operations could be materially and adversely affected by any of these risks. The trading price of the ADSs could decline due to any of these risks or other factors, and you may lose all or part of your investment.
For purposes of this section, when we state that a risk, uncertainty or problem may, could or will have an “adverse effect” on us or “adversely affect” us, we mean that the risk, uncertainty or problem could have an adverse effect on our business, financial condition, results of operations, cash flow, prospects and/or the trading price of the ADSs, except as otherwise indicated. The risks described below are those that we currently believe may materially and adversely affect us.
Risks Relating to Brazil
The Brazilian government has exercised, and continues to exercise, significant influence over the Brazilian economy. This influence, as well as Brazilian political and macroeconomic conditions, may adversely affect us.
The Brazilian government from time to time intervenes in the Brazilian economy and makes changes in policies and regulations. The Brazilian government’s actions have involved, in the past, among other measures, changes in interest rates, tax policies, price controls, monetary policies, restrictions on selected imports, and foreign exchange policies. We have no control over and cannot foresee the measures and policies that may be adopted in the future. Our business, financial condition, and results of operations may be materially and adversely affected by changes in policies or regulations involving or affecting factors, such as:
| · | fluctuations in exchange rates and interest rates; |
| · | exchange controls; |
| · | inflation; |
| · | price volatility of raw materials and our final products; |
| · | lack of infrastructure in Brazil; |
| · | energy and water supply shortages and rationing programs; |
| · | liquidity of capital, financial and credit markets; |
| · | regulatory policies for the mining, steel, cement, logistics and energy industries; |
| · | environmental policies and regulations; |
| · | U.S. tariffs on certain goods imported to the United States; |
| · | tax policies and regulations, including frequent changes that may result in uncertainties regarding future taxation; and |
| · | other political, diplomatic, social and macroeconomic developments within and outside Brazil that affect the country. |
Uncertainty over whether the Brazilian government will implement changes in policy or regulation affecting these or other factors may contribute to economic uncertainty in Brazil and to heightened volatility in the Brazilian securities markets and securities issued by Brazilian companies, including our common shares and the ADSs that represent them.
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Additionally, according to the Brazilian Institute of Geography and Statistics (Instituto Brasileiro de Geografia e Estatística), or the IBGE, Brazil’s gross domestic product, or GDP, grew by 3.0%, 2.9% and 3.4% in 2022, 2023 and 2024, respectively. Developments in the Brazilian economy may affect Brazil’s growth rates and, consequently, demand for our products, and we have been, and will continue to be, affected by changes in the Brazilian GDP.
Political instability may adversely affect us.
Brazilian markets have experienced heightened volatility due to uncertainties deriving from investigations relating to unlawful payments, as part of which numerous members of the Brazilian government, as well as senior officers of large state-owned and private companies have been convicted of political corruption of government officials accepting bribes by means of kickbacks on contracts granted by the government to infrastructure, oil and gas and construction companies.
These investigations have had an adverse impact on the image and reputation of the implicated companies, as well as on the general market perception of the Brazilian economy.
Uncertainty regarding political developments and the policies the Brazilian federal government may adopt or alter, as well as the government’s willingness to limit expenses, may have material adverse effects on the macroeconomic environment in Brazil, as well as on the operations and financial performance of businesses operating in Brazil, including ours. These uncertainties may heighten the volatility of the Brazilian securities market, including in relation to our shares and ADSs.
Exchange rate instability may adversely affect us and the market price of our common shares and the ADSs.
The Brazilian currency has, during the last decade, experienced frequent and substantial variations compared to the U.S. dollar and other foreign currencies. In 2022, the real depreciated against the U.S. dollar and the U.S. dollar selling rate was R$5.2177 per US$1.00 as of December 31, 2022. In 2023, the real appreciated against the U.S. dollar and the U.S. dollar selling rate was R$4.8413 per US$1.00 as of December 31, 2023. In 2024, the real depreciated against the U.S. dollar and the U.S. dollar selling rate was R$6.1923 per US$1.00 as of December 31, 2024, as reported by the Brazilian Central Bank.
Depreciation of the real against the U.S. dollar creates inflationary pressures in Brazil and causes increases in interest rates, which adversely affect the growth of the Brazilian economy as a whole, curtail access to foreign financial markets and may prompt government intervention, including recessionary governmental policies. Depreciation of the real against the U.S. dollar may also, in the context of an economic slowdown, lead to decreased consumer spending, deflationary pressures and reduced growth of the Brazilian economy.
On the other hand, appreciation of the real relative to the U.S. dollar and other foreign currencies could lead to a deterioration of the Brazilian foreign exchange current accounts, as well as dampen export-driven growth. Depending on the circumstances, either depreciation or appreciation of the real could materially affect our growth and that of the Brazilian economy, as well as impact the U.S. dollar value of distributions and dividends on, and the U.S. dollar equivalent of the market price of, our common shares and the ADSs.
In the event the real depreciates in relation to the U.S. dollar, the cost in reais of our foreign currency-denominated borrowings and imports of raw materials, particularly coal and coke, will increase. On the other hand, if the real appreciates in relation to the U.S. dollar, it will cause real-denominated production costs to increase as a percentage of total production costs and cause our exports to be less competitive. As of December 31, 2024, we had a total U.S. dollar-denominated or U.S. dollar-linked indebtedness of R$37,846 million, which represented 65.7% of our total indebtedness as of such date.
Government efforts to combat inflation may hinder the growth of the Brazilian economy and could harm us.
Historically, Brazil has experienced high inflation rates. Inflation and certain actions taken by the Central Bank to limit inflation have had significant negative effects on the Brazilian economy. Inflation as measured by the national broad consumer price index (Índice Nacional de Preços ao Consumidor Amplo), or IPCA, was 5.8%, 4.7% and 4.8% in 2022, 2023 and 2024, respectively, and 5.5%, 3.2% and 6.5%, respectively, as measured by the general market price index (Índice Geral de Preços do Mercado), or IGP-M.
The base interest rate for the Brazilian banking system is the Central Bank’s Special System for Settlement and Custody (Sistema Especial de Liquidação e Custódia) rate, or SELIC rate. The SELIC rate was repeatedly increased from 2.00% in August 2020 to 13.75% in August 2023. As of December 31, 2022, 2023 and 2024, the SELIC rate was 13.75%, 11.75% and 12.25%, respectively. As of the date of this annual report, the SELIC rate is 14.25%.
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Inflation and the Brazilian government’s measures to address it, principally the Central Bank’s monetary policy, have had and may have significant effects on the Brazilian economy and us. Tight monetary policies with high interest rates have restricted and may restrict Brazil’s growth and the availability of credit. Conversely, more lenient government and Central Bank policies and interest rate decreases have triggered and may trigger increases in inflation, and, consequently, growth volatility and the need for sudden and significant interest rate increases, which could negatively affect us and increase the payments on our indebtedness.
Developments and the perception of risk in other countries may adversely affect the trading price of Brazilian securities, including our common shares and the ADSs.
The market value of securities of Brazilian issuers is affected to varying degrees by economic and market conditions in other countries including developed countries such as the United States and certain European countries, as well as emerging market countries. Although economic conditions in these countries may differ significantly from economic conditions in Brazil, investors’ reactions to foreign developments may have a material adverse effect on the market value of securities of Brazilian issuers. In addition, globalization of capital markets has increased countries’ vulnerability to adverse events, such as economic fluctuations and recessions in other parts of the world, which may negatively affect the availability of credit in Brazil and foreign investment in Brazil. Any financial crisis or significant developments, such as increase in interest rates and tariffs in other countries may diminish investor interest in securities of Brazilian issuers, including ours. This could adversely affect the trading price of our common shares and/or the ADSs and could also make it more difficult for us to gain access to the capital markets and finance our operations on acceptable terms, or at all.
Protectionist policies have been on the rise globally. In April 2025, President Donald J. Trump signed an executive order (regulating imports with a reciprocal tariff to rectify trade practices that contribute to large and persistent annual United States goods trade deficits), declaring a national emergency with respect to the threat from various foreign trade and economic policies and practices and imposing new tariffs on imports of all articles into the United States customs territory, subject to certain exceptions. The executive order directs the imposition of a new baseline 10% ad valorem rate of duty on imports from almost all U.S. trading partners, as well as jurisdiction-specific ad valorem rates of duty on 57 countries and territories. Brazil will be subject to the original 10% tariff baseline and some goods, such as steel products that are already subject to Section 232 tariffs, are currently not subject to the reciprocal tariff. The executive order follows several other tariff-related measures that were imposed by the United States government earlier this year, including with respect to imports from Canada, China and Mexico, and imports of steel, aluminum, automobiles and automobile parts.
The imposition of import tariffs by the United States government could disrupt global supply chains, increase production costs, and contribute to higher consumer prices worldwide. These measures may trigger retaliatory tariffs, further exacerbating trade uncertainties and inflationary pressures across multiple economies, including Brazil. Additionally, if China or any of our competitors are unable to access U.S. markets, they are expected to target other international markets. This shift could impact our domestic market, particularly if competitors focus on Brazil and our international clients, increasing competition. Such developments could significantly lower market prices, our margins and reduce demand for our steel products.
Further, crises in world financial markets, such as in 2020 and the banking crisis in early 2023, global economic challenges and geopolitical conflicts, such as conflicts between Russia and Ukraine and in the Middle East, have had and may continue to have an adverse effect on global capital markets and could affect investors’ views of securities issued by companies that operate in emerging markets.
We cannot predict how these developments will evolve and whether or to what extent they may affect Brazilian capital markets and, consequently, us.
Risks Relating to Us and the Industries in Which We Operate
We are exposed to substantial changes in the demand for steel and iron ore, which significantly affect the prices of our products and may adversely affect us.
The steel and mining industries are highly cyclical, both in Brazil and abroad. The demand for steel and mining products and, thus, the financial condition and results of operations of companies in these industries, including us, are generally affected by macroeconomic fluctuations in the world economy and the economies of steel-producing countries, including trends in the automotive, construction, home appliances and packaging industries, as well as other industries that rely on steel distributors. A worldwide recession, an extended period of below-trend growth in developed countries or a slowdown in the emerging markets that are large consumers of our products (such as the Brazilian domestic market for our steel products and the Chinese market for iron ore) could sharply reduce demand for our products.
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According to the Brazilian Steel Institute (Instituto Aço Brasil), steel import volumes into Brazil increased by 18% compared to 2023, reaching a record high. This surge has had a direct impact on the domestic market. Additionally, if our competitors, including China, are unable to access U.S. markets due to the tariffs currently in place, it is expected that they will target other foreign markets, which could further impact our domestic market. If steel import levels continue to rise without appropriate safeguard measures to ensure fair competition, demand for domestically produced steel could decline, which could have a material adverse effect on our business and operations.
In addition, flat steel competes with other materials that may be used as substitutes, such as aluminum (particularly in the automotive and packaging industry), cement, composites, glass, plastic and wood. Government regulatory initiatives mandating the use of such materials in lieu of steel, whether for environmental or other reasons, as well as the development of other new substitutes for steel products, could also significantly reduce market prices and demand for steel products and thereby reduce our cash flow and profitability. Any material decrease in demand or increase in supply for steel and iron ore in the domestic or export markets served by us could have a material adverse effect on us.
Prices charged for iron ore are subject to volatility. International iron ore prices may decrease significantly and materially and adversely affect us or require us to suspend certain of our projects and operations.
Our iron ore prices are based on a variety of pricing terms, which generally use market price indices as a basis for determining customer prices. Our prices for and revenues from iron ore are consequently volatile, which may adversely affect us. In 2024, average iron ore prices decreased 9.3% to US$103.4dmt from US$128.30dmt in the same period of 2023. In 2023, average iron ore prices increased 29.6% to US$128.30dmt from US$99.00/dmt in 2022, in each case according to the average Platts iron ore price index (62% Fe CFR China). A decrease in market prices for iron ore may require us to change the way we operate or, depending on the magnitude of price decreases, even to suspend certain of our projects and operations and impair certain assets, which could adversely affect us.
Adverse economic conditions in China and an increase in global iron ore production capacity could materially and adversely affect us.
China has been the main driver of global demand for minerals and metals over the past years, effectively driving global prices for iron ore and steel. In 2024, China accounted for 75.7% of the global seaborne iron ore trade and 78.7% of our iron ore export sales were to the Asian market, mainly China. China is also the largest steel producer in the world, accounting for approximately 53.4% of the global steel production in 2024.
China’s macroeconomic condition is a critical factor for our business. A slowdown could impact our operations, as the infrastructure and real estate sectors together account for approximately 50% of China’s steel production. Additionally, the imposition of import tariffs by the U.S. on China could limit their access to U.S. markets, leading to an oversupply of steel. This, coupled with the surplus of iron ore resulting from the ramp-up of new projects and the inability to sell to U.S. markets, may lead to shifts in global demand and, consequently, in the prices of iron ore and steel, potentially affecting our profitability.
In addition, the improved performance of the main players, the ramp-up of projects started in past years by major iron ore suppliers combined with the new players entering the business due to recent favorable conditions could affect seaborne iron ore prices and adversely affect us.
We are exposed to substantial changes in commodities prices, including oil prices, which significantly affect the prices of our inputs and the prices of our products, and may adversely affect us.
We are subject to volatility in international commodities prices, which affects the prices of certain of our inputs, such as oil, and may therefore adversely affect our results of operations. Although oil prices surged in 2022 due to geopolitical developments, they declined in 2023, driven by uncertainties surrounding China’s post-pandemic economic recovery and increased oil production in the United States.
In 2024, the capsize shipping market experienced significant fluctuations. While Chinese steel supply showed positive developments, an expanded capsize fleet compared to 2023 initially kept freight rates low. However, in the second half of the year, a surge in iron ore shipments, particularly from Western Australia to China, along with higher volumes of other commodities such as coal and bauxite, pushed capesize rates to their highest levels since September 2022.
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We may not be able to adjust our steel and mining production volume in a timely or cost-efficient manner in response to changes in demand.
Our steel business accounted for 66.1%, 50.0%, and 53.1% of our total net revenues in 2022, 2023, and 2024, respectively, while our mining business accounted for 28.2%, 37.7%, and 30.0% over the same period, respectively. Given the capital-intensive nature of these businesses, a large portion of our cost structure is fixed in the short term, making it challenging to scale production without impacting cost efficiency.
During periods of weak demand, operating with significant idle capacity can increase our per-unit costs. In addition, our ability to implement cost-reduction measures may be limited by labor regulations or existing agreements with employees or government entities.
Conversely, our capacity to rapidly scale up production is constrained. When demand rises sharply, we may not be able to increase production quickly enough to meet it, potentially requiring the purchase of iron ore or steel from third parties and reselling it, which would increase our costs and narrow our margins. Failure to satisfy excess customer demand could also result in the loss of customers. In addition, operating near full capacity may expose us to additional costs, such as demurrage fees due to capacity restrains in our logistics systems.
A decrease in the availability or an increase in the price of raw materials for steel production, particularly coal and coke, may adversely affect us.
In 2024, raw material costs accounted for 59.0% of our total steel production costs. Our main raw materials include iron ore, coal, coke, limestone, dolomite, manganese, zinc, tin and aluminum. We depend on third parties for some of our raw material requirements, including importing all of the coal required to produce coke. In addition, we require significant amounts of energy, in the form of natural gas and electrical energy, to power our plants and equipment.
Any prolonged interruption in the supply of raw materials, natural gas or electrical energy, or substantial increases in their prices, could materially and adversely affect us. Interruptions and price increases could result from changes in laws or trade regulations, the availability and cost of transportation, suppliers’ allocations to other purchasers, interruptions in production by suppliers and/or accidents or similar events on suppliers’ premises or along the supply chain. Any inability to pass these cost increases onto our customers or to meet our customer demand because of scarcity of our key raw materials could also have a material and adverse effect on us.
Our steel products face significant competition, including price competition, from other domestic or foreign producers, which may adversely affect our profitability and market share.
The global steel industry is highly competitive with respect to price, product quality, customer service and technological advances permitting reduced production costs. Several factors influence Brazil’s export of steel products, including protectionist policies of other countries, especially the United States, disputes regarding these policies before the World Trade Organization, the Brazilian government’s exchange rate policy and the growth rate of the world economy.
Further, continuous advances in materials sciences and technology have given rise to improvements in products such as plastics, aluminum, ceramics and glass, permitting them to serve as substitutes for steel. Due to high start-up costs, the economics of operating a steelworks facility on a continuous basis may encourage mill operators to maintain high levels of output, even in times of low demand, which results in oversupply and increases the pressure on industry profit margins. In addition, downward pressure on steel prices by our competitors may affect our profitability.
The steel industry has historically suffered from structural over-capacity, which has worsened due to a substantial increase in production capacity in the developing world, particularly China and India, as well as other emerging markets. China is the largest global steel producer and, in addition, China and certain steel exporting countries have favorable conditions (excess steel capacity, undervalued currency or higher market prices for steel in non-domestic markets), which can have a significant impact on steel prices in other markets. If we are not able to remain competitive in relation to competitors in China or other steel-producing countries, we may be adversely affected.
Steel companies in Brazil face strong competition from imported products, mainly as a result of the global excess in steel production, reduction in demand for steel products in mature markets, exchange rate appreciation and tax incentives in some of the main exporting countries. Despite Brazilian import duties to protect domestic producers, the volume of steel products imported has increased significantly over the past years. According to the Brazil Steel Institute, the volumes of steel imports into Brazil in 2024 increased by 18% compared to 2023, reaching a record high. If the Brazilian government does not implement measures against subsidized steel imports and there is an increase in imports, we may be materially and adversely affected. Apart from direct steel imports, the Brazilian industry also faces competition from imported finished goods, which adversely affects the whole domestic steel supply and production chain.
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Protectionist and other measures adopted by foreign governments could adversely affect our export sales.
In response to increased production and steel exports from many countries, anti-dumping and countervailing duty and safeguard measures have been imposed by foreign governments representing the main markets for our exports. In 2021, the European Commission initiated an anti-dumping investigation of electrolytic chromium coated steel (tin-free steel) products imported from Brazil and China. This investigation resulted in anti-dumping duties on the exports of tin-free steel from Brazil into the European Union. In 2022, the European Commission initiated its five-year “sunset review” of the anti-dumping duties on hot-rolled steel. As a result of this review, in 2022, an anti-dumping duty was imposed on the exports of tin-free steel from Brazil into the European Union.
In 2021, the European Commission extended safeguard measures on imports of hot-rolled, cold-rolled, and tin mill products and maintained quotas for the next three years.
The European Commission published on February 2024 a notice of initiation concerning the possible extension in time and review of the safeguard measures applicable to imports of certain steel products.
In March 2025, the European Commission announced an action plan addressed to the European Parliament, the European economic and social committee, and the committee of the regions. The announced measures will be implemented gradually and include adjustments to steel safeguard measures to respond to market conditions, and the proposal of a new trade instrument to replace the current safeguards beginning in July 2026.
EU regulation No. 2023/956, establishing the Carbon Border Adjustment Mechanism (CBAM) aimed at combating carbon leakage from cement, iron, steel and aluminum, has entered into force in October 2023. The regulation institutes a carbon tax on these products originated in other countries and destined for trade within the EU.
The policies to be adopted by Mr. Donald Trump as President of the United States, following his inauguration on January 20, 2025, particularly regarding trade and commercial barriers, remain uncertain. In the past, Mr. Trump has advocated for stricter trade restrictions and substantial tariff increases on certain goods imported into the United States. In February 2025, he signed new executive orders that raised tariffs on steel and aluminum imports to a flat 25%. This directly impacts suppliers in Brazil and other countries. Recently, Mr. Trump signed a presidential memorandum outlining a plan to impose reciprocal tariffs on foreign nations. Some goods, such as steel products that are already subject to Section 232 tariffs, are currently not be subject to the reciprocal tariff.
For more information on protectionist measures, see “Item 4. Information on the Company––4B. Business Overview—Regulatory Matters—Protectionist Measures.” The imposition of these and other protectionist measures by foreign countries may materially and adversely affect our export sales.
Measures adopted by, or conflicts between, foreign governments could adversely affect us.
Recent global developments relating to Russia’s conflict with Ukraine have generated significant uncertainty in global commodities and financial markets, and the global steel market, among others, has shown indications of instability. Misalignment between supply and demand in the international coal and steel markets may adversely affect our pricing strategy, undermine our investment strategy and adversely affect us. Misalignment could result from, among other things, international embargoes between governments or suspended international steel production due to significant increases in the prices of raw materials or, in the case of certain companies, proximity to conflict zones.
Our activities depend on authorizations, concessions, licenses and permits, and changes in applicable laws, regulations or government measures could adversely affect us.
Our activities and the activities of our subsidiaries and joint ventures are subject to governmental authorizations, concessions, licenses and permits, which include environmental licenses, as well as water grants, for our mining and industrial plants, infrastructure projects and concessions, including for the port terminals, railways and power plants that we operate or in which we have an equity interest. We cannot guarantee that we will be able to maintain, renew or obtain any required authorization, concession, license or permit, or that no additional requirement will be imposed on us in connection with our requests.
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Authorizations, concessions, licenses or permits required for the development of our activities may require that we meet certain performance thresholds or completion milestones. In case we are unable to meet these thresholds or milestones, we may lose or not be able to obtain or renew such authorizations, concessions, licenses or permits, or we may not be able to do so under the terms of new concession laws, claims for amicable contractual termination and subsequent re-bidding for concessions. We also cannot guarantee that we, our subsidiaries or our joint ventures that hold concessions will timely comply with our or their obligations under any relevant concession agreement or under conduct adjustment agreements (Termos de Ajustamento de Conduta), or TACs, entered into with governmental agencies. In addition, we are subject to supervision and penalties from governmental entities, including the Brazilian court of audit (Tribunal de Contas da União), or TCU, and regulatory agencies. A material breach of those obligations may result in the loss or early termination of concessions, authorizations, permits and/or licenses, the restriction of access to public financing for the concession or the amortization of public financing before a project begins to operate, or the acceleration of an event of default under our indebtedness. Additionally, we would be subject to penalties, including fines or the closure of facilities. In case of a takeover or concession agreement termination due to government default, if we are entitled to any indemnification from granting authorities for our investments, this indemnification may be insufficient to cover our costs, expenses or losses and may be paid long after the events affecting our concessions, licenses or permits occur, if at all.
In addition, changes in applicable laws or regulations could require modifications to our technologies and operations and unexpected capital expenditures. Capital expenditures that we have already made may not generate the returns we expected, if any.
After accidents involving the breaking of upstream mining dams operated by other mining companies in the cities of Mariana and Brumadinho in the state of Minas Gerais, the Brazilian National Mining Agency (Agência Nacional de Mineração), or the ANM, which is the regulatory agency under the Brazilian Ministry of Mines and Energy (Ministério de Minas e Energia), or the MME, of the Brazilian government, and Brazilian environmental regulatory authorities have applied more stringent environmental licensing requirements for mining project operations, specifically for dams.
The amount and timing of these and other environmental and related expenditures may vary substantially from those currently anticipated, and we may encounter delays in obtaining environmental or other operating licenses, or not be able to obtain and/or renew them, which could subject us to civil, administrative or criminal liability and closure orders. Any of the above events, among others, may adversely affect us and our ability to obtain expected returns from our projects, and may render certain projects economically or otherwise unfeasible.
Further, new or more stringent environmental licensing requirements for our project operations, specifically for our dams, could be imposed on us. For additional information on mining regulations in Brazil, see “Item 4. Information on the Company—4B. Business Overview—Regulatory Matters—Mining Regulation.”
We have a high level of indebtedness that could make it more difficult or expensive to refinance our maturing debt and/or incur new debt.
As of December 31, 2024, our total debt outstanding was R$56,915 million, comprising R$8,822 million of short-term debt and R$48,093 million of long-term debt. We had R$23,310.2 million in cash and cash equivalents and short-term financial investments with immediate liquidity as of December 31, 2024. Our planned investments across our business segments will require a significant amount of cash over the course of 2025 and the following years. See “Item 4. Information on the Company—4B. Business Overview—Investments and Divestitures.”
Our level of indebtedness could affect our credit rating and our ability to obtain any necessary financing in the future and may increase our cost of borrowing. In addition, our level of indebtedness could make it more difficult to refinance our existing indebtedness and could make us more vulnerable in the event of a downturn in our business. In these and other circumstances, servicing our indebtedness may use a substantial portion of our cash flow from operations, which could adversely affect us and make it more difficult for us to make payments of dividends and other distributions to our shareholders, including the holders of ADSs, as well as to fund our operations, working capital and capital expenditures necessary for the maintenance and expansion of our business activities.
Our ability to refinance our indebtedness maturing in 2025 and 2026 is subject to market conditions and creditor approvals. In the event conditions are not favorable or approvals are not obtained, we will be required to make significant payments in the next 36 months under our financings, which would adversely affect our financial and cash position and may result in downgrades in our credit ratings.
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We cannot assure you that our credit ratings will not be lowered, suspended or withdrawn by the rating agencies.
Our credit ratings are limited in scope, and do not address all material risks relating to an investment in our common shares or the ADSs, but rather reflect only the views of the rating agencies at the time the ratings are issued. These ratings may affect the cost and other terms upon which we are able to obtain funding and are subject to change due to factors specific to us, trends in the industries we operate in or trends in the credit and capital markets generally. As of the date of this annual report, our Fitch, Moody’s and S&P credit ratings are BB with a stable outlook, Ba3 with a stable outlook and BB- with a stable outlook, respectively.
Credit rating agencies regularly evaluate us, and their ratings are based on a number of factors, including our financial strength. We cannot assure you that credit rating agencies will not downgrade our credit ratings or that credit ratings will remain in effect for any given period of time or not be withdrawn entirely by the rating agencies, if in their judgment circumstances so warrant. Any lowering, suspension or withdrawal of our credit ratings may have an adverse effect on us and our ability to refinance our existing indebtedness.
Accidents or malfunctioning equipment on our premises, railways or ports may decrease or interrupt production, internal logistics or distribution of our products and adversely affect us.
Steel, iron ore and cement production processes depend on certain critical equipment, such as blast furnaces, steel converters, continuous casting machines, rolling mills, drillers, reclaimers, conveyor belts, crushing and screening equipment and ship loaders, as well as on internal logistics and distribution channels, such as seaports and railways. This equipment and infrastructure may be affected in the case of malfunction or damage. Any significant interruptions in our production process, internal logistics or distribution channels (including our ports and railways) could materially and adversely affect us.
In addition, our operations involve the use, handling, storage, and discharge and disposal into the environment of hazardous substances. Our mining, steel and cement businesses are generally subject to significant risks and hazards, including fire, explosions, toxic gas leaks, spilling of polluting substances or other hazardous materials, rockfall incidents in mining operations and incidents involving mobile equipment or machinery and accidents involving our dams. Such events could occur by accident or by breach of operating and maintenance standards, and could result in a significant environmental impact, damage to or destruction of our mineral properties and/or production facilities, personal injury or death, delays or suspensions in production, monetary losses and exposure to civil responsibilities, administrative penalties, criminal sanctions and closure orders for non-compliance with these regulations. Our health, safety and environmental standards and risk management programs and procedures may be insufficient to prevent incidents or accidents that could adversely affect us.
Failures in or interruptions to our telecommunications, information technology systems or automated machinery could adversely affect us.
Our operations are heavily reliant on telecommunications, information technology systems and automated machinery. Disruptions to these systems, caused by obsolescence, technical failures or intentional acts, may adversely affect us. In addition, any failure in our systems related to confidential information, caused by external cyberattacks or internal actions, including negligence or misconduct of our employees, could adversely affect our reputation and our interactions with customers, competitors and other third parties, including governmental and regulatory bodies, suppliers and others, and may, among other things, expose us to fines and litigation.
Unauthorized access to or release or violation of our or our business partners’ systems and data could materially and adversely affect us.
We are subject to a broad range of cyber threats, including attacks, with varying levels of sophistication. These cyber threats are related to the confidentiality, availability and integrity of our systems and data, including our customers’ and business partners’ confidential, classified or personal information. In addition, because we have access to certain information technology systems of certain of our business partners, our systems may be subject to attacks aimed at accessing, tampering with or exposing our business partners’ systems and their data.
In addition, certain of our business partners, including our suppliers, have broad access to certain of our confidential and strategic information. Many of these business partners face similar security threats and any attacks on their systems could result in unauthorized access to our systems or data. Any unauthorized access to, or release or violation of our systems and data, whether directly or through cyberattacks or similar breaches affecting our business partners, could materially and adversely affect us, including subjecting us to regulatory scrutiny and fines.
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Our insurance policies may not be sufficient to cover all our losses.
We maintain several types of insurance policies as part of our risk management for each of our businesses and seek to follow industry practice regarding best coverage, which encompasses domestic and international (import and export) cargo transportation (road, rail, sea or air), life insurance, personal accidents, health, automobile, directors and officers, general liability, construction and erection risks), trade credit insurance, surety, named perils, ports and terminal liabilities.
The coverage obtained in our insurance policies may not be sufficient to cover all risks or the extent of the risks we are exposed to, which could expose us to significant costs. Additionally, we may not be able to successfully contract or renew our insurance policies or to do so on terms satisfactory to us. The occurrence of one or more of these events may adversely affect us.
Our projects are subject to risks that, if materialized, may result in increased costs and/or delays or that could prevent their timely or successful implementation.
We are investing to further increase our steel, mining, cement and energy production capacity and/or efficiency, as well as our logistics capabilities. The success of these projects is subject to a number of risks that, if materialized, may adversely affect our growth prospects and profitability, including, among others:
| · | delays, availability issues or higher than expected costs in obtaining the necessary equipment, services and materials to build and operate a project; |
| · | lack of infrastructure, including waste disposal areas and reliable power and water supply; |
| · | environmental remediation costs; |
| · | delays or higher than expected costs in obtaining or renewing required authorizations, concessions, licenses or permits and/or regulatory approvals, including related to environmental matters, to build or continue a project; |
| · | changes in market conditions, laws or regulations that may result in material additional costs, which may render a project less profitable than expected or economically or otherwise unfeasible; |
| · | service providers’ inability to comply with certain legal duties under Brazilian law, including tax, labor and social security, for which we may become liable; |
| · | breach by suppliers, contractors and service providers of their obligations with us; and |
| · | disruptions in our logistics chain caused by third parties, contractual breaches, general operational or geotechnical issues. |
Any one or a combination of the factors described above may materially and adversely affect our ability to successfully implement our strategy and, consequently, us.
We are subject to environmental, health and safety incidents and current, new or more stringent regulations may result in liability exposure and increased capital expenditures.
Our steel production, mining, cement, logistics and energy facilities are subject to a broad range of laws, regulations and permit requirements in the countries where we operate relating to the protection of the environment, health and safety.
Brazilian pollution standards are subject to change, including new effluent and air emission standards, water management and solid waste-handling regulations, wildlife maintenance regulations, restrictions on business expansions, native forest preservation requirements and the obligation to support the creation of an integral protection conservation unit, as privately owned conservation areas (Reserva Particular do Patrimônio Natural), or national parks, or areas of relevant ecological interest (Área de Relevante Interesse Ecológico – ARIE) as environmental compensation for industrial and mining expansion projects. The Brazilian government has adopted a decree under the national policy for climate change (Política Nacional de Mudanças Climáticas) that contemplates a reduction in carbon emissions for the mining, steel and cement industries and an action plan is under development by a technical committee comprising representatives from the government, industry associations and academia.
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Our operations involve the use of natural resources, and are subject to significant risks and hazards, including fire, explosion, toxic gas leaks, spilling of polluting substances or other hazardous materials, rockfalls, incidents involving dams, failure of operational structures and incidents involving mobile equipment, vehicles or machinery. These could occur by accident or by breach of operating and maintenance standards, and could result in significant environmental and social impacts, damage to or destruction of mineral properties or production facilities, personal injury, illness or death of employees, contractors or community members close to operations, environmental damage, delays in production, monetary losses and possible legal liability. Additionally, in remote localities, our employees may be exposed to tropical and contagious diseases that may affect their health and safety. Notwithstanding our standards, policies and controls, our operations remain subject to incidents or accidents that could adversely affect us and our stakeholders.
New or more stringent environmental, health and safety standards imposed on us could require increased capital expenditures, additional legal preservation areas within our properties or modifications to our operating practices or projects. For further information on environmental regulations and claims, see “Item 4. Information on the Company—4B. Business Overview—Regulatory Matters––Environmental Regulation.”
The amount and timing of expenditures related to environmental, health and safety matters may vary substantially from those currently anticipated. These additional costs may have a negative impact on the profitability of the projects we intend to implement or may make such projects economically unfeasible. Waste disposal, including our slag piles, and emission practices may result in the need for us to clean up or retrofit our facilities or our disposal locations at substantial costs and/or could result in substantial civil, criminal and administrative liability, including, among other things, liability pursuant to public civil actions. Environmental legislation in foreign markets to which we export our products may also materially and adversely affect our export sales and us.
In addition, we may enter into TACs with Brazilian regulatory agencies that require us to minimize or eliminate the risk of environmental impacts in the areas where we operate. If we are unable to comply with a TAC or to remediate non-compliance in a timely manner, we may be exposed to penalties, such as fines, new environmental offsets, delays in obtaining environmental or other operating licenses, revocation of permits or closure of facilities.
Finally, new or more stringent regulatory frameworks may be imposed and may affect our mining operations, including requests for environmental recovery of areas and investments for the granting of mining concessions. Any failure to comply with these or other laws, resolutions and standards may expose us to civil, criminal and administrative liability.
Our governance and compliance procedures may fail to prevent regulatory penalties and reputational harm.
We operate in a global environment and our activities straddle multiple jurisdictions and complex regulatory frameworks subject to enforcement worldwide. Our governance and compliance procedures may not prevent breaches of legal, accounting and/or governance standards applicable to us, and we may be unable to identify wrongdoing or improper activities by members of our management, employees or third parties. We may be subject to breaches of our Code of Conduct and business conduct protocols as well as to instances of fraudulent behavior, dishonesty and unlawful conduct by members of our management, employees, contractors or other agents, which could subject us to fines, loss of our operating licenses and reputational harm, as well as other penalties, which may materially and adversely affect us.
We may fail to maintain an effective system of internal controls, which could prevent us from timely and accurately reporting our financial results.
Our internal controls over financial reporting may not prevent or detect misstatements in a timely manner due to inherent limitations, including human error, circumvention or overriding of controls, or fraud. Even effective internal controls can provide only reasonable assurance with respect to the preparation and fair presentation of financial statements. If we fail to maintain the adequacy of our internal controls, including implementing new or improved required controls, we could fail to meet our financial reporting obligations, which could trigger a default under certain of our agreements. In this regard, and in connection with management’s evaluation of the effectiveness of our internal control over financial reporting, we concluded that, as of December 31, 2024, our internal control over financial reporting is effective.
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Certain of our operations depend on joint ventures, strategic alliances and consortia, among other forms of cooperation, and our business could be adversely affected if our partners fail to observe their commitments.
We currently operate parts of our business through joint ventures, strategic alliances and consortia with other companies. Our forecasts and plans for these joint ventures, strategic alliances and consortia assume that our partners will observe their obligations to make capital contributions, purchase products and, in certain cases, provide managerial personnel or financing. In addition, many of the projects contemplated by our joint ventures or consortia rely on financing commitments, which contain certain preconditions for each disbursement. If any of our partners fails to observe their commitments or we fail to comply with all preconditions required under our financing commitments or other partnership arrangements, the affected joint venture, consortium or other project may not be able to operate in accordance with its business plans, or we may have to increase the level of our investment to implement these plans, which could adversely affect us.
Risks associated with drilling and production could render mining projects economically unfeasible.
Once mineral deposits are discovered, it can take a number of years from the initial phase of drilling until production is possible, during which time the economic feasibility of production may change. Substantial time and expenditures are required to:
| · | establish mineral reserves through drilling; |
| · | determine appropriate mining and metallurgical processes for optimizing the recovery of metal contained in ore; |
| · | obtain environmental and other licenses; |
| · | construct mining and processing facilities and set up the infrastructure required for greenfield properties; and |
| · | obtain the ore or extract the minerals from the ore. |
If a mining project proves to not be economically feasible by the time we are able to profit from it, we may incur substantial losses and be obliged to record write-offs. In addition, potential changes or complications involving metallurgical and other technological processes arising during the life of a project may result in delays and cost overruns that may render the project not economically feasible.
Our mineral reserves and mine life may prove inaccurate, market price fluctuations and cost changes may render certain ore reserves uneconomical to mine and we may face rising extraction costs or investment requirements over time as our reserves deplete.
Our reported ore and limestone reserves are estimated quantities of ore and minerals that we have determined can be economically mined and processed under present and anticipated conditions to extract their mineral content. There are numerous uncertainties inherent in estimating quantities of reserves and in projecting potential future rates of mineral production, including many factors beyond our control. Reserve engineering involves estimating deposits of minerals that cannot be measured in an exact manner, and the accuracy of any reserve estimate is a function of the quality of available data and engineering and geological interpretation and judgment. As a result, no assurance can be given that the indicated amount of ore will be recovered or that it will be recovered at the rates we anticipate. Estimates of different engineers may vary, and results of our mining production subsequent to the date of an estimate may lead to revision of estimates. Reserve estimates and estimates of mine life may require revision based on actual production experience and other factors. For example, fluctuations in the market prices of minerals and metals, reduced recovery rates or increased operating and capital costs due to inflation, exchange rates or other factors may render proven and probable reserves uneconomic to exploit and may ultimately result in a restatement of reserves.
In addition, reserves are gradually depleted in the ordinary course of our exploration activities. As mining progresses, distances to the primary crusher and to waste deposits become longer and pits become steeper. Also, for some types of reserves, mineralization grade decreases and hardness increases at increased depths. As a result, over time we may experience rising unit extraction costs with respect to each mine, or we may need to make additional investments, including adaptation or construction of processing plants and expansion of our dry tailings processes. Our exploration programs may also fail to result in the expansion or replacement of reserves depleted by current production. If we do not enhance existing reserves or develop new operations, we may not be able to sustain our current level of production beyond the remaining lives of our existing mines. See “Item 4. Information on the Company—4B. Business Overview—Our Mining Segment” and “Item 4. Information on the Company—4B. Business Overview—Our Cement Segment.”
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Our subsidiary CSN Mineração intends to invest in the increase of the total iron ore processing capacity of its facilities and it may not necessarily complete these investments as planned and/or effectively achieve the production volume corresponding to the planned total iron ore processing capacity.
Our subsidiary CSN Mineração included in its business plan certain investments to increase its iron ore processing capacity in the medium and long term. The expansion of its production capacity involves significant investment and expenses and may not result in the effective expansion of its iron ore production, which depends on other additional factors, including the expansion of its mineral reserves. Moreover, these investments to increase its processing capacity are subject to numerous risks inherent to mining projects.
CSN Mineração has planned investments for the expansion of its iron ore processing capacity from 42.7 million tons per year in 2024 to up to 65 million tons per year by 2028. These numbers represent expected production capacity of CSN Mineração’s facilities following the implementation in full of its current business plan – not its production volume. We can provide no assurances that CSN Mineração’s production volume will effectively reach 65 million tons per year by 2028.
If CSN Mineração is unable to transform its iron ore processing capacity into effective iron ore production, it may not obtain the expected return on investments made, which may adversely affect us.
Natural and other disasters, or extreme weather conditions, could disrupt our operations.
Our mining, logistics and energy operations are exposed to natural and other disasters, or extreme weather conditions, including as a result of climate change developments such as heavy rainfall or flooding, and these could reduce the available supply of our raw materials and increase our raw materials costs, as well as delay and otherwise disrupt our operations, including relating to logistics. We cannot foresee extraordinary climate conditions, including as a result of climate change developments (the physical risks of climate change to which we are subject), or all regulatory changes in response to climate change (the transition risks of climate change to which we are subject), as well as their full potential impact on our operations.
Additionally, we are subject to technical or physical risks including fire, power loss, water supply loss, leakages, accidents and failures in telecommunications and information technology systems, whether resulting from natural or other disasters or otherwise, any of which could disrupt our operations.
Cement is a perishable product and failure to carefully store and distribute it may result in losses for our cement subsidiary and us.
Cement is a perishable product and, as a result, must be carefully stored pursuant to applicable law and within specific parameters, and requires efficient distribution, in accordance with expiration dates. Cement requires specific care in regard to conservation and transportation, as the humidity during storage may render it unusable. Any failure in the storage and distribution process may result in loss of product and adversely affect our cement subsidiary and us.
We may not be able to consummate proposed acquisitions, integrate acquired businesses successfully or consummate expected divestures.
From time to time, we may evaluate acquisition opportunities that would strategically fit our business objectives. If we are unable to consummate acquisitions or to integrate them successfully and develop these businesses to realize revenue growth and cost savings, we could be adversely affected. Acquisitions also pose the risk that we may be exposed to successor liability involving an acquired company. Due diligence conducted in connection with an acquisition, and any contractual guarantees or indemnities that we receive, may not be sufficient to protect us from, or compensate us for, actual liabilities. A material liability associated with an acquisition, including related to labor or environmental matters, could adversely affect us and reduce the expected and bargained-for benefits of the acquisition.
We may incur asset impairment charges related to acquisitions, which may reduce our profitability. Our acquisition activities may also present financial, managerial and operational risks, including diversion of management attention from existing core businesses, difficulties integrating or separating personnel, financial and other systems, failure to achieve the operational benefits that were anticipated at the time of the transaction, adverse effects on existing business relationships with suppliers and customers, inaccurate estimates of fair value made in the accounting for acquisitions and/or amortization of acquired intangible assets which would reduce future reported earnings, potential loss of customers or key employees of acquired businesses and indemnities and potential disputes with buyers or sellers. Moreover, proposed acquisitions may also be subject to review from the antitrust authorities in the countries involved in the transaction, which may approve the transaction, do so subject to restrictions, including the divestment of assets, or reject it. Any of these developments or adverse regulatory decisions could adversely affect us.
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Finally, we may not be able to execute divestitures within the expected timeframe or at the anticipated price. Delays or unfavorable market conditions could prevent us from achieving the desired financial outcomes, potentially impacting our liquidity, strategic objectives, and overall financial performance, which could have an adverse effect on our ability to fund key investments or achieve our financial targets.
We may not be able to maintain adequate liquidity and our cash flows from operations and available capital may not be sufficient to meet our obligations.
While our cash flows from operations and available capital have been sufficient to meet our current operating expenses, contractual obligations and debt service requirements to date, our liquidity, cash flows from operations and available capital may be adversely affected by the pricing environment for our products, the exchange rate environment and the effects of weak macroeconomic conditions in Brazil. We are considering certain measures to improve our liquidity and debt profile, including the potential sale of certain assets. In addition, we are negotiating the extension of certain of our credit facilities. If we are unable to successfully sell certain assets and/or extend our debt amortization profile, we may not be able to maintain adequate liquidity and our cash flows from operations and available capital may not be sufficient to meet our obligations.
We have experienced labor disputes in the past that have disrupted our operations, and such disputes may recur.
A substantial number of our employees and some of the employees of our subcontractors are represented by labor unions and are covered by collective bargaining or other labor agreements, which are subject to periodic renegotiation. Strikes and other labor disruptions at any of our facilities or labor disruptions involving third parties who may provide us with goods or services have in the past and may in the future materially and adversely affect the operations of our facilities and/or the timing of completion and the cost of our projects.
We are exposed to the risks of litigation.
We are and may be a party to legal proceedings and judicial, administrative or arbitration claims. For certain of these legal proceedings and claims, we have not established a provision on our balance sheet or have only established provisions for part of the amounts in question, based on our external or internal counsels’ judgment as to the likelihood of an outcome unfavorable to us. Although we are contesting existing proceedings and claims, the outcome of each specific proceeding and claim is uncertain and may result in obligations that could materially and adversely affect us. In addition, certain judicial or administrative proceedings may adversely affect our shareholders and holders of the ADSs, specifically their receipt of dividends.
Risks Relating to Our Common Shares and the ADSs
Our controlling shareholder has the ability to direct our business and affairs and its interests could conflict with yours.
Our controlling shareholder has the power to, among other things, elect a majority of our directors and determine the outcome of any action requiring shareholder approval, including transactions with related parties, corporate reorganizations, acquisitions, dispositions, the destination and diversification of our investments and the timing and payment of any future dividends, subject to minimum dividend payment requirements imposed by Brazilian Corporate Law. Our controlling shareholder may have an interest in pursuing acquisitions, dispositions, financings or other transactions that could conflict with your interests as a holder of our common shares or the ADSs. In addition, the interests of the members of our controlling family have not always been aligned and any conflicts that may arise may adversely affect us.
If you surrender ADSs and withdraw common shares, you risk forfeiting Brazilian tax advantages and losing the ability to timely remit foreign currency abroad.
As an ADS holder, you benefit from the electronic certificate of foreign capital registration obtained by the custodian for our common shares underlying the ADSs in Brazil, which allows the custodian to convert dividends and other distributions with respect to our common shares into non-Brazilian currency and remit the proceeds abroad. Pursuant to Resolution No. 4,373, dated September 29, 2014, of the Brazilian National Monetary Council (Conselho Monetário Nacional), or the CMN, in order for an investor to surrender ADSs for the purpose of withdrawing the common shares represented thereby and be entitled to trade the underlying common shares directly on the B3 S.A. – Brasil, Bolsa, Balcão, or the B3, the investor is required to appoint a Brazilian financial institution duly authorized by the Central Bank and the Brazilian Securities Exchange Commission (Comissão de Valores Mobiliários), or the CVM, to act as its legal representative, who is responsible, among other things, for keeping and updating the investors’ certificates of registration with the Central Bank. If you surrender ADSs and withdraw common shares, you may be subject to a less favorable tax treatment on gains with respect to these investments. Moreover, if your representative fails to obtain or update the relevant certificates of registration, you may incur additional expenses or be subject to operational delays which could affect your ability to receive dividends or distributions relating to our common shares or the return of your capital in a timely manner. The custodian’s certificate of registration or any foreign capital registration directly obtained by you may be affected by future legislative or regulatory changes, and we cannot assure you that additional restrictions applicable to you, the disposition of the underlying common shares or the repatriation of the proceeds from the process will not be imposed in the future. For a more complete description of Brazilian tax regulations, including any potential risks regarding the possibility that the sale or disposition of ADSs by a Non-Brazilian Holder may be subject to capital gains tax in Brazil, see “Item 10. Additional Information—10E. Taxation—Brazilian Tax Considerations.”
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Holders of ADSs may not be able to exercise their voting rights.
Holders of ADSs may only exercise their voting rights with respect to the underlying common shares in accordance with the provisions of the deposit agreement. Under the deposit agreement, ADS holders must vote by giving voting instructions to the depositary. Upon receipt of the voting instructions of the ADS holder, the depositary will vote the underlying common shares in accordance with such instructions. If we ask for voting instructions, the depositary will notify ADS holders of the upcoming vote and will arrange to deliver the notice of the upcoming vote. We cannot assure that ADS holders will receive the notice in time to ensure that they can instruct the depositary to vote. In addition, the depositary and its agents are not liable for failing to carry out voting instructions or for the manner in which they do so.
As determined by Brazilian Corporate Law, the first notice of a shareholders’ meeting must be given at least 21 days prior to holding the meeting. However, CVM rules require that companies whose shares are also represented by ADSs must convene a shareholders’ meeting no later than 30 days in advance. When a shareholders’ meeting is convened, holders of ADSs may not receive sufficient advance notice to surrender their ADSs in exchange for the underlying common shares in time to allow them to vote with respect to any specific matter. As a result, holders of ADSs may not be able to exercise their voting rights.
The relative volatility and illiquidity of the Brazilian securities markets may substantially limit your ability to sell the common shares underlying the ADSs at the price and time you desire.
Investing in securities that trade in emerging markets, such as Brazil, often involves greater risk than investing in securities of issuers in the United States and other developed countries, and such investments are generally considered to be more speculative in nature. The Brazilian securities market is substantially smaller, less liquid, more concentrated and can be more volatile than major securities markets in the United States and other developed countries. There is also significantly greater concentration in the Brazilian securities market than in major securities markets in the United States and other developed countries. The ten largest companies in terms of market capitalization represented 38% of the aggregate market capitalization of the B3 as of December 31, 2024. Although you are entitled to withdraw the common shares underlying the ADSs from the depositary at any time, your ability to sell the common shares underlying the ADSs at the price and time you wish may be substantially limited.
Holders of ADSs may be unable to exercise preemptive rights with respect to our common shares.
We may not be able to offer our common shares to U.S. holders of ADSs pursuant to preemptive rights granted to holders of our common shares in connection with any future issuance of our common shares unless a registration statement under the Securities Act is effective with respect to such common shares and preemptive rights, or an exemption from the registration requirements of the Securities Act is available. We are not obligated to file a registration statement relating to preemptive rights with respect to our common shares or to undertake steps that may be needed to find available exemptions from registration, and we cannot assure you that we will file any such registration statement or take any such steps. If such a registration statement is not filed and an exemption from registration is not available the depositary of the ADSs may attempt to sell the preemptive rights, and you will be entitled to receive the proceeds of such sale. However, these preemptive rights will expire if the depositary does not sell them, and U.S. holders of ADSs will not realize any value from the granting of such preemptive rights. Moreover, U.S. holders of ADSs representing our common shares, pursuant to the deposit agreement, are deemed to recognize that all preemptive and similar rights with respect to the ADSs have been validly waived. For a more complete description of preemptive rights, see “Item 10. Additional Information—10B. Memorandum and Articles of Association—Description of Capital Stock––Preemptive Rights.”
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A decrease in our market capitalization may increase volatility in the trading price of our common shares and the ADSs.
In recent years, our market capitalization has been volatile, resulting in increased volatility in the trading price of our common shares and the ADSs. Any decrease in our market capitalization may further increase this volatility. If the trading price of the ADSs drops below the levels required by the listing standards of the New York Stock Exchange, or the NYSE, we may be required to do a reverse stock split or a ratio change of the number of common shares per ADS in order to regain compliance with the NYSE’s listing standards.
The trading price of the ADSs decreased in 2024 and, as of December 31, 2024, presented a variation of 10.4%, as compared to their trading price as of December 31, 2023.
Item 4. Information on the Company
4A. History and Development of the Company
Companhia Siderúrgica Nacional (sociedade por ações) is one of Brazil’s largest and most diversified industrial groups, with integrated operations across the steel, mining, cement, logistics, and energy segments. We were established in 1941, as a state-owned enterprise, and began production in 1946 with the inauguration of the Presidente Vargas Steelworks, located in the city of Volta Redonda, in the state of Rio de Janeiro. This facility was Brazil’s first integrated flat steel mill.
We were privatized through a series of auctions held in 1993 and early 1994, through which the Brazilian government sold its 91% ownership interest. After the privatization, we strategically shifted from a state-run steelmaker to a diversified industrial conglomerate. Over the past three decades, we have implemented a long-term strategy focused on vertical integration, operational efficiency, and diversification, supported by a series of strategic investments, capacity expansions, and acquisitions.
In 2005, we acquired Estanho de Rondônia S.A., or ERSA, located in the city of Ariquemes, in the state of Rondônia, which mines and casts tin. The tin is used in the manufacture of tinplate, a coating with high added value and used in packaging. As of the date of this annual report, we are the only manufacturer of this product in Brazil and one of the five largest in the world.
In 2006, we acquired Lusosider Aços Planos S.A. or Lusosider, the only Portuguese company in the steel sector to produce cold-rolled flat steel, with an anti-corrosion coating. Lusosider has an installed capacity of approximately 550,000 thousand tons per year to produce four large groups of steel products: galvanized sheet, cold-rolled sheet, pickled sheet, and oil-coated sheet. The products manufactured by Lusosider may be used in the packaging industry, civil construction (tubes and metallic structures) and in components for home appliances.
In 2007, we started to sell iron ore in the seaborne market. Today, we, through our subsidiary CSN Mineração, are an important exporter of iron ore, drawing from the high-quality iron ore reserves in the Casa de Pedra and Engenho mines, located in the state of Minas Gerais. CSN Mineração holds the concession to operate the Terminal de Carvão, or TECAR, a solid bulks terminal located in Itaguaí Port in the state of Rio de Janeiro.
In 2009, we entered the cement market with our first grinding mill, in the Presidente Vargas Steelworks in Volta Redonda, in the state of Rio de Janeiro, taking advantage of the synergies of the cement business with our steel business.
In order to diversify our product portfolio, we entered the long steel market in 2012, with the acquisition of Stahlwerk Thüringen Gmbh, or SWT, a long steel manufacturer located in Unterwellenborn, Germany.
In addition, we installed a plant for production of long steel products at Volta Redonda, which began operations in December 2013. The plant consists of an electric arc steelmaking furnace, continuous casting for billets and a hot rolling mill for round section long products. This plant provides the domestic Brazilian market with rebar for civil construction and wire rod for industrial and civil construction.
In 2015, we inaugurated two new grinding mills, and in 2016, we concluded a new 6,500 tons per day kiln line in Arcos, state of Minas Gerais, reaching an aggregate annual capacity of 4.7 million tons in our cement plants. In the same year, we installed two vertical crushers in Arcos, state of Minas Gerais, starting the production of cement and clinker, reaching full independence for clinker in the production of cement.
In early 2021, CSN Mineração completed its initial public offering, and its shares are now traded on the B3.
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In 2021, we reached historically high net revenue, mainly due to favorable commodity prices. In 2021 and 2022, we took advantage of the following acquisition opportunities: (i) in our cement segment, Elizabeth Cimentos S.A. and Elizabeth Mineração Ltda., which operate in the Northeast region of Brazil, and LafargeHolcim (Brasil) S.A., as a result of which we are, as of the date of this annual report, the second largest cement producer in Brazil, with a total installed capacity of 17 million tons per year; (ii) in our steel segment, Metalgráfica Iguaçu S.A., or Metalgráfica, which operates in Ponta Grossa, in the state of Paraná, and Goiânia, in the state of Goiás, and produces steel cans for the national and international market of metal food packaging, as a strategic step to expand the production capacity of our packaging division; and (iii) in our energy segment, Santa Ana Energética S.A., Topázio Energética S.A. and Companhia Energética Chapecó, or CEC, each of which holds concessions for hydroelectric power plants, and Companhia Estadual de Geração de Energia Elétrica, or CEEE-G, which holds concessions for hydroelectric power plants and greenfield wind power plant projects. These acquisitions collectively provide us with enhanced energy independence in our operations.
In 2023, after completing and integrating our energy acquisitions, we achieved self-sufficiency in energy and managed to capture the benefits of self-production, with a significant reduction in the cost of energy in all our segments by allowing exemption from payment of part of the sectoral charges and taxes incidents.
In 2024, we entered a new phase of strategic development. In January, we completed the acquisition of the 29.9% of Panatlântica S.A. for R$150 million. In November, we sold a 10.74% equity stake in CSN Mineração to Itochu Corporation, a long-term strategic partner, for R$4.42 billion (approximately US$769 million). Proceeds from this transaction are being directed toward lowering our financial risk and priority growth projects. Also in 2024, we acquired 70% of Estrela, the holding company of Grupo Tora, a leader in intermodal transport and distribution, for R$742.5 million. This acquisition significantly bolstered our logistics capabilities in road and rail freight, aligning with our vertical integration strategy and improving scale, reliability, and service coverage.
General
We are one of the largest fully integrated steel producers in Brazil and Latin America in terms of crude steel production. We operate throughout the entire steel production chain, from the mining of iron ore to the production and sale of a diversified range of high value-added steel products. We divide our business into five segments: steel, mining, cement, logistics and energy.
Steel
Our steel segment comprises a portfolio of diverse products and provides us an international footprint by means of our international subsidiaries and our exports from Brazil. In our flat steel segment, we are an almost fully integrated steelmaker. Our main industrial facility, Presidente Vargas Steelworks, produces a broad line of steel products, including slabs, hot- and cold-rolled, galvanized and tin mill products for the distribution, packaging, automotive, home appliance and construction industries.
Our production process is based on the integrated steelworks concept. Our annual crude steel capacity and rolled product capacity at Presidente Vargas Steelworks as of the date of this annual report is, in each case, 5.4 million tons.
We obtain all of our iron ore (except for pellets), limestone and dolomite requirements, and a portion of our tin requirements, from our own mines. Using imported coal, we produce approximately 27.3% of our coke requirements at current production levels in our own coke batteries at Volta Redonda. Imported coal is also pulverized and used directly in the pig iron production process. Zinc, manganese ore, aluminum and a portion of our tin requirements are purchased in local markets. Our steel production and distribution processes also require water, industrial gases, energy, rail and road transportation and port facilities.
In addition, we have an annual production capacity of approximately 330,000 tons of galvanized steel products, operated through our subsidiary Lusosider in Portugal, and an annual production capacity of approximately 1.1 million tons of steel products operated through SWT in Germany.
We own and operate a plant in Volta Redonda for the production of long steel products. The plant consists of an electric arc steelmaking furnace, continuous casting for billets and a hot rolling mill for round section long products – wire rod and rebar.
Mining
We own a number of high quality iron ore mines, strategically located within Brazil’s “Iron Ore Quadrangle” (Quadrilátero Ferrífero) in the state of Minas Gerais, including the Casa de Pedra and Engenho mines, located in the city of Congonhas, pertaining to our subsidiary CSN Mineração, and the Fernandinho mines, located in the city of Itabirito, as well as the Cayman and Pedras Pretas mining rights, located in the city of Rio Acima and the city of Congonhas, respectively, pertaining to our wholly owned subsidiary Minérios Nacional S.A., or Minérios Nacional.
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Our mining assets also include the solid bulks cargo terminal TECAR, in the state of Rio de Janeiro, which pertains to CSN Mineração, and ERSA, located in the city of Ariquemes, in the state of Rondônia, which mines and casts tin.
We sold 33.3 million tons, 42.7 million tons, and 42.5 million tons of iron ore in 2022, 2023, and 2024, respectively, of which 29.2 million tons, 39.1 million tons, and 38.5 million tons were sold to third parties in those same years.
Cement
We entered the cement market in 2009 to take advantage of the synergy potential with our steelmaking business. Our cement operations use as inputs slag generated by our blast furnaces at Volta Redonda and limestone from our limestone reserves in our Bocaina mines, which is used to produce clinker. Slag and clinker are the main inputs in cement production.
In 2015, we inaugurated two grinding mills, and in 2016, we concluded the construction of a new kiln line with a capacity of 6,500 tons per day, reaching an aggregate capacity of 4.7 million tons per year of cement production including our Volta Redonda and Arcos plants.
In August 2021, our cement subsidiary, CSN Cimentos, acquired Elizabeth Cimentos S.A. and Elizabeth Mineração Ltda., which operate in the Northeast region of Brazil. This acquisition increased our annual cement production capacity by 1.3 million tons, from 4.7 million tons to 6.0 million tons.
In September 2022, our cement subsidiary, CSN Cimentos, acquired LafargeHolcim (Brasil) S.A., and began operating in the concreate and aggregates markets in the Southeast region of Brazil. This acquisition added 11 million tons of cement per year to our production capacity, bringing our total production capacity to 17.0 million tons of cement per year, by means of plants strategically located in the Southeast, Northeast and Midwest regions of Brazil, as well as substantial high-quality limestone reserves. Following this acquisition, CSN Cimentos is the second largest cement producer in Brazil as of the date of this annual report.
We plan to further increase our market share in the cement segment in Brazil in order to diversify our product mix and markets, which will allow us to reduce our risk exposure.
Logistics
Our vertical integration strategy and the synergies among our business units are strongly dependent on the logistics needed to guarantee the transportation of inputs at low cost. A number of railways and port terminals comprise the logistics system that integrates our mining, steelmaking and cement units.
We operate a port terminal for containers, TECON at Itaguaí Port, in the state of Rio de Janeiro, and CSN Mineração operates TECAR.
We also have the following participation in three railways: (i) we share control in MRS, which operates in the Southeast region of the federal railway system, along the Rio de Janeiro – São Paulo – Belo Horizonte axis; (ii) we have an interest in joint venture Transnordestina Logística S.A., or TLSA, which has a concession to construct and operate the Northeastern Railway System II; and (iii) we control Ferrovia Transnordestina Logística S.A., or FTL, which operates the Northeastern Railway System I.
Energy
Our main source of electrical energy in the steel business is our thermoelectric co-generation power plant at the Presidente Vargas Steelworks, which is fueled by gas from the steel production process, with 267 MW of installed capacity. In addition, as of the date of this annual report, we hold a 29.50% equity interest in the Itá hydroelectric facility in the state of Santa Catarina, through a 48.75% equity interest in Itá Energética S.A., or ITASA and a 17.92% equity interest in the Igarapava hydroelectric facility. Through these equity interests, we have secured an average of 185 MWavg in annual power supply for our operations under power purchase agreements at a fixed price per megawatt average, or MWavg, per hour, adjusted annually for inflation according to ITASA’s board decision and 22.9 MWavg at a cost price of the annual generation of Igarapava’s hydroelectric power plant.
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Since 2022, we operate SHG Santa Ana, SHG Sacre II and HPP Quebra Queixo (Santa Ana Energética S.A., Brasil Central Energia LTDA., and CEC - Companhia Energética Chapecó, respectively), which hold concessions for hydroelectric power plants, and CEEE-G, which holds concessions for hydroelectric power plants and greenfield wind power plant projects. As of the date of this annual report, we are self-sufficient in energy production, and we sell the excess energy we generate in the market on a spot basis.
Recent Developments
Stoppages for Maintenance of Blast Furnace 2
In January 2025, we started the scheduled maintenance of Blast Furnace 2 located at the Presidente Vargas Steelworks. The schedule maintenance aims to modernize and extend the useful life of the asset.
Acquisition in Logistics
In April 2025, we acquired 70% of the share capital of Estrela Comércio e Participações S.A., or Estrela, for the total price of R$742 million. Estrela is the Holding Company of the Tora Transportes group, one of the largest logistics operators in Brazil, with expertise in the area of road-rail integration and terminal operations for over 50 years, focused on the movement of large tonnages. This acquisition aims to promote strong growth in intermodal operations by strengthening our performance in the logistics segment.
Other Information
Our legal and commercial name is Companhia Siderúrgica Nacional. We are organized under the laws of the Federative Republic of Brazil with head offices located at Av. Brigadeiro Faria Lima, 3400, 19th and 20th floors, Itaim Bibi, São Paulo, Brazil, CEP 04538-132, and our telephone number is +55 (11) 3049-7100. Our agent for service of process in the United States is Cogency Global Inc., located at 122 East 42nd Street, 18th Floor, New York, New York 10016. Our website is www.csn.com.br. Information contained on our website is not incorporated by reference in, and shall not be considered a part of, this annual report. The U.S. Securities and Exchange Commission, or the SEC, maintains a website that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC, including our filings, at http://www.sec.gov.
4B. Business Overview
Competitive Strengths
We believe that we have the following competitive strengths:
Integrated business model. We are a highly integrated steelmaker, and we believe this integration supports resilient and profitable operations. Our integrated business model comprises our captive sources of raw materials, principally iron ore, and our infrastructure, including railways and deep-water port facilities. In terms of raw materials, we own a number of high-quality iron ore mines, strategically located within Brazil’s “Iron Ore Quadrangle,” which distinguishes us from our main competitors in Brazil who are required to purchase all or a portion of their iron ore from mining companies.
Strong presence in domestic market and strategic international exposure for steel products. We have a strong presence in the Brazilian market for steel products, with a market share in 2024 of approximately 26% of the domestic flat steel market. In addition, through our international subsidiaries, we sell our flat steel products in the United States and in Europe, which aggregate sales accounted for approximately 14.45% of our total flat steel sales in 2024. Our subsidiary SWT is a long steel producer in Germany with annual production capacity of approximately 1.1 million tons of steel profiles, strengthening our steel products mix and geographical diversification. In 2024, SWT accounted for 68.2% of our total long steel sales, representing 651,953 tons.
Diverse product portfolio and product mix. We have a diversified flat steel product mix that includes hot-rolled, cold-rolled, galvanized and tin mill products, in order to meet a wide range of customer needs across all steel-consuming industries. We focus on selling high-margin products, including tin-coated, pre-painted, Galvalume® and galvanized products. Galvalume® is a registered trademark owned by BIEC International Inc. or its affiliates. Our galvanized products provide material for exposed auto parts, using hot-dip galvanized steel and laser-welded blanks. Our CSN Paraná branch provides us with additional capacity to produce high-quality galvanized, Galvalume® and pre-painted steel products for the construction and home appliance industries. In addition, our distribution subsidiary, Prada, provides a strong sales channel in the domestic market, enabling us to meet demand from smaller customers and to establish an important presence in this market.
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Profitable mining business. We have invested significantly in our mining business, placing us in a prominent position among the world’s leading iron ore players. Further mining expansions will enable us to expand our product portfolio and total output, increasing our presence in seaborne markets.
We have high-quality iron ore reserves in Casa de Pedra, Engenho, Fernandinho and other mines, all located in the state of Minas Gerais. We sold 33.3 million tons, 42.7 million tons, and 42.5 million tons of iron ore in 2022, 2023, and 2024, respectively, of which 29.2 million tons, 39.1 million tons, and 38.5 million tons were sold to third parties in those same years. Our mining business also includes TECAR, a solid bulks terminal at Itaguaí Port in the state of Rio de Janeiro, with a capacity to handle (i) shipments of 45 million tons per year of iron ore and (ii) landings of 4.0 million tons per year.
Second largest player in Brazilian cement market. Following our strategic acquisitions in the Brazilian cement market in 2021 and 2022, as part of which we now own Elizabeth Cimentos S.A. and LafargeHolcim (Brasil) S.A., we are the second largest player in the Brazilian cement market with an installed capacity of 17.0 million tons, seven integrated plants, six grinding and mixing plants and 23 distribution centers throughout Brazil, in each case as of December 31, 2024. Our cement segment further diversifies our business model and permits us to use by-products of our other operations as inputs in our cement production.
We have state-of-the-art equipment at our cement production units, which contribute to our high operational efficiency in terms of consumption of resources and environmental impact. Moreover, we have an integrated base of assets, which increase our competitiveness.
Energy generation. We are self-sufficient in energy production, and we sell excess energy we generate in the energy market on a spot basis. We generate power through our hydroelectric facilities, as well as our thermoelectric plant located inside Presidente Vargas Steelworks, which allow us to benefit from reduced energy tariffs.
Since 2022, we operate Santa Ana Energética S.A., Brasil Central Energia Ltda. and CEC, which hold concessions for hydroelectric power plants, and CEEE-G, which holds concessions for hydroelectric power plants and greenfield wind power plant projects.
Thoroughly developed transport infrastructure. We have a thoroughly developed transport infrastructure, connecting our iron ore mines to our steel mills and to the port terminals we operate. Our Presidente Vargas Steelworks facility is located next to railway and port systems, which facilitates its supply of raw materials, product shipments and access to our main customers. Our steelworks are close to the main steel consumer centers in Brazil, with easy access to port facilities and railways. The concession for the main railway we use and operate is owned by MRS, in which we hold, directly and indirectly, as of December 31, 2024, a total of 37.49% ownership interest. The railway connects our Casa de Pedra mine to the Presidente Vargas Steelworks and to our terminals at Itaguaí Port, which handle our iron ore exports and most of our steel exports, as well as our imports of coal and metallurgical coke.
Low-cost structure. As a result of our fully integrated business model, our thoroughly developed transportation infrastructure and our energy generation, we have been consistently generating high margins compared to peer companies in the steel, mining and cement segments. Other factors that lead to our low-cost structure include the strategic location of our steelworks facility along with our low-cost, skilled workforce.
Our Strategies
Our goal is to make the most of our high-quality product portfolio, low-cost production and diverse consumer market to preserve our position as one of the world’s lowest-cost steel producers and as a global player in the mining of iron ore, increase our cement segment’s market share and optimize our infrastructure assets, including ports, railways and power generating plants, which support our high integration and low-cost structure. Additionally, as part of our strategy, we evaluate opportunities for investments and divestitures. To achieve these goals, we have developed specific strategies for each of our business segments, as described below. For more information, see “Item 4. Information on the Company—4B. Business Overview—Investments and Divestitures.”
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Steel
The strategy for our steel business comprises:
| · | Focus on the domestic market, by increasing market share in the flat steel segment and long steel market; |
| · | Emphasis on high-margin coated steel products, such as galvanized, Galvalume®, pre-painted and tin plate; |
| · | Investments in technology startups and other disruptive companies through our subsidiary CSN Inova Ventures, in order to foster innovation and efficiency; |
| · | Geographical diversification through our flat and long steel facilities abroad and our focus on diversifying our exports through, among others, coated steels; |
| · | Constant pursuit of operational excellence by developing and implementing cost reduction projects, including energy efficiency, and process review programs, including internal logistics optimization, project development and implementation discipline; |
| · | Exploring marketing and commercial synergies through our flat steel distribution network and product portfolio to further accelerate our entrance into the domestic long steel market; |
| · | Increased customized services and distribution abilities through our expanding distribution network; and |
| · | Investments to decarbonize our operations through the implementation of projects that aim to improve our operational efficiency and to develop new technologies. |
Mining
In order to strengthen our position in the iron ore market, we plan to invest in our mining assets, including through CSN Mineração, to generate low operational costs and long-term growth opportunities.
In the coming years, we expect to reach an annual shipment level of over 60 million tons per year of iron ore products, including third-party products, by increasing mine capacities, including at the Casa de Pedra mine, and developing export services for third-party producers. In the short-term, our focus is to adapt our products to market demands with optimal margins without affecting the balance of supply and demand in the transoceanic market. To sustain this growth, we plan to increase TECAR’s capacity from 45 million tons per year in 2024 to 60 million tons per year in 2028. For more information on risks relating to iron ore price volatility, see “Item 3. Key Information––3D. Risk Factors—Risks Relating to Us and the Industries in Which We Operate—We are exposed to substantial changes in the demand for steel and iron ore, which significantly affect the prices of our products and may adversely affect us.”
This expansion will be funded by CSN Mineração’s financings. For more information on CSN Mineração’s financings, see “Item 5. Operating and Financial Review and Prospects—5B. Liquidity and Capital Resources—Sources of Funds and Working Capital—Debt Maturity Profile” and future issuances of debentures or other debt instruments.
To maximize the profitability of our product portfolio, we are focused on meeting our customers’ demands which can vary between low to high end material. We also focus on increasing our output of high-quality pellet feed with Itabirito deposits and investing with strategic partners and customers in providing pellet feed to pellet producers.
Cement
We have invested heavily in our cement business and completed two important acquisitions in the last few years: Elizabeth Cimentos S.A., together with Elizabeth Mineração Ltda., in 2021 and LafargeHolcim (Brasil) S.A. in 2022. These acquisitions allowed us to become the second largest player in the Brazilian cement market with an installed capacity of 17.0 million tons, seven integrated plants, six grinding and mixing plants and 23 distribution centers throughout Brazil, in each case as of December 31, 2024.
Our cement business strategy looks to increased production and competitiveness, portfolio diversification and capillarity expansion by means of greenfield and brownfield projects, as well as possible acquisition opportunities. We are also working to reduce the greenhouse gas emissions of our cement operations, mainly through the implementation of projects to improve our operational efficiency, the use of alternative fuels and biomass, and the development and use of new disruptive technologies related to carbon capture and use.
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In addition, we expect favorable market perspectives in upcoming years due to a robust pipeline of infrastructure projects and higher industry utilization rates, each of which we expect will sustain cement consumption and favorable pricing in Brazil. The focus of our cement sales strategy is on the retail segment, which operates with a low level of inventory and for which our distribution centers provide a competitive advantage.
Logistics
We expect to expand our logistics capabilities, which comprise our integrated infrastructure operations of railways and ports, in order to increase the transportation efficiency of both our incoming raw materials and distributed products. We will continue to improve our product delivery in the Brazilian market (mainly steel and cement) by implementing low-cost measures, increasing our use of rail transportation and providing more distribution centers to reach end-customers.
In 2024, we acquired 70% of Estrela, the holding company of Grupo Tora, a leader in intermodal transport and distribution, for R$742.5 million. This acquisition significantly bolstered our logistics capabilities in road and rail freight, aligning with our vertical integration strategy and improving scale, reliability, and service coverage.
In addition to our bulk terminal TECAR, our TECON container terminal has a capacity of 660,000 TEUs per year.
In terms of railways, we are developing the TLSA project, which focuses on iron ore, agricultural commodities, gypsum and fuel. We also plan to invest in increased efficiency and capacity in the South of Brazil through our participation in MRS. Because MRS will primarily use its own operating income and other funding strategies to invest in its expansion projects, these investments will not require material capital expenditures by us.
Energy
We intend to continue to take advantage of certain acquisition opportunities in our energy segment to increase our clean energy generation volume to support the operations and expansion of our other segments, the growth of the energy segment and to replace concessions that will expire in the near future.
Our portfolio is composed of a thermal power plant in our steel complex, and several hydro power plants mostly concentrated in the southern region of Brazil, taking advantage of the great hydrological resources and transmission infrastructure, added to the synergy between our operations, engineering and the location in which we consume energy. The operations in our energy segment provide us with autonomy according to our energy needs, giving the industrial segment competitive prices due to energy production, cost predictability, and significant reduction of chargers and fees for our energy consumption. Since 2023, the electrical energy used for our industrial consumption is renewable.
Until June 2024, Presidente Vargas Steelworks procured natural gas through the local distribution company Naturgy (formerly Companhia Estadual de Gás do Rio de Janeiro S.A.), which sourced it from Petrobras. Subsequently, the plant transitioned to the Natural Gas Free Market, and began contracting the natural gas molecule, its transportation, and its distribution separately. This market structure provided CSN with a competitive edge among steel companies, given that we significantly reduced the cost of fuel by negotiating the acquisition price of gas molecule openly.
Investments and Divestitures
In addition to our planned investments and capital expenditures, we continue to evaluate acquisition opportunities, as well as joint ventures and brownfield or greenfield projects, to improve our steel, mining and cement cost competitiveness and production, along with our energy generation, logistics capabilities and infrastructure.
We also continue to evaluate business opportunities in order to improve our liquidity position in the short- to medium-term, including in the form of streaming transactions related to our iron ore business and the sale of our investment in Usinas Siderúrgicas de Minas Gerais S.A., or Usiminas.
Acquisition of Panatlântica S.A.
In October 2023, we executed a share purchase agreement with Panatlântica S.A., under which we agreed to acquire shares representing 18.61% of the company, for a total purchase price of R$150 million. As a result, our stake in Panatlântica S.A. increased to 29.91%. The acquisition was completed in January 2024.
Termination of Acquisition Opportunity in Cement Segment
In November 2023, we hired a financial adviser to evaluate the assets of InterCement Participações S.A., or InterCement, with the goal of assessing opportunities to enhance our participation in the cement segment. In February 2024, we made an offer to acquire the assets of InterCement as part of a competitive process. However, on December 4, 2024, we announced that, due to InterCement’s request for judicial reorganization, our exclusivity period for the potential acquisition of shares representing 100% of InterCement's share capital was automatically terminated. As a result, we decided to no longer engage in this process. We will continue to explore opportunities in the cement segment.
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Sale of Stake in CSN Mineração
In November 2024, we entered into a share purchase agreement for the sale of 589,304,801 common shares issued by CSN Mineração to Itochu Corporation. The sale represented 11% of our stake in CSN Mineração. The price per share was R$7.50 paid in cash, totaling R$4,420 million.
Acquisition of Grupo Tora
In December 2024, we signed a share purchase agreement with Grupo Tora under which we agreed to purchase shares representing 70% of the capital stock of Estrela, for a total purchase price of R$742.5 million. In April 2025, we completed the acquisition of such shares.
Joint Ventures, Strategic Alliances and Consortia
We currently operate parts of our business through joint ventures, strategic alliances and consortia with other companies. We have, among others: (i) a strategic alliance with an Asian consortium at our controlled investee CSN Mineração to mine iron ore; (ii) a concession jointly held with other Brazilian steel and mining companies at MRS to explore railway transportation in the Southeastern region of Brazil; (iii) a concession jointly held with certain Brazilian governmental entities at TLSA to explore railway transportation in the Northeastern region of Brazil; (iv) a joint venture with Engie Brasil Energia S.A., or Engie Brasil, and Companhia de Cimento Itambé, or Itambé, at ITASA, to produce electrical energy; (v) an energy consortium with Aliança, L.D.R.S.P.E. Geracão de Energia e Participações Ltda. and AngloGold to produce electrical energy through the hydroelectric power plant of Igarapava; (vi) a consortium with CSN Cimentos Brasil S.A. for self-production of electrical energy, called Consórcio Itaúba; and (vii) a consortium with Elizabeth Cimentos S.A., CSN Mineração and Minérios Nacional S.A. for operation and maintenance of the Passo Real Hydroelectric Plant and self-production of electrical energy.
Description of our Operating Segments
Our Steel Segment
We produce carbon steel, which is the world’s most widely produced type of steel, representing the vast bulk of global consumption. From carbon steel, we sell a variety of products, both domestically and abroad, to manufacturers in several industries. For more information on our steel segment, see “—4A. History and Development of the Company—General—Steel.”
Flat Steel
Our Presidente Vargas Steelworks produces flat steel products, which comprise slabs, hot-rolled, cold-rolled, galvanized and tin mill products. For more information on our flat steel production process, see “—Production Output.”
Slabs
Slabs are semi-finished products used for processing hot-rolled, cold-rolled or coated coils and sheet products. We are able to produce continuously cast slabs with a standard thickness of 250 millimeters, widths ranging from 830 to 1,600 millimeters and lengths ranging from 5,250 to 10,500 millimeters. We produce high, medium and low carbon slabs, as well as micro-alloyed, ultra-low-carbon and interstitial free slabs. The slabs are then slit and finished, generating blooms which are delivered to the long products plant.
Hot-Rolled Products
Hot-rolled products include heavy and light-gauge hot-rolled coils and sheets. A heavy gauge hot-rolled product, as defined by Brazilian standards, is a flat-rolled steel coil or sheet with a minimum thickness of 5.01 millimeters. We are able to provide coils of heavy gauge hot-rolled sheet with a maximum thickness of 12.70 millimeters used to manufacture automobile parts, pipes, structural beams and other construction products. We produce light gauge hot-rolled coils and sheets with a minimum thickness of 1.20 millimeters, which are used for welded pipe and tubing, automobile parts, gas containers, compressor bodies and light cold-formed shapes, channels and profiles for the construction industry.
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Cold-Rolled Products
Cold-rolled products include cold-rolled coils and sheets. A cold-rolled product, as defined by Brazilian standards, is a flat cold-rolled steel coil or sheet with thickness ranging from 0.30 millimeters to 3.00 millimeters. Cold-rolled products have more uniform thickness and better surface quality when compared to hot-rolled products and their main applications are automotive parts, home appliances and construction. We supply cold-rolled coils with thickness ranging from 0.30 millimeters to 2.99 millimeters.
Galvanized Products
Galvanized products comprise flat-rolled steel coated on one or both sides with zinc or a zinc-based alloy applied by either a hot-dip or an electrolytic process. We use the hot-dip process, which is approximately 20% less expensive than the electrolytic process. Galvanizing is one of the most effective and low-cost processes used to protect steel against corrosion caused by exposure to water and the atmosphere. Galvanized products are highly versatile and can be used to manufacture a broad range of products, such as:
| · | automobiles, trucks and bus bodies; |
| · | manufactured products for the construction industry, such as panels for roofing and siding, dry wall and roofing support frames, doors, windows, fences and light structural components; |
| · | air ducts and parts for hot air, ventilation and cooling systems; |
| · | culverts, garbage containers and other receptacles; |
| · | storage tanks, grain bins and agricultural equipment; |
| · | panels and sign panels; and |
| · | pre-painted parts. |
Galvanized sheets, both painted and bare, are also frequently used for gutters and downspouts, outdoor and indoor cabinets and home appliances, among others. We produce galvanized sheets and coils in continuous hot-dip processing lines, with thickness ranging from 0.30 millimeters to 3.00 millimeters. The continuous process allows for products with highly adherent and uniform zinc coatings capable of being processed in nearly all kinds of bending and forming machinery.
We produce Galvanew in addition to standard galvanized products. Galvanew is produced by an additional annealing cycle just after the zinc hot-dip coating process. This annealing process causes iron to diffuse from the base steel into the zinc coating. The resulting iron-zinc alloy coating allows better welding and paint performance. The combination of these qualities makes our Galvanew product particularly well suited for manufacturing automobile and home appliance parts, including high gloss exposed parts.
At CSN Paraná, one of our branches, we produce Galvalume®, a continuous Al-Zn coated material. Although the production process is similar to hot-dip galvanized coating, Galvalume® has at least twice the corrosion resistance of standard galvanized steel. Galvalume® is primarily used in outdoor construction applications that may be exposed to severe acid corrosion, like marine uses.
The value added from the galvanizing process permits us to price our galvanized products with a higher margin. Our management believes that our expertise in value-added galvanized products presents one of our best opportunities for profitable growth because of the increase in Brazilian demand for these products.
Through CSN Paraná, we also produce pre-painted flat steel, which is manufactured in a continuous painting line. In this production line, a layer of resin-based paint in a choice of colors is deposited over either cold-rolled or galvanized base materials. Pre-painted material is a higher value-added product used primarily in the construction and home appliance markets.
Tin Mill Products
Tin mill products consist of flat-rolled low-carbon steel coils or sheets with, as defined by Brazilian standards, a maximum thickness of 0.45 millimeters, coated or uncoated. We apply coatings of tin or chromium by electrolytic process. Coating costs place tin mill products among our highest priced products because the added value from the coating process permits us to price our tin mill products at a higher margin. There are four types of tin mill products, all produced by us in coil and sheet forms:
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| · | Tin plate: coated on one or both sides with a thin metallic tin layer plus a chromium oxide layer, covered with a protective oil film; |
| · | Tin free steel: coated on both sides with a very thin metallic chromium layer plus a chromium oxide layer, covered with a protective oil film; |
| · | Low tin coated steel: coated on both sides with a thin metallic tin layer plus a thicker chromium oxide layer, covered with a protective oil film; and |
| · | Black plate: uncoated product used as the starting material for the coated tin mill products. |
Tin mill products are primarily used to make cans and other containers. With six electrolytic coating lines, we are one of the largest producers of tin mill products in the world and the sole producer of coated tin mill products in Brazil.
Long Steel
We entered the long steel market in 2012, with the acquisition of SWT, in Unterwellenborn, Germany. Additionally, in 2013, our Volta Redonda plant started to produce long steel products, which comprise products for civil construction and high-quality drawing and cold heading applications. For more information on our long steel production process, see “—Production Output.”
Quality Management System
We maintain a quality management system that is certified to comply with the International Standardization Organization, or ISO, 9001:2015 standard and the automotive industry’s International Automotive Task Force, or IATF, standard 16949:2016. ISO 9001:2015 is for the design and manufacture of slabs, blooms, billets, hot-rolled flat, pickled and oiled, cold-rolled and galvanized steel, tin mill products and long steel products; and IATF 16949:2016, third edition, is for the manufacture of hot-rolled flat, pickled and oiled steel products, cold-rolled and galvanized steel products. In addition, as a manufacturer and supplier of products for the food packaging industry, we hold the food safety management system certification, or FSSC 22000, recognized by the Global Food Safety Initiative. Moreover, we are committed to customer satisfaction, constantly seeking to optimize our production processes based on three pillars: (i) quality management, (ii) alignment between strategies, and (iii) continuous process improvement.
Production Facilities
Flat Steel Mill
The Presidente Vargas Steelworks, located in the city of Volta Redonda, in the state of Rio de Janeiro, began operating in 1946. It is an integrated facility covering approximately four square km and containing five coke batteries, three of which are in operation, three sinter plants, two blast furnaces, a basic oxygen furnace steel shop, with three converters, three continuous casting units, one hot strip mill, three cold strip mills, two continuous pickling lines, one continuous annealing line, 28 batch annealing furnaces, three continuous galvanizing lines, four continuous annealing lines exclusively for tin mill products, three of which are in operation, and six electrolytic tinning lines, three of which are in operation.
The annual production capacity of steel at the Presidente Vargas Steelworks as of December 31, 2024 was 5.4 million tons.
Downstream Facilities
CSN Paraná
Our CSN Paraná branch produces and supplies plain regular galvanized products, Galvalume® products and pre-painted steel products for the automotive, construction and home appliance industries. The plant has an annual capacity of 295,000 tons of galvanized products and Galvalume® products, 131,000 tons of pre-painted products, which can use cold-rolled or galvanized steel as substrate, service capacity of 150,000 tons of sheets and narrow strips, and 384,000 tons of pickled hot-rolled coils in excess of the coils required for the coating process.
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CSN Porto Real
Our CSN Porto Real branch produces and supplies plain regular galvanized, Galvanew and tailored blanks, mainly for the automotive industry. The plant has an annual capacity of 350,000 tons of galvanized products, including Galvanew products, and 354,000 tons of tailored blanks, sheets and narrow strips, which can use cold-rolled or galvanized steel as a substrate.
Companhia Metalúrgica Prada
Established in 1936, Companhia Metalúrgica Prada is the largest Brazilian steel can manufacturer and has an annual production capacity of over one billion cans in its five industrial facilities located in the states of São Paulo, Minas Gerais, Rio de Janeiro and Rio Grande do Sul and in the city of Brasília. We are the only Brazilian producer of tin plate, which is Companhia Metalúrgica Prada’s main raw material, making it one of our most important products. Companhia Metalúrgica Prada has important customers in the food and chemical industries, including packages of vegetables, fish, dairy products, meat, aerosols, infant nutrition and other business activities.
Prada Distribuição, the distribution arm of Companhia Metalúrgica Prada, is one of the leaders in the Brazilian distribution market for steel products with 600,000 tons per year of installed processing capacity. Prada Distribuição has two steel service centers and three distribution centers strategically located in the southeastern region of Brazil. The service centers are located in the city of Mogi das Cruzes, in the state of São Paulo, and in the city of Valença, in the state of Rio de Janeiro. Its product mix also includes sheets, slit coils, sections, tubes and roofing in standard or customized format, according to customers’ specifications. Prada Distribuição processes the entire range of products produced by us and services 4,000 customers annually from the civil construction, automotive and home appliances sectors, among others.
In 2021, we acquired Metalgráfica Iguaçu S.A., which produces steel cans for the national and international market of metal food packaging. Metalgráfica Iguaçu S.A.’s operations also include the manufacture, commercialization, export and import of containers and packaging in general (metallic or not), metal sheets, raw materials and inputs for steel or plastic products, equipment and electronic components in general. This acquisition was a strategic step to expand our production capacity in the packaging division.
Lusosider Aços Planos, S.A.
Lusosider is a flat steel processing facility located in Seixal, near Lisbon, Portugal. Lusosider has the capacity to produce approximately 105,000 tons of hot-rolled pickled coils, 36,000 tons of cold-rolled steel products and 276,000 tons of galvanized steel products per year. Its main customers include service centers and tube making industries.
CSN Distribuição
CSN Distribuição has one service center, located in the city of Camaçari, in the state of Bahia, to support sales in the northeastern and northern regions of Brazil. It also has a distribution center in the city of Canoas, in the state of Rio Grande do Sul, to support sales in the southern region of Brazil.
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SWT Long Steel Mill
In February 2012, we acquired SWT in Germany, which marked our entry into the long steel market. SWT specializes in the production of profiles, including IPE (European I Beams) and HE (European Wide Flange Beams) sections, channels and UPE (Channels with Parallel Flanges) sections and steel sleepers. In total, SWT produces more than 200 types of sections according to different German and international standards. SWT possesses a 28 km internal railway system, as well as the logistics infrastructure to ensure supply of scrap and delivery of finished products. The main markets served by SWT include non-residential construction, equipment industries and engineering and transport, in Germany and in neighboring countries, including Poland and the Czech Republic. The following table sets forth SWT’s production capacity as of December 31, 2024:
|
Tons per year |
Equipment in operation | |
| Process: | ||
| EAF – Electric Arc Furnace | 1,100,000 | 1 furnace |
| Ladle Furnace | 1,100,000 | 1 furnace |
| Finished Products: | ||
| Section Mill | 1,000,000 | 1 mill |
Volta Redonda Long Steel Mill
Our Volta Redonda plant for the production of long steel products comprises a 50-ton electric arc steelmaking furnace, 50-ton ladle furnace, continuous casting machine for billets and a hot rolling mill for wire rod and reinforcing bar. This plant is operational and its production increases annually, providing the Brazilian market with products for civil construction and high-quality drawing and cold heading applications. In addition to our operational performance improvements, we are developing and negotiating certain equipment enhancements that we expect will provide for nominal capacity of 383 kt/year of billets and 450 kt/year of laminates.
Steelmaking Shop
Designed for an output of 200,000 tons per year, this unit mainly consists of one 50 ton UHP, AC electric arc furnace, one 50 ton ladle furnace, one continuous casting machine for billets with three strands, mobile equipment and cranes, power supply, distribution facilities and auxiliary equipment.
Rolling Mill
Designed for an output of 500,000 tons per year, this unit has one walking-beam reheating furnace, or RHF, a four-stand blooming mill, a 250 ton hot shear, a six-stand roughing mill, a six-stand intermediate mill, a six-stand pre-finishing mill, internal water cooling, a double length flying shear, a stepping cooling bed, a 500 ton cold shear, transfer inspection stand, bundling machine, a water-cooling section before wire finishing mill, a 10-stand high-speed wire finishing mill, a water-cooling section after wire finishing mill, a laying head, a loose coil cooling line, reforming device, bundling machine, stripper and coil handling devices.
Production Output
Flat Steel
The following table sets forth the aggregate annual production of crude steel in Brazil and by us, and the percentage of Brazilian production attributable to us for the periods indicated:
|
Brazil |
CSN |
CSN as % of Brazil | |
| 2022 | 33.9 | 3.6 | 11.2% |
| 2023 | 31.9 | 2.9 | 9.1% |
| 2024 | 33.7 | 3.1 | 9.2% |
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Source: Brazilian Steel Institute (Instituto Aço Brasil).
The following table sets forth our selected operating statistics for the periods indicated:
2022 |
2023 |
2024 | |
| (in millions of tons) | |||
| Production of: | |||
| Molten steel | 3.7 | 3.0 | 3.2 |
| Crude steel | 3.6 | 2.9 | 3.1 |
| Hot-rolled coils and sheets | 3.6 | 3.3 | 3.6 |
| Cold-rolled coils and sheets | 2.2 | 2.0 | 2.1 |
| Galvanized products | 1.4 | 1.3 | 1.4 |
| Tin mill products | 0.4 | 0.3 | 0.3 |
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Long Steel
The following table sets forth the production output of our Volta Redonda long steel mill:
|
2022 |
2023 |
2024 | |
| (in thousands of tons) | |||
| Billets (crude steel) | 208 | 207 | 211 |
| Long steel (finished products) | 217 | 210 | 239 |
The following table sets forth SWT’s production for the indicated years:
|
2022 |
2023 |
2024 | |
| Production of: | |||
| Beam blank (crude steel) | 758 | 764 | 764 |
| Long steel (finished products) | 712 | 720 | 827 |
Raw Materials and Suppliers
Flat Steel
The main raw materials we use in our integrated steel mill include iron ore, coal (from which we make coke), coke, limestone, dolomite, aluminum, tin and zinc. In addition, our production operations consume water, natural gas, energy, diesel oil, and ancillary materials.
Iron Ore
We are able to obtain the majority of our iron ore requirements from our Casa de Pedra and Engenho mines located in the state of Minas Gerais. The only iron ore product that we buy from third parties is pellet. For more information, see “—Our Mining Segment.”
Coal
In 2024, our metallurgical coal consumption totaled 1.1 million tons. Metallurgical coal includes coking coal and pulverized coal injection coal, or PCI coal, which is a lower grade coal injected into blast furnaces, in a pulverized form, to reduce coke consumption. The PCI system reduces our need for imported coke, thereby reducing production costs. Our total PCI coal consumption in 2024 totaled 0.461 million tons, all imported from Russia. In 2024, the sources of the hard coking coal consumed in our plants were 79.9% from USA, 18.4% from Australia, and 1.7% from Colombia.
Coke
In 2024, in addition to approximately 0.498 million tons of coke we produced, we also consumed 1.117 million tons of coke purchased from third parties in China, Japan, Indonesia and Colombia, which represented an increase of 1.85% compared to our consumption in 2023.
Limestone and Dolomite
Our Bocaina Mine in the city of Arcos, in the state of Minas Gerais, has been supplying, since the early 1970s, limestone (calcium carbonate) and dolomite (dolomitic limestone) to our Presidente Vargas Steelworks in Volta Redonda. These products are used in the process of sintering and calcination. Limestone is used in the production of various products, including clinker and cement.
The annual production of limestone and dolomite in 2024 from the Bocaina Mine for our steelworks was approximately 1.4 million tons.
The main products obtained from limestone and dolomite that are transferred to our steelworks in Volta Redonda are:
| · | Limestone and dolomite calcination: with a granulometry between 32 and 76 mm, they are used in the lime plant in Volta Redonda to produce calcitic and dolomitic lime, for further use in the steelmaking process and sintering. At the steelworks, lime is used for chemical controlling of liquid slag in order to preserve the refractory of the converters and assist in the stabilization of the chemical reactions that occur during the steel manufacturing process. During sintering, the purpose of lime is to increase the performance of this process and the final quality of the sinter that is produced. |
| · | Limestone and dolomite fines for sintering: used in the production of “sinter” in our steelworks. The sintering process mixes and heats together with fine ores, solid fuel and flux, producing a highly reactive granulated burden. The sinter is used in blast furnaces as the main source of iron for the production of pig iron. |
The Bocaina Mine is also responsible for supplying limestone for cement and agricultural limestone manufacturing in Arcos.
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Aluminum, Zinc and Tin
Aluminum is mostly used for steelmaking. Zinc and tin are important raw materials used in the production of certain higher-value steel products, such as galvanized and tin plate. We typically purchase aluminum and tin from third-party domestic suppliers and zinc from third-party domestic and international suppliers. We purchase part of our tin from our subsidiary ERSA. We maintain approximately 32-, 22- and 55-days’ inventory of tin, aluminum and zinc, respectively, at the Presidente Vargas Steelworks.
Ancillary Materials
In our production of steel, we consume, on an annual basis, significant amounts of spare parts, refractory bricks and lubricants, which we generally purchase from domestic suppliers.
We also consume significant amounts of oxygen, nitrogen, hydrogen, argon and other gases at the Presidente Vargas Steelworks. These gases are supplied by a third-party under a long-term contract from gas production facilities located at the Presidente Vargas Steelworks site.
In 2024, we used 456,067 tons of oxygen at the Presidente Vargas Steelworks site.
Water
We require large quantities of water in the production of steel. Water serves as a solvent, a catalyst and a cleaning agent. It is also used to cool, carry waste, help produce and distribute heat and power and dilute liquids. Our source of water is the Paraíba do Sul River, which runs through the city of Volta Redonda. Over 94.2% of the water used in the steelmaking process is recirculated and the balance, after careful processing, is returned to the Paraíba do Sul River. Since March 2003, the Brazilian government has imposed an annual tax for our use of water from the Paraiba do Sul river, based on an annual fee, which in 2024 was of approximately R$3.5 million.
Natural Gas
The market for natural gas is strongly correlated with the energy market and we consume both natural gas and electrical energy, mainly in our hot strip mill. Following the transition of Presidente Vargas Steelworks into the free gas market, we have maintained a diverse portfolio of gas suppliers. We entered into a master sales agreement with each supplier, which outlines the general characteristics of our operations, including gas scheduling, supply metrics, and legal implications. The master sales agreement expedites transactions between parties, as only commercial characteristics remain to be agreed upon. In 2024, the Presidente Vargas Steelworks consumed 470.6 million cubic meters of natural gas.
Diesel Oil
We maintain agreements with Vibra Energia S.A., or Vibra, to receive diesel oil to supply our equipment in our mining plants in the state of Minas Gerais, which provide the iron ore, dolomite and limestone used in our steel plant in Volta Redonda.
In 2024, our diesel oil consumption was 85,666 kiloliters, which was used to produce 32.01 million tons of iron ore, for which we paid R$327.8 million. For more information, see “Item 3. Key Information––3D. Risk Factors—Risks Relating to Us and the Industries in Which We Operate—We are exposed to substantial changes in commodities prices, including oil prices, which significantly affect the prices of our inputs and the prices of our products, and may adversely affect us.”
Long Steel – SWT
The main raw material we use in our long steel production is scrap. In addition, we require electrical energy, natural and technical gases and ancillary materials like ferroalloys, lime, dolomite and foaming coal.
Scrap
Our scrap consumption in 2024 was 0.92 million tons, as compared to 0.85 million tons in 2023. Scrap accounted for approximately 63% and 60% of our production costs in 2024 and 2023, respectively. The scrap price has increased 1.3% compared to 2023, and the production costs have decreased by 3.3%. We are able to obtain approximately 70% of our scrap needs from within a 250 km vicinity of our production facilities.
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Ferroalloys, Lime and Foaming Coal
Because we do not own any sources of ferroalloys, lime or foaming coal, we must buy these raw materials from third-party traders, most of which are located in Europe and source these raw materials from producers around the world.
Rolls
We consume different types of rolls in our long steel rolling mill, usually cast rolls that come from Germany, Italy, Slovenia and China.
Graphite Electrodes
In the smelting shop, which is an electric arc furnace, we use graphite electrodes with a diameter of 750mm. In the ladle furnace, we use electrodes with a diameter of 400mm. We source these electrodes from Europe, Japan and China.
Other Raw Materials
Our production of long steel also requires the use of electrodes, rolls, refractory materials and materials for packaging and spare parts, which are mostly purchased from domestic suppliers.
Water
Large amounts of water are required in the long steel production process. Our source of water is the Saale River, located five km from the plant in Germany. We use our own water station to pump water via pipelines to the plant.
Electrical Energy and Natural Gas
The production of long steel also requires significant amounts of electrical energy and natural gas, for which we have supply contracts. Under normal conditions, we consume approximately 444 GWh of electrical energy and 407 GWh of natural gas annually.
In 2024, SWT’s electricity supply prices were slightly lower than in 2023, although prices remained significantly higher than pre-energy crisis levels, which began with the conflict between Russia and Ukraine. Notwithstanding these conditions, STW concluded the year 2024 with a natural gas price marginally below the budgeted figure and an electricity price approximately 20% lower than the budget amount.
Suppliers
Flat Steel
We acquire our inputs in Brazil and abroad. Aluminum, zinc, tin, spare parts, refractory bricks, lubricants, oxygen, nitrogen, hydrogen and argon are the main inputs we acquire in Brazil. Coal and coke are the only inputs we acquire abroad.
In 2022, 2023 and 2024, we consumed 190,256 tons, 387,722 tons and 651,964 tons, respectively, of third-party slabs.
Following are our main raw materials suppliers as of December 31, 2024:
|
Main Suppliers |
Raw Material |
| Steelena DMCC, ArcelorMittal and Cheongfuli | Slabs |
| Anglo American, Javelin Global and Alpha Metallurgical | Coal |
| CI Milpa S.A. Trafigura Pte and Sinochem International | Coke |
| EGA América and ZincoSul | Aluminum |
| ZincoLigas | Zinc |
| ERSA and Fabrica Auricchio Ind e Com | Tin |
| Sotreq, Minas Máquinas, Komatsu, Inova, WLM, Metso, Sany and Centro Oeste Equip. | Spare parts |
| Magnesita Refratários, Shinagawa Refratários, Vesuvius, Indústrias Brasileiras de Artigos Refratários –IBAR, Togni S/A, CNBM International and Primetals | Refractory bricks |
| Iconic, Quaker, Magni and Cosan | Lubricants |
| Vale and Samarco | Pellet |
| Vibra Energia and Ipiranga | Diesel oil |
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Long Steel – SWT
We acquire the inputs necessary for the production of our long steel products globally. The following table sets forth our main raw materials suppliers for out long steel production on SWT:
|
Main Suppliers |
Raw Material |
| Scholz, TSR | Scrap |
| RWE Supply & Trading GmbH | Electrical energy |
| Shell Energy Deutschland GmbH | Natural gas |
| Refractories Site Service GmbH | Refractory |
| Graftech, Tokai, BWA | Electrodes |
| Siemens, Schneider, Voith | Spare parts |
| Irle, Walzengießerei Coswig | Rolls |
Our Mining Segment
Our mining activities are among the largest in Brazil and are mainly driven by the exploration of our iron ore reserves. We sell our iron ore products mainly in Asia, Europe and Brazil with sales and marketing from Brazil and Austria. For more information on our mining segment, see “—4A. History and Development of the Company—General—Mining.”
Following is an overview of our material mining properties as of December 31, 2024:
|
Material Mining Properties | |||||||||
|
Name of mining operation |
Location of the mining operation |
Type and amount of ownership interest |
Operator |
Surface |
Stage of the mining operation |
Permits |
Key condition of permit |
Type of mine/ material |
Beneficiation plant and other installations |
| (%) | (Ha) | ||||||||
| Casa de Pedra | Congonhas, MG | 69.01 | CSN Mineração | 2,516 | Production | Yes | EIA(1) and others | Open Pit / Iron Ore | Mining facilities and Pires |
| Engenho | Congonhas, MG | 69.01 | CSN Mineração | 344 | Production | Yes | EIA(1) and others | Open Pit / Iron Ore | Mining facilities and Pires |
_____________
| (1) | Environmental Impact Assessment – EIA. Permits or licenses have been obtained, are being renewed or are being processed in accordance with current regulations. |
Following is an overview of our non-material mining property as of December 31, 2024:
|
Non-material Mining Properties | |||||||||
|
Name of mining operation |
Location of the mining operation |
Type and amount of ownership interest |
Operator |
Surface |
Stage of the mining operation |
Permits |
Key condition of permit |
Type of mine/ material |
Beneficiation plant and other installations |
| (%) | (Ha) | ||||||||
| Fernandinho | Itabirito, MG | 100 | Minerios Nacional | 147.0 | Deactivated | Yes | – | Open Pit/ Iron Ore | – |
_____________
| (1) | The key permissions to guarantee the respective reserves are: mineral concessions; environmental licenses; and rights to use the property. |
The following tables set forth each individual property’s production information for the indicated years:
|
Material Mining Properties | |||||
|
Name of mining operation |
Location of the mining operation |
Beneficiation plant and other installations |
Aggregate production 2022 (*1000) |
Aggregate production 2023 (*1000) |
Aggregate production 2024 (*1000) |
| Casa de Pedra | Congonhas, MG | Mining facilities and Pires | 23,725 | 33,400 | 40,290 |
| Engenho | Congonhas, MG | Mining facilities and Pires | 7,024 | 1,600 | 1,260 |
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|
Non-material Mining Properties | |||||
|
Name of mining operation |
Location of the mining operation |
Beneficiation plant and other installations |
Aggregate production 2022 |
Aggregate production 2023 |
Aggregate production 2024 |
| (tons) | (tons) | (tons) | |||
| Fernandinho | Itabirito, MG | Fernandinho Mine | – | – | – |
Iron Ore Mining Properties
Our iron ore business is conducted by our subsidiary CSN Mineração in the state of Minas Gerais, within the area called the Iron Quadrangle. Casa de Pedra mine, Engenho mine and Fernandinho mine are our open pit mines. Casa de Pedra mine and Engenho mine belong to the same mining complex and run their own transportation and shipping capabilities. The mining complex comprises the Casa de Pedra central plant and the Pires Beneficiation Plant. Fernandinho mine, which is currently deactivated, is located on the North side of Brazil and, when it was active until 2015, it also ran its own transportation and shipping capabilities.
To complement its iron ore mining properties, CSN Mineração runs the Itaguaí Port, located in the municipality of Itaguaí, state of Rio de Janeiro, and the Presidente Vargas Steelworks, in the municipality of Volta Redonda, also in the state of Rio de Janeiro.
The following map presents an overview of our iron ore operations:
Our iron ore properties comprise Casa de Pedra and Engenho (both material properties) and Fernandinho (non-material property), as further described below:
Casa de Pedra Mine – Congonhas, MG
Casa de Pedra mine is our main iron ore mine. It is located in the municipality of Congonhas, 80 km to the south of Belo Horizonte, the capital of the state of Minas Gerais. Its mining concession has no expiration date and covers 2,516 hectares. Casa de Pedra is in full production stage.
Casa de Pedra mine has all the necessary permits for current operations, and the authorization process related to its planned production expansion is running according to schedule. Related facilities, such as waste piles and tailings dams, also comply with applicable legislation.
Casa de Pedra mine is an open pit operation with high grade hematite ore type (iron grade of approximately 64%) mixed with a minor amount of itabirite ore type (iron grade of approximately 30-60%). Mine occurrences are represented by banded iron formations, varying from low grade (~Fe@30%) to medium/high grade types (~Fe@60%), and supergenous/hypogenous hematite (Fe@64%), all varying from fresh to hard material types. Some types of mineralized covers are also mixed to feed the plant. The geology framework is complex as a consequence of innumerous geological events that created an integrate grade variability scenario. For this reason, mapping and drilling are always reinforced and are one of the work priorities at Casa de Pedra mine.
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The Casa de Pedra central plant is fed with natural high grade run of mine, and the beneficiation process comprises crushing, screening, and flotation. The Casa de Pedra central plant generates lump ore, sinter feed and pellet feed. The Pires beneficiation plant is fed with low to medium grade in a dry beneficiation process.
All products from Casa de Pedra mine are transported by MRS’s railroad, which transports iron ore to the Itaguaí maritime terminal in the state of Rio de Janeiro.
Engenho Mine – Congonhas, MG
Engenho mine covers 344 hectares and has been integrated in the Casa de Pedra mining complex since 2012. Engenho mine production is constantly mixed with Casa de Pedra mine production, following the same process route.
The following map sets forth a detailed illustration of Casa de Pedra mine and Engenho mine locations:
Fernandinho Mine – Itabirito, MG
Fernandinho mine covers 147 hectares and has been integrated in the Casa de Pedra mining complex since 2012. Fernandinho mine’s operations were deactivated in 2015 as part of an internal strategic decision. In the future, additional geological, drilling and resource studies and estimations will be performed in order to update mineral resources conversion to mineral reserves.
The following map sets forth a detailed illustration of Fernandinho mine and its related facilities:
| 34 |
In addition to the mining properties detailed above, CSN Mineração conducts initial exploration activities in the surrounding areas of our mining operations.
Our Mining Plants
Casa de Pedra Plant
Casa de Pedra facilities are located in the city of Congonhas, in the state of Minas Gerais. Casa de Pedra mine is located 350 km from the Presidente Vargas Steelworks and supplies iron ore products to our steel mill, as well as for export through the Itaguaí Port. Casa de Pedra’s equipment fleet and treatment facilities have an installed annual run of mine capacity of approximately 120 million tons and 40 million tons, respectively.
Pires and Fernandinho Beneficiation Plants
The Pires beneficiation plants are dry beneficiation plants that receive material from Engenho mine and Casa de Pedra mine and generate final products, such as lump ore and sinter feed.
The Fernandinho beneficiation plant receives material from stockpiled tailings piles, located in the city of Rio Acima, state of Minas Gerais, and generates sinter feed and fines as final products.
The following table sets forth the production volume of iron ore in each of our mines in the last three years:
|
Production(1) | |||
|
2022 |
2023 |
2024 | |
| Casa de Pedra(2) (Mt) | 16.09 | 19.75 | 22.63 |
| Grade(3) (%) | 61.4% | 61.6% | 61.9% |
| Pires(2) (Mt) | 7.41 | 8.49 | 9.39 |
| Grade (%) | 58.0% | 55.2% | 53.1% |
| Fernandinho(2) (Mt) | 0.57 | 0.61 | 0.41 |
| Grade (%) | 64.7% | 63.7% | 62.0% |
_____________
| (1) | In addition to its own production, CSN Mineração also purchased iron ore from third parties. Third-party purchase volumes were 9.4 million tons, 14.3 million tons and 9.9 million tons in 2022, 2023 and 2024, respectively. |
| (2) | Production information considers 100% of the mines. |
| (3) | Grade is the proportion of metal or mineral present in ore or any other host material. |
The following table sets forth our consolidated sales in the periods presented:
|
2022 |
2023 |
2024 | |
| Consolidated sales (Mt) | 29.19 | 37.67 | 38.51 |
Our Iron Ore Mineral Resources and Mineral Reserves
The following table sets forth a summary of our iron ore resources and reserves, updated to December 31, 2024, considering our ownership interest in each property:
|
Measured mineral resources |
Indicated mineral resources |
Measured + Indicated mineral resources |
Inferred mineral resources | |||||
|
Amount |
Grades/ Qualities |
Amount |
Grades/ Qualities |
Amount |
Grades/ Qualities |
Amount |
Grades/ Qualities | |
| (million tons) | (% Fe) | (million tons) | (% Fe) | (million tons) | (% Fe) | (million tons) | (% Fe) | |
| Iron ore: | ||||||||
| Casa de Pedra Mine | 132 | 39.8 | 970 | 37.6 | 1,102 | 37.9 | 1,180 | 37.1 |
| Engenho Mine | 153 | 40.2 | 37 | 46.9 | 190 | 41.5 | 10 | 43.5 |
| Fernandinho Mine | 42 | 39.8 | 49 | 39.2 | 92 | 39.5 | 50 | 39 |
_____________
Updated December/2024.
The following table sets forth our proven, probable and total mineral reserves at the Casa de Pedra and Engenho mines, as of December 31, 2024:
|
Proven mineral reserves |
Probable mineral reserves |
Total mineral reserves | ||||
|
Amount |
Grades/ Qualities |
Amount |
Grades/ Qualities |
Amount |
Grades/ Qualities | |
| (million tons) | (% Fe) | (million tons) | (% Fe) | (million tons) | (% Fe) | |
| Iron ore: | ||||||
| Casa de Pedra Mine | 64 | 37.9 | 1,144 | 40.8 | 1,208 | 40.6 |
| Engenho Mine | 8 | 38.6 | 145 | 41.5 | 153 | 41.3 |
_____________
*We consider an average price of US$95 per ton for the economic analysis. Updated December/2024.
| 35 |
Casa de Pedra mine and Engenho mine are mill feed material (Run of Mine – ROM) and the point of reference for the mineral reserves is ore delivered to the processing facility. The following tables set forth Casa de Pedra mine and Engenho mine reserves pit optimization parameters:
|
Parameters |
Base |
Value |
| Price | USD/t product | 78.82 |
| Waste mining cost | US$/t mined | 0.99 |
| Ore mining cost | US$/t mined | 1.88 |
| Overall dilution | % | 5% |
| Overall mining recovery | % | 95% |
| Overall mining cost | US$/t mined | 1.57 |
| PC/OS processing cost | US$/t | 3.86 |
| P15 friable ore process cost | US$/t | 5.32 |
| P15 hard ore process cost | US$/t | 6.17 |
| Additional downstream cost | USD/t product | 49.49 |
| Overall processing cost | US$/t mined | 5.45 |
| PC/OS mass recovery | % | 82.40% |
| P15 mass recovery | % | 43.80% |
| Overall Mass recovery | % | 52.80% |
| Overall economic cog | % | 22.40% |
_____________
| Notes: |
Metallurgical recovery or mass recovery for PC/OS = 82.40%
Metallurgical recovery or mass recovery for P15 = 43.80% Overall metallurgical recovery or mass recovery = 52.60%
Cut-off grade: 22.40%
The following table sets forth a reconciliation with the depletion of mineral resources (exclusive of reserves) for Casa de Pedra mine and Engenho mine in each of 2022, 2023 and 2024, considering our ownership interest of 79.8% as of December 31, 2022, 79.8% as of December 31, 2023, and 69.01% as of December 31, 2024:
|
As of December 31, 2022 |
2023 Depletion |
2023 Net Difference |
As of |
2024 Depletion |
2024 Net Difference |
As
of | |
| (million tons) | |||||||
| Mineral Resources | 2,929 | (28) | (0.96)% | 2,901 | (419) | (14.44)% | 2,482 |
_____________
Note: Figures included in this table have been subject to rounding adjustments. Accordingly, figures shown as totals may not represent an arithmetic sum of the figures that precede them.
The following table sets forth a reconciliation with the depletion of mineral reserves for Casa de Pedra mine and Engenho mine in each of 2022, 2023 and 2024, considering our ownership interest of 79.8% as of December 31, 2022, 79.8% as of December 31, 2023, and 69.01% as of December 31, 2024:
|
As of December 31, 2022 |
2023 Depletion |
2023 Net Difference |
As of |
2024 Depletion |
2024 Net Difference |
As
of | |
| (million tons) | |||||||
| Mineral Reserves | 1,634 | (28) | (1.71)% | 1,606 | (245) | (15.26)% | 1,361 |
_____________
Note: Figures included in this table have been subject to rounding adjustments. Accordingly, figures shown as totals may not represent an arithmetic sum of the figures that precede them.
Mineral Resource and Mineral Reserve Estimation Internal Controls
We are committed to applying best practices in our mineral resource and mineral reserve estimations. Our team responsible for these estimations works with global institutions, organizations and universities to maintain updated estimation processes and to document and apply these processes. Our internal controls for mineral resource and mineral reserve estimation include the following:
| · | Updated operational procedures for routine activities, which include: |
| o | geological mapping; |
| o | coordination of checks on drillhole collars; |
| o | downhole survey protocols; |
| o | core shed activities; and |
| o | database management system containing collar, survey and assay files; |
| 36 |
| · | Drilling with appropriate and satisfactory methods for geological logging, structural measurements and metallurgical testing by use of diamond drill core; |
| · | Logging performed onsite using in-house geologists; and |
| · | Sampling performed on all drill core and supervised or directly performed by in-house geologists. |
In terms of quality control and quality assurance practices, we regularly inspect analytical and sample preparation laboratories, and we use five certified reference materials, blanks and laboratories duplicates, which are all inserted at appropriate frequencies to the primary and secondary laboratories. In addition, we regularly check specific gravity determinations using the water immersion method or the “sand bottle” method.
We interpret our geological model using domains classified into a series of lithology codes based on a combination of grain particles (lump and fines) and chemical thresholds used directly by our mine planning and beneficiation departments.
With respect to our mineral reserve estimation, we verify the following factors that may affect our estimates, and we constantly update and refine our estimates based on these factors:
| · | Structural factors |
| o | Input parameters of mineral resources; |
| o | Pit designs and pushbacks; |
| o | Geotechnical models; |
| o | Hydrogeological factors; |
| o | Land surface properties; |
| o | Mineral rights licenses; |
| o | Environmental licenses; |
| o | Water usage rights; |
| o | Regulatory licenses and authorizations to operate; |
| o | Physical constraints, such as: |
| § | Geological model boundaries; |
| § | Third-party areas; |
| § | Cultural protected sites; |
| § | Protected reserves; and |
| § | Processing plants and facilities. |
| · | Mine Operation Factors |
| o | Mining recovery assumptions; |
| o | Production rate assumptions; |
| o | Load and haul fleet adopted; and |
| o | Dilution and mining recovery assumptions. |
| · | Plant Operation Factors |
| o | Mass recovery that directly affects the volume produced of concentrates with their respective qualities; |
| o | Mineral process changes and plant modifications that have an impact on plant performance and product quality; and |
| o | Potential upgrades in mineral characterization that could modify the performance of processing plants. |
| · | Other Factors |
| o | Product price changes over the years; |
| 37 |
| o | Royalties and costs associated with mining, processing, overhead and logistics; and |
| o | Taxes and exchange rate considerations. |
We use our mineral resource and mineral reserve estimates information currently available to us, and these estimates may not represent actual production volumes in the future. We can provide no assurance that our estimates will not change or that we will be able to extract and convert all of our resources and reserves into production volumes. For more information, see “Item 3. Key Information—3D. Risk Factors—Risks Relating to Us and the Industries in Which We Operate—Our mineral reserves and mine life may prove inaccurate, market price fluctuations and cost changes may render certain ore reserves uneconomical to mine and we may face rising extraction costs or investment requirements over time as our reserves deplete.”
Dams
As a pioneer utilizing technologies that enable the stacking of tailings generated during the ore production process, CSN Mineração’s production is mostly independent of tailings dams. After significant investments to increase reliability, disposal and dry stacking, the majority of CSN Mineração’s tailings go through a dry filtering process and are stacked in dedicated areas. This initiative led to expertise in this technology, enabling current production and sustainable growth without the use of tailings dams.
In addition to our focus on the quality of our products and competitive costs, the environmental impact of our operations is one of our priorities. We are a pioneer in Brazil in our commitment to eliminate the use of tailings dams from our operations. The full implementation of CSN Mineração’s tailings filtering plant allowed us to achieve this independence in January 2020, filtering and dry stacking the majority of the tailings generated from our production process.
The following table sets forth certain information on the dams we operate as of the date of this annual report:
| Name of the Dam/Dike | Company / Entrepreneur | Main Use | Substance | Height (m) | Capacity (m³) | Construction Method | Last Certification | Risk | Impact | Status |
| Casa de Pedra(2) | CSN Mineração | Containment of mining tailings | Iron ore | 84.00 | 65,374,575 | Downstream | Mar/25 | Low | High | Active |
| B4 | CSN Mineração | Containment of mining tailings | Iron ore | 65.00 | 13,001,821 | Upstream | Mar/25 | Low | High | Under de-characterization |
| B5 | De-characterized and unregistered. | |||||||||
| Dique Batateiro de Low | De-characterized and unregistered. | |||||||||
| Pilha da Vila II dike | De-characterized and unregistered. | |||||||||
| Bichento IIIA dike | CSN Mineração | Containment of limestone | Gravel | 19.38 | 116,696 | Single stage | Mar/25 | Low | Medium | Active |
| Esmeril IV dike | CSN Mineração | Containment of limestone | Gravel | 41.44 | 230,901 | Single stage | Mar/25 | Low | High | Active |
| Lagarto dam | CSN Mineração | Containment of limestone | Gravel | 14.20 | 363,901 | Single stage | Mar/25 | Low | High | Active |
| Poço Fundo dam | De-characterized and unregistered. | |||||||||
| Vigia auxiliary dam | De-characterized and unregistered. | |||||||||
| B2 dam | Minérios Nacional | Containment of mining tailings | Iron ore | 40.00 | 304,143 | Upstream | Mar/25 | Low | High | Under de-characterization |
| B2 auxiliary dam | Minérios Nacional | Containment of mining tailings | Iron ore | 33.00 | 2,785,859 | Upstream | Mar/25 | Low | High | Under de-characterization |
| Engenho dike | De-characterized and unregistered. | |||||||||
| Vigia dam (1) | De-characterized and unregistered with FEAM | |||||||||
| Ecológica 1 Dam | Minérios Nacional | Containment of limestone | Gravel | 18.50 | 186,637 | Downstream | Mar/24 | Low | Medium | Active |
| Ecológica 2 Dam | De-characterized and unregistered. | |||||||||
| B1 - Água Preta | De-characterized and unregistered. | |||||||||
| B2 - Água Preta | De-characterized and unregistered. | |||||||||
| B2 dam | CSN Cimentos | Water storage and catchment | Dolomite | 11.00 | 240 | Center line | Mar/24 | Low | High | Under de-characterization |
| B3 dam | CSN Cimentos | Containment of limestone | Limestone | 11.00 | 900 | Single stage | Mar/24 | Low | High | Under de-characterization |
| PIT-01 | De-characterized and unregistered. | |||||||||
| Taboquinha 01 - Crente | Estanho de Rondônia | Containment of mining tailings | Deposit of tin | 18.00 | - | Upstream | Mar/24 | Low | Medium | de-characterized |
| 38 |
| Name of the Dam/Dike | Company / Entrepreneur | Main Use | Substance | Height (m) | Capacity (m³) | Construction Method | Last Certification | Risk | Impact | Status |
| Taboquinha 02 - Serra Azul | Estanho de Rondônia | Containment of mining tailings | Deposit of tin | 19.00 | 1,983,201 | Upstream | Mar/24 | Low | Medium | Under de-characterization |
| Taboquinha 03 | Estanho de Rondônia | Containment of mining tailings | Deposit of tin | 9.00 | 1,708,100 | Single stage | Mar/24 | Medium | Medium | Under de-characterization |
| Taboquinha 04 | Estanho de Rondônia | Containment of mining tailings | Deposit of tin | 16.00 | 2,253,100 | Single stage | Mar/24 | Medium | Medium | Under de-characterization |
| Igarapava | Aliança Geração de Energia S.A. | Hydroelectric | Water | 49.90 | 241,840,000 | Soil – concrete face rockfill | Sep/22 | Low | High | Active |
| Itá (dam) | Engie Brasil | Hydroelectric | Water | 125.00 | 5,100,000,000 | Concrete face rockfill | Feb/22 | Low | High | Active |
| Itá (dike 1) | Engie Brasil | Hydroelectric | Water | 22.00 | Compressed soil, upstream protection with riprap rock and downstream protection with grass | Feb/22 | Low | High | ||
| Itá (dike 2) | Engie Brasil | Hydroelectric | Water | 22.00 | Compressed soil, upstream protection with riprap rock and downstream protection with grass | Feb/22 | Low | High | ||
| Itá (dike 3)(3) | Engie Brasil | Hydroelectric | Water | 29.00 | Compressed soil, upstream protection with riprap rock and downstream protection with grass | Feb/22 | Low | High | ||
| Blang | CEEE-G | Hydroelectric | Water | 20.70 | 50,000,000 | Cyclopean concrete | Dec/23 | Low | High | Active |
| Canastra | CEEE-G | Hydroelectric | Water | 25.40 | 242,000 | Reinforced concrete | Dec/23 | Low | High | Active |
| Capigui I (Regularização) | CEEE-G | Hydroelectric | Water | 20.50 | 42,000,000 | Conventional concrete | Dec/23 | Low | High | Active |
| Capigui II (Auxiliar) | CEEE-G | Hydroelectric | Water | 6.10 | 10,000 | Wooden Buttress | Dec/23 | Low | Low | Active |
| Capigui III (Captação) | CEEE-G | Hydroelectric | Water | 5.20 | 30,000 | Conventional concrete | Dec/23 | Medium | Low | Active |
| Divisa | CEEE-G | Hydroelectric | Water | 27.50 | 11,400,000 | Conventional concrete | Dec/23 | Low | High | Active |
| Ernestina | CEEE-G | Hydroelectric | Water | 22.69 | 258,350,000 | Rockfill | Dec/23 | Low | High | Active |
| Ernestina 1 Dike | CEEE-G | Hydroelectric | Water | 5.00 | - | Homogeneous embankment | Dec/23 | Low | High | Active |
| Ernestina 2 Dike | CEEE-G | Hydroelectric | Water | 5.00 | - | Homogeneous embankment | Dec/23 | Low | High | Active |
| Forquilha | CEEE-G | Hydroelectric | Water | 6.50 | 50,000 | Stone masonry | Dec/23 | Low | Low | Active |
| Guarita | CEEE-G | Hydroelectric | Water | 8.75 | 60,000 | Cyclopean concrete | Dec/23 | Medium | Low | Active |
| Herval | CEEE-G | Hydroelectric | Water | 11.85 | 150,000 | Reinforced concrete | Dec/23 | Medium | Low | Active |
| Ijuizinho | CEEE-G | Hydroelectric | Water | 6.90 | 60,000 | Cyclopean concrete | Dec/23 | Low | Low | Active |
| Itaúba | CEEE-G | Hydroelectric | Water | 97.00 | 382,900,000 | Earth fill | Dec/23 | Low | High | Active |
| Itaúba – Vertedouro | CEEE-G | Hydroelectric | Water | 28.10 | - | Conventional concrete | Dec/23 | Low | High | Active |
| Ivaí | CEEE-G | Hydroelectric | Water | 7.10 | 50,000 | Cyclopean concrete | Dec/23 | Low | Low | Active |
| João Amado | CEEE-G | Hydroelectric | Water | 11.50 | 10,600,000 | Cyclopean concrete | Dec/23 | Low | High | Active |
| João Amado - Left dike | CEEE-G | Hydroelectric | Water | 4.50 | - | Homogeneous embankment | Dec/23 | Low | High | Active |
| Maia Filho | CEEE-G | Hydroelectric | Water | 24.45 | 34,500,000 | Conventional concrete | Dec/23 | Low | High | Active |
| Passo do Inferno | CEEE-G | Hydroelectric | Water | 8.00 | 10,000 | Stone masonry | Dec/23 | Medium | Low | Active |
| Passo Real | CEEE-G | Hydroelectric | Water | 58.00 | 3,738,600,000 | Earth fill | Dec/23 | Low | High | Active |
| Salto | CEEE-G | Hydroelectric | Water | 10.00 | 13,800,000 | Cyclopean concrete | Dec/23 | Low | High | Active |
| Santa Rosa | CEEE-G | Hydroelectric | Water | 7.20 | 70,000 | Stone masonry | Dec/23 | Low | Low | Active |
| Toca | CEEE-G | Hydroelectric | Water | 4.50 | 10,000 | Stone masonry | Dec/23 | Low | Low | Active |
| 39 |
| Name of the Dam/Dike | Company / Entrepreneur | Main Use | Substance | Height (m) | Capacity (m³) | Construction Method | Last Certification | Risk | Impact | Status |
| Quebra Queixo | CEC | Hydroelectric | Water | 70.00 | 136,630,000 | Concrete face rockfill dam | Dec/23 | Low | High | Active |
| Santa Ana | Santa Ana Energética S.A. | Hydroelectric | Water | 3.35 | 100,000 | Conventional concrete | Dec/23 | Low | Low | Active |
| Sacre 2 | Brasil Central Energia Ltda. | Hydroelectric | Water | N/A | No reserve | River diversion | Dec/23 | N/A | N/A | Active |
| Barroso containment dike | CSN Cimentos Brasil S/A | Containment of limestone | Gravel | 5.00 | 29,000 | Rockfill | – | Low | Low | Active |
| PCH Macacos | CSN Cimentos Brasil S/A | River dam | Water | 10 | 240,000 | Conventional concrete | Dec/23 | Low | Low | Active |
_____________
| (1) | De-characterization works already completed, in the process of deregistration with ANM. |
| (2) | The Casa de Pedra dam comprises B2, B3 and B6 underwater dams, flooded by its reservoir. |
| (3) | The dam and dikes (1, 2 and 3) comprise the reservoir of Itá hydroelectric. |
We constantly work on changing our processes to reduce tailings deposits and we continue to execute our plan for the decommissioning or de-characterization of our inactive tailings dams pursuant to a timeline that is, as of the date of this annual report, being developed by our ESG and engineering teams.
Expanding our Mining Capacity
We have projects at an advanced stage of development with a robust investment plan to finance and accelerate iron ore production by our mining subsidiary CSN Mineração. CSN Mineração’s current business plan contemplates an expansion in annual production and third-party purchasing capacity from 42 million tons in 2024 to over 60 million tons per year in 2030, assuming we are able to complete all of our planned expansion projects.
CSN Mineração has four projects under development that will be carried out gradually. The estimated total investment for the projects is R$13.2 billion:
(i) Casa de Pedra Central Plant Expansion Project (Ultra Fine Tailings Processing Plants): licensed brownfield expansions to accelerate the production of pellet feed at low operating costs; increase by 1.0 million tons per year.
(ii) Tailings Recovery Projects (Pires Dams B4 Dam and Casa de Pedra Dam Tailings Processing Plants): brownfield expansions to generate value by recovering more than 200 million tons of tailings stored in dams as part of our dam de-characterization program.
(iii) Itabirito Processing Project (Itabirito Plant P15): licensed brownfield expansion project, with known technology and competitive investment per ton for the production of premium pellet feed with low impurities and high iron content (including direct reduction pellet feed); increase of 16.5 million tons per year.
(iv) TECAR Expansion Project (Port expansion Phase 60): investment for expanding shipping capacity from 45 million tons per year to 60 million tons per year to support mining expansions in already existing areas.
Additionally, we have plans to further expand our mining production capacity in the medium and long term and are currently advancing the tradeoff studies for second and third Itabirito Plant P15 projects and conversion of the Casa de Pedra Central Plant.
Our Cement Segment
Our cement segment comprises seven integrated cement plants, six grinding and mixing plants and 23 distribution centers throughout the Southeast, Northeast and Midwest of Brazil, in the states of Rio de Janeiro, Minas Gerais, São Paulo, Espírito Santo, Paraíba, Bahia and Goiás. For more information on our cement segment, see “—4A. History and Development of the Company—General—Cement.”
Cement Mining Properties
We own 100% of each of our cement mining properties and hold the respective mining and property rights for each such property.
All of our cement properties are operational as of the date of this annual report. The key permissions to guarantee the respective reserves are: mineral concessions; environmental licenses; and rights to use the property, all of which were in force as of December 31, 2024.
| 40 |
Following is an overview of our non-material mining properties as of December 31, 2024:
|
Non-material Mining Properties | |||||||||
|
Name of mining operation |
Location of the mining operation |
Type and amount of ownership interest |
Operator |
Surface |
Stage of the mining operation |
Permits |
Key condition of permit |
Type of mine/ material |
Beneficiation plant and other installations |
| (%) | (Ha) | ||||||||
| Bocaina | Arcos, MG | 100 | CSN Cimentos Brasil | 342.9 | Production | Yes | (2) | Open Pit/ Limestone, Dolomite | Bocaina Mining Facilities and Tin (ERSA) |
| Pitimbu | Alhandra, PB | 100 | CSN Cimentos Brasil | 746.7 | Production | Yes | (2) | Open Pit/ Limestone, Clay, Sand | Pitimbu Mining Facilities |
| Capoeira Grande | Barroso, MG | 100 | CSN Cimentos Brasil | 93.4 | Production | Yes | (2) | Open Pit/ Limestone | Capoeira Grande Mining Facilities |
| Mata do Ribeirão | Barroso, MG | 100 | CSN Cimentos Brasil | 129.7 | Production | Yes | (2) | Open Pit/ Limestone | Mata do Ribeirão Mining Facilities |
| Fazenda Campinho | Pedro Leopoldo, MG | 100 | CSN Cimentos Brasil | 661.4 | Production | Yes | (2) | Open Pit/ Limestone | Fazenda Campinho Mining Facilities |
| Boa Vista | Montes Claros, MG | 100 | CSN Cimentos Brasil | 432.9 | Production | Yes | (2) | Open Pit/ Limestone | Boa Vista Mining Facilities |
| Saudade | Cantagalo, RJ | 100 | CSN Cimentos Brasil | 514.6 | Production | Yes | (2) | Open Pit/ Limestone | Saudade Mining Facilities |
| Miramar | Caaporã, PB | 100 | CSN Cimentos Brasil | 983.7 | Production | Yes | (2) | Open Pit/ Limestone | Miramar Mining Facilities |
_____________
| (1) | The key permissions to guarantee the respective reserves are: mineral concessions; environmental licenses; and rights to use the property. |
The following maps present the location of each non-material cement mining property:
Bocaina Mine – Arcos, MG:
| 41 |
Pitimbu – Alhandra, PB:
Mata do Ribeirão and Capoeira Grande – Barroso, MG:
| 42 |
Fazenda Campinho – Pedro Leopoldo, MG:
Boa Vista – Montes Claros, MG:
Saudade – Cantagalo, RJ:
| 43 |
Miramar – Caaporã, PB:
Each property includes a mine: (i) Arcos – Bocaina Mine; (ii) Elizabeth Plant – Pitimbu Mine; (iii) Barroso Plant – Capoeira Grande Mine and Mata do Ribeirão Mine; (iv) Pedro Leopoldo Plant – Pedro Leopoldo Mine (Fazenda Campinho); (v) Montes Claros Plant – Mining complex of Montes Claros; (vi) Cantagalo Plant – Cantagalo (Saudade Mine); and (vii) Caaporã Plant – Caaporã (Miramar Mine).
Cement Products
The portfolio of cement products we offer in bagged and bulk forms includes the following: (i) CP II (Composite Portland Cement), (ii) CPIII (Blast Furnace Portland Cement) and (iii) CP V ARI (High Initial Strength Portland Cement). We produce these different types of cement with the addition of different elements in the composition, as well as filler (calcium carbonate), slag and pozzolan.
The types of cement we produce are: CP III 32, CP III-40 RS, CP II-E-32, CP II-E-40, CP II-F-40, CP II-F-40 Fibro, CP II-F 32, CP-II-F-32 SUPER, CP II-Z-32, CPV ARI, CPV ARI RS, CPV ARI PLUS, CP ARIF ESPECIAL, CP ARIF and ECOCEM 50, in each case in bagged and bulk forms.
The following table sets forth information on our plants as of December 31, 2024:
|
Plants |
Region |
Number of Silos |
Maximum Capacity |
| Caaporã | Northeast | 8 | 31,200 |
| Barroso | Southeast | 10 | 55,850 |
| Pedro Leopoldo | Southeast | 10 | 26,000 |
| Cantagalo | Southeast | 4 | 24,000 |
| Montes Claros | Southeast | 6 | 34,800 |
| Cocalzinho | Midwest | 2 | 8,000 |
| Vitória | Southeast | 2 | 9,296 |
| Candeias | Northeast | 2 | 2,250 |
| Unidade Rio | Southeast | 4 | 2,400 |
| Arcos | Southeast | 7 | 28,000 |
| Alhandra | Northeast | 4 | 18,000 |
| Sorocaba | Southeast | 1 | – |
| Volta Redonda | Southeast | 4 | 30,000 |
Production Process
Our cement production begins with the influx of raw materials comprising clinker, limestone, gypsum and sometimes slag in a cement mill. The cement grinding process in the Volta Redonda, Arcos and Barroso plants is performed by vertical mills. The mills have a hydraulic roller system, which uses pressure to grind the layer of material on the turntable. In other plants, the cement grinding process is performed by ball mills. The materials are ground to a fine powder, in rotating, cylindrical ball mills containing a charge of steel grinding balls.
| 44 |
The following tables set forth each individual property’s production information for the indicated periods:
|
Name of mining operation |
Location of the mining operation |
Beneficiation plant and other installations |
Aggregate production 2022 |
Aggregate production 2023 |
Aggregate production 2024 |
| (tons) | (tons) | (tons) | |||
| Bocaina | Arcos, MG | Bocaina Mine and Tin (ERSA) | 5,412,725 | 4,847,461 | 5,792,406 |
| Pitimbu | Alhandra, PB | Pitimbu Mine | 1,417,962 | 1,373,910 | 1,782,612 |
| Capoeira Grande | Barroso, MG | Capoeira Grande Mine | 329,795 | 344,952 | 475,820 |
| Mata do Ribeirão | Barroso, MG | Mata do Ribeirão Mine | 1,772,303 | 2,059,997 | 1,810,129 |
| Fazenda Campinho | Pedro Leopoldo, MG | Fazenda Campinho Mine | 1,238,936 | 1,551,685 | 1,778,456 |
| Boa Vista | Montes Claros, MG | Boa Vista Mine | 1,004,218 | 1,052,509 | 1,042,368 |
| Saudade | Cantagalo, RJ | Saudade Mine | 986,374 | 941,101 | 1,082,855 |
| Miramar | Caaporã, PB | Miramar Mine | 1,833,328 | 1,814,471 | 1,654,651 |
We produce clinker in each of our integrated cement plants. The main raw materials for the production of clinker are limestone, clay and other correctives, such as iron ore, bauxite, etc. These materials undergo grinding and are then dosed, forming the so-called “raw meal.” After the homogenization of this raw meal, the mixture is taken to a kiln where it is heated to high temperatures. As a result of this procedure, we obtain clinker, which is the base material for our cement. We add gypsum and other ingredients to the clinker mix that are dosed and fed into the cement mills until we reach a granulometry suitable for the type of cement products.
Slag is a by-product of iron and steel, produced in the blast furnace, stored in a warehouse and transported by road. We use natural gypsum, which is transported by truck and stored in a warehouse. Certain of our plants have a slag supply contract with other steel plants.
Inside our plants, the raw materials are carried out by conveyor belts, placing inputs in scales according to a predefined formula and delivering them to the mills. The grinding stations receive clinker transferred from the integrated plants by rail or road.
Mineral Reserves and Resources for Our Cement Properties
The point of reference in which our reserves and resources are calculated for our non-material cement properties is in-situ.
The following tables set forth the mineral reserves and mineral resources for each of our cement properties, containing measured and indicated resources informed separately and useful life information calculated only for reserves. With respect to quality, the guidelines employed provide for a minimum CaO content of 45% for all cement mines. We do not report inferred resources for our non-material cement mines because they are resources of low geological knowledge, we consider that inferred resources provide little practical value for asset valuation, and we are not required to report inferred resources to the Brazilian mining authority. We consider the following measured and indicated proven reserves, resources and mine life for each of our cement properties, in each case as of December 31, 2024:
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The following table sets forth the pit optimization parameters for our non-material cement properties in millions of Brazilian reais, as of December 31, 2024:
|
Alhandra |
Arcos |
Barroso |
Caaporã |
Cantagalo |
Montes Claros |
Pedro Leopoldo | |
| Fuel | 4,013,306 | 13,201,016 | 6,636,332 | 3,855,864 | 3,109,455 | 1,459,315 | 2,719,598 |
| Electric Energy | 424,244 | 2,846,363 | 1,315,933 | 374,254 | 63,519 | 83,389 | 658,380 |
| Other Variable Costs |
2,030,855 |
5,215,663 |
1,602,840 |
1,522,552 |
912,552 |
1,042,368 |
1,343,164 |
| Variable Cost |
6,468,405 |
21,263,042 |
9,555,105 |
5,752,670 |
4,085,526 |
2,585,072 |
4,721,142 |
| Labor Expenses | 5,546,066 | 18,001,807 | 3,160,316 | 2,039,520 | 2,823,284 | 2,814,394 | 2,648,837 |
| Third Party Services | 1,915,536 | 16,368,367 | 4,342,902 | 4,454,271 | 172,854 | 4,847,011 | 1,644,979 |
| Maintenance (Material and Services) | 2,809,850 | 19,432,397 | 4,711,691 | 329,934 | 512,810 | 614,997 | 4,453,230 |
| Other Fixed Costs |
1,164,128 |
3,978,492 |
1,767,611 |
888,980 |
641,428 |
917,284 |
1,204,298 |
| Fixed Cost |
11,435,580 |
57,781,063 |
13,982,520 |
7,712,705 |
4,150,376 |
9,193,686 |
9,951,344 |
| Cash Cost |
17,903,985 |
79,044,105 |
23,537,625 |
13,465,375 |
8,235,902 |
11,778,758 |
14,672,486 |
| Price* | ~10% | ~10% | ~10% | ~10% | ~10% | ~10% | ~10% |
_____________
| * | With respect to price parameters, we assume a margin of 10% over total cost of goods sold, since we do not conduct direct sales. With respect to commodity price, pricing dynamics for cement are a function of local supply and demand and are not, like other commodities such as steel and iron ore, pegged to an index or to global commodity prices. In addition, cement prices take into account the costs of cement plants, which may vary by plant and by company. |
Our Logistics Segment
A number of railways and port terminals comprise the logistics system that integrates our mining, steelmaking and cement units. For more information on our logistics segment, see “—4A. History and Development of the Company—General—Logistics.”
Railways
Southeastern Railway System
MRS has a concession to operate Brazil’s Southeastern railway system until 2056. As of December 31, 2024, we held 37.49% (18.75% directly and 18.74% through CSN Mineração) of MRS’s total capital. For more information, see “Item 5. Operating and Financial Review and Prospects—5B. Liquidity and Capital Resources––Off-Balance Sheet Arrangements—“Take-or-Pay” Contractual Obligations.”
The Brazilian Southeastern railway system, with 1,643 km of track, serves the São Paulo – Rio de Janeiro – Belo Horizonte industrial triangle in southeast Brazil, and links our mines located in the state of Minas Gerais to the ports located in the states of São Paulo and Rio de Janeiro and to the steel mills of CSN, Companhia Siderúrgica Paulista and Gerdau Açominas.
In addition to serving other customers, the railway transports iron ore from our mines at Casa de Pedra in the state of Minas Gerais and coke and coal from Itaguaí Port in the state of Rio de Janeiro to the Presidente Vargas Steelworks and transports our exports to the ports of Itaguaí and Rio de Janeiro. The railway system connects the Presidente Vargas Steelworks to the container terminal at Itaguaí Port, which handles most of our steel exports.
Northeastern Railway System
We hold interest in companies that have concessions to operate the Northeastern railway system, which operates in the states of Maranhão, Piauí, Ceará and Pernambuco, and connects with the region’s leading ports, offering an important competitive advantage through opportunities for intermodal transportation solutions and made-to-measure logistics projects.
In 1997, we were awarded a concession granting the exclusive right to operate cargo transportation at the railway that belonged to Rede Ferroviária Federal S.A., or RFFSA, which we currently call Northeastern Railway System I, effective January 1, 1998, and the preference to operate cargo railway transportation in any new tracks of the Northeastern Railway System that the Brazilian government may elected to build.
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Further, in 2005, we executed a letter of intent with the Brazilian government (the grantor of this concession) to enable the development of new tracks and certain other improvements of the Northeastern Railway System, in a project called “Nova Transnordestina.” The Nova Transnordestina project discussions resulted in the execution, in 2013 and 2014, of (i) a conduct adjustment agreement (termo de ajustamento de conduta), or TAC, that settled all claims of non-compliance by us with the original concession agreement until 2012, and (ii) multiple agreements, including an investment agreement (discussed below) and a new concession, pursuant to which we were granted the right to develop and operate new tracks and the Northeastern Railway System management was divided into the following two sub-railway systems:
| · | Northeastern Railway System I, which is operated by our subsidiary FTL, encompasses the RFFSA network, covering the stretches between the cities of São Luís – Altos, Altos – Fortaleza, Fortaleza – Souza, Souza – Recife/Jorge Lins, Recife/Jorge Lins – Salgueiro, Jorge Lins – Propriá, Paula Cavalcanti – Cabedelo and Itabaiana – Macau, with a total of 4,238 km of railways, of which 1,191 km are operational. We are negotiating with the National Agency for Ground Transportation (Agência Nacional de Transportes Terrestres), or ANTT, to return the remainder of the tracks into operation. As of December 31, 2024, we held 92.71% of the capital stock of FTL and its concession extends until 2027, renewable for an additional 30 years. As of December 31, 2024, R$54.7 million in concession payments were outstanding over the remaining years of the concession. |
| · | Northeastern Railway System II, which is under construction by our jointly controlled investee TLSA, will encompass the new network, covering the stretches between the cities of Eliseu Martins – Trindade, Trindade – Salgueiro, Salgueiro – Missão Velha and Missão Velha – Porto de Pecém, with an expected extension of 1,206 km that will connect the interior of Northeast Brazil to Pecém and Suape Ports. As of December 31, 2024, we held 48.03% of the capital stock of TLSA and its concession extends until the earlier of 2057 or the date when TLSA recovers its invested equity at an annual return rate of 6.75%. |
In September 2013, we entered into an investment agreement, or the TLSA Investment Agreement, with Valec Engenharia, Construções e Ferrovias S.A., or Valec, and the Northeast National Development Fund (Fundo Nacional de Desenvolvimento do Nordeste), or FDNE, two Brazilian government entities focused on infrastructure and the development of the northeastern region and our partners in TLSA. Under the TLSA Investment Agreement, we and our partners agreed on a budget of R$7.5 billion to complete the construction of the Northeastern Railway System II. An updated budget of approximately R$14.9 billion is under review by the partners of TLSA and is also subject to an amendment to the TLSA Investment Agreement, which, as of the date of this annual report, has not been formalized.
The TLSA Investment Agreement also provides for indicative terms and conditions, including amounts, under which the Brazilian National Economic and Social Development Bank (Banco Nacional de Desenvolvimento Econômico e Social), or BNDES, agreed to provide long-term financing for the completion of Northeastern Railway System II. Although we have received indicative terms, the financing is subject to several conditions, including the satisfactory completion of internal and credit approval processes by lenders. If any of the conditions are not met, including final credit approval by the lenders in terms and costs reasonable to us, we may not be able to obtain the financing. The other long-term financing from FDNE and the Constitutional Financing Fund of the Northeast (Fundo Constitucional de Financiamento do Nordeste), or FNE, has already been received by TLSA.
In 2016, the Brazilian federal court of accounts (Tribunal de Contas da União), or TCU, initiated a proceeding questioning the legality of certain aspects of the concession contract for the Northeastern Railway System II, which has contributed to a slow pace of construction of the new tracks, and the ANTT has initiated a proceeding claiming TLSA did not comply with the terms of the concession contract for the Northeastern Railway System I.
Valec’s non-compliance with material obligations under the TLSA Investment Agreement has also contributed to a slow pace of construction of the new tracks, resulting in the revised budget.
In the end of 2019, ANTT recommended the expiry of the concession contract for the Northeastern Railway System I, and, in the first half of 2020, ANTT recommended the expiry of the concession contract for the Northeastern Railway System II. The concessionaires requested the revision of both such decisions and, as of the date of this annual report, we await a final decision by ANTT.
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ANTT’s decisions do not become immediately effective and will only be implemented once they have been analyzed and decreed by the President of Brazil, as well as the matter has reached final and unappealable decisions in administrative and judicial proceedings. For more information, see “Item 8. Financial Information—8A. Consolidated Statements and Other Financial Information—Legal and Administrative Proceedings—Northeastern Railway System Proceedings.”
In December 2022, we entered into an amendment to the concession agreement of TLSA, pursuant to which, among other things, there was a change to the railroads granted to TLSA and we agreed to certain mandatory investments and to the conditions for the return of the Salgueiro – Porto de Suape’s grid, where the TLSA project currently has 1,206 km of railway network and a completion deadline of December 2029.
The concession contract for the Northeastern Railway System I remains valid in all its terms until 2027, with a request for extension of the contract under analysis by the federal government.
In November 2023, TLSA received R$811 million from FDNE and currently the Northeastern Railway System II represents one of the federal government’s most significant strategic initiatives regarding the economic and social development of the Northeastern region of Brazil. This amendment represents an important step in the evolution of TLSA’s operations, which will support our operations and the transportation of our products across the Northeast region of Brazil.
In December 2024, TLSA and Banco do Nordeste executed an amendment to the concession agreement, providing for an additional R$3.61 billion in funding and increasing the total project investment to R$7.48 billion through the issuance of debentures, 50% of which are convertible. The amendment also establishes new rules regarding fund disbursement, use of proceeds, guarantees, and other contractual terms.
Port Facilities
Solid Bulks Terminal
Part of our integrated and modern logistics structure includes the operation of TECAR through a concession renewed in 2015 and expiring in 2047.
TECAR is connected to road and rail systems across Southeast Brazil and is one of the four port terminals that make up the Itaguaí Port facilities. With a strategic location and a total area of 740,761 m², the terminal consists of a concrete molded berthing pier superposed on jacketed stilts connected to the mainland by an access bridge perpendicular to the berthing pier. Its backyard includes conveyor belts, an internal road system, bulk storage yards and a railway looping, as well as industrial and administrative facilities.
Container Terminal
We indirectly own almost the entirety of TECON, which has a concession to operate the container terminal at Itaguaí Port for a 25-year term, expiring in 2026, which is renewable for an additional 25 years. As of December 31, 2024, approximately R$51.4 million of the cost of the concession was outstanding and payable over the remaining years of the concession.
The Itaguaí Port is in Brazil’s southeast region, within 500 km from all major exporting and importing areas in the states of São Paulo, Minas Gerais and Rio de Janeiro.
Favorable natural conditions, like natural deep waters and a low urbanization rate around the Itaguaí Port, allow large vessels to operate and allow for highly competitive prices for services rendered. After TECON’s investments in infrastructure and equipment, which increased our capacity to 440,000 containers (660,000 TEUs) per year, new improvements were achieved from 2019, which increased the terminal’s service level and productivity, including maritime access and berths achieving certification for 15.4 meters in draft, including tides, which is the deepest in the East coast of South America, as well as the acquisition of new equipment.
In 2024, we continued to invest in upgrading our operational facilities and complying with regulatory requirements. In addition, in the same year, we purchased six new forklifts and three warehouses, which improved our operational capacity. TECON will keep investing in the project expansion to increase its capacity by approximately 40%, which would make it one of the largest port terminals in Brazil, with a nominal capacity of 1,000,000 TEUs per year. This expansion project, which is under discussion with regulatory agencies, includes a quay extension of 273 meters, with a total resulting length of 1,083 meters, acquisition of two new gantry cranes (ship-to-shore) for larger container carriers, acquisition of additional yard civil works and equipment, and dredging of the access channel and maneuvering basin.
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In 2024, TECON moved 135 thousand containers, 1.3 million tons of steel products, 58.3 thousand tons of general cargo, and 658.5 thousand tons of dry bulk, compared to 58 thousand containers, 1.1 million tons of steel products, 35 thousand tons of general cargo, and 660 thousand tons of dry bulk in 2023.
The increase in container volume in 2024 is mainly due to the operations of New Panamax standard vessels and the start of operations in partnership with Cosco Specialized in the second quarter of the year. Even with the increase in the volume of containers handled, TECON continued to serve other markets, carrying out operations with various products, such as shipments of wood, other steel cargoes, as well as billets, wire rod, plates, tubes, transformers and solid bulk.
Our Energy Segment
Our energy segment comprises our generation plants, which support reduction of our production costs and exposure to fluctuations or availability of certain energy sources.
Following is an overview of our energy segment related assets. For more information on our energy segment, see “—4A. History and Development of the Company—General—Energy.”
Thermoelectric Co-Generation Power Plant
We have a 245 MW thermoelectric co-generation power plant at the Presidente Vargas Steelworks. Aside from operational improvements, the power plant supplies our strip mills with electric energy, processed steam and forced air from the blast furnaces, benefiting the surrounding environment through the elimination of flares that burn steel-processing gases into the atmosphere. In addition, we have a turbine generator, which adds 22 MW to our installed capacity. This turbine is located near our blast furnace no. 3 and uses the outlet gases from the iron making process to generate energy. The total annual capacity of our thermoelectric co-generation power plant is 267 MW.
Itá Hydroelectric Facility
We hold a 29.50% equity interest in the Itá hydroelectric facility, as we and Engie Brasil each own 48.75% of ITASA, a special-purpose company formed to own and operate, under a 30-year concession granted in 2000, 60.5% of the Itá hydroelectric facility on the Uruguay River in Southern Brazil. Itambé owns the remaining 2.5% of ITASA. Engie Brasil directly owns the remaining 39.5% of the Itá hydroelectric facility, which has an installed capacity of 1,450 MW. The amount of energy generated by Itá represented approximately 60% of CSN Siderurgia’s energy consumption in 2024.
Igarapava Hydroelectric Facility
We own 17.92% of a consortium that built and has the right to operate, until September 2031, the Igarapava hydroelectric facility. Other consortium members are Aliança, L.D.R.S.P.E. Geracão de Energia e Participações Ltda. and AngloGold. The facility has an installed capacity of 210 MW. The amount of energy generated by Igarapava represented approximately 8% of CSN Siderurgia’s energy consumption in 2024.
Santa Ana Hydroelectric Facility
CSN Cimentos and our energy subsidiary CSN Energia own 100% of Santa Ana Energética S.A., which holds the concession for the Santa Ana hydroelectric power plant that has an installed capacity of 6.3 MW and is located in the state of Santa Catarina, in southern Brazil. The amount of energy generated by Santa Ana represented approximately 3% of CSN Cimentos’ energy consumption in 2024.
Sacre II Hydroelectric Facility
CSN Cimentos and our energy subsidiary CSN Energia own 100% of Topázio Energética S.A., which holds, through its subsidiary Brasil Central Energia Ltda., the concession for the Sacre II hydroelectric power plant that has an installed capacity of 30 MW and is located in the state of Mato Grosso, in the midwestern region of Brazil. The amount of energy generated by Sacre II represented approximately 22% of CSN Cimentos’ energy consumption in 2024.
Quebra-Queixo Hydroelectric Facility
CSN Mineração and our energy subsidiary CSN Energia own 100% of CEC, which holds the concession for the Quebra-Queixo hydroelectric power plant that has an installed capacity of 120MW and is located in the state of Santa Catarina, in southern of Brazil. The amount of energy generated by Quebra Queixo supplied 100% of CSN Mineração’s energy consumption in 2024.
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CEEE-G
Companhia Florestal do Brasil owns 100% of CEEE-G, which holds concessions of 15 hydroelectric power plants, and participates as a minor shareholder in 4 other hydro projects, that represent, in the aggregate, an installed capacity of 1,119 MW. CEEE-G has a strong commercialization strategy to ensure its results in the short and long term, such as a fixed income through leasing of 60% of the assured energy to us and our subsidiaries, 30% through medium-term power purchase agreements ranging from one to three years, and 10% for the spot market to assure a safe hedge for the Generation Scale Factor.
Marketing, Organization and Strategy
Flat Steel
Our steel products are sold both domestically and abroad as a raw material for several manufacturing industries, including the automotive, home appliance, packaging, construction and steel processing industries.
Our sales approach involves establishing brand loyalty and achieving a reputation for quality products by developing relationships with our customers, focusing on their specific needs and providing tailor-made solutions.
Our distribution network division is responsible for supplying large steel processors and distributors. In addition to independent distributors, we count with our own distributor, Prada Distribuição. The pipes division supplies oil and gas pipe manufacturers as well as industries that produce small diameter pipe and light profiles. The packaging division acts in an integrated way with suppliers, representatives of the canning industry and distributors to respond to customer needs for finished products. We supply the automotive division from a specialized mill, CSN Porto Real, as well as by a portion of the galvanized material produced at Presidente Vargas Steelworks, thereby benefitting from a combined sales strategy.
Historically, our sales in international markets were primarily through international brokers. However, as part of our strategy to establish direct, longer-term relationships with end-users, we have decreased our reliance on these brokers and have instead focused on direct sales to more profitable international markets.
All of our sales are on an order basis and have an average delivery time of 45 days. As a result, our production levels closely reflect our order logbook status. We forecast sales trends in both the domestic and international markets based on historical data and general economic outlooks. We have our own data systems to remain informed of worldwide and Brazilian market developments. Our management believes that a key to our success is maintaining our presence in international markets, which provide us flexibility to shift between domestic and international markets depending on how favorable conditions are.
Unlike other commodity products, steel is not traded on an exchange, nor is there uniform pricing, due to wide differences in size, quality and specifications. In general, we price exports based on international spot prices of steel at the time of sale in U.S. dollars or euros, depending on the destination. Sales are normally paid upfront, or within 14 or 28 days, and, in the case of exports, usually backed by a letter of credit and an insurance policy. Sales are made primarily on cost and freight terms.
Sales by Geographic Region
In 2024, we sold steel products to customers in Brazil and in 12 other countries. The fluctuations in the portion of total sales assigned to domestic and international markets, which are presented in the table below, reflect our ability to adjust our sales in light of variations in the domestic and international markets, as well as domestic and international steel demand and prices.
The two main export markets for our products are Europe and North America, representing approximately 60% and 20%, respectively, of our export sales volume in 2024. The following table sets forth the geographic break-down of our steel product exports by destination in 2024:
|
2024 | ||||
|
Tons |
% of Total |
Net Operating Revenues |
% of Total | |
| Brazil | 3,280 | 72% | 16,901,495 | 73% |
| Export |
1,252 |
28% |
6,277,183 |
27% |
| Total |
4,532 |
100% |
23,178,678 |
100% |
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|
2024 | ||||
|
Tons |
% of Total |
Net Operating Revenues |
% of Total | |
| Exports by Region | ||||
| North America(1) | 316 | 20% | 1,750,998 | 28% |
| Latin America | 310 | 20% | 70,752 | 1% |
| Europe | 956 | 60% | 4,455,433 | 71% |
_____________
| (1) | Sales to Mexico are included in North America. |
Sales by Product
The following table sets forth our sales breakdown by product in Brazil in the periods indicated:
|
2022 |
2023 |
2024 | |
| Domestic Sales Breakdown | |||
| Hot-rolled products | 41% | 40% | 43% |
| Cold-rolled products | 14% | 12% | 12% |
| Galvanized products | 29% | 30% | 29% |
| Tin plates products | 9% | 9% | 7% |
| Long steel | 7% | 9% | 9% |
Sales by Industry
We sell our steel products to manufacturers in several industries. The following table sets forth our breakdown by market segment of domestic volume shipped in the periods indicated:
|
2022 |
2023 |
2024 | |
| Sales Breakdown | (in percentages of total domestic volume shipped) | ||
| Distribution network | 30% | 32% | 35% |
| Industrial | 21% | 15% | 16% |
| Packaging | 9% | 9% | 8% |
| Automotive | 12% | 15% | 13% |
| Home appliances | 7% | 10% | 16% |
| Construction | 21% | 19% | 19% |
We believe we have a particularly strong domestic and export position in the sale of tin plates products used for packaging in Latin America. Our customers for these products include some of the world’s largest food processing companies, as well as many small and medium-sized entities. We also maintain a strong position in the sale of galvanized products for use in the automobile manufacturing, construction and home appliance industries in Brazil and abroad, supplied by CSN Porto Real and CSN Paraná. No single customer accounts for more than 10% of our net operating revenues.
For further information on steel sales, see “Item 5. Operating and Financial Review and Prospects—5A. Operating Results—Overview—Steel Market—Steel Segment Overview” and “—Results of Operations.”
Seasonality
Although steel demand is stronger in the second quarter of each year and weaker in the last quarter, our production is continuous throughout the year.
Long Steel – SWT
Our long steel products are sold by SWT both in Germany (approximately 30%) and other countries, mainly in Europe (approximately 60%), for use in industrial, infrastructure, civil construction and engineering industries.
Our sales approach is to establish brand loyalty and to maintain our reputation of high-quality products and excellent delivery performance by developing long-term relationships with our customers. SWT focuses on meeting specific customer needs, developing solutions for both low temperature and high temperature resistant applications, as well as optimized section shapes for special applications.
Our commercial area is responsible for sales of all of our long steel products worldwide. This area is divided into the direct sales team which is organized in 13 agencies located in Germany and in our core markets in Europe, the commercial back-office department (order management from entry via tracking to the final delivery and invoicing), logistics contracting (truck, rail, vessel, maritime, inventory worldwide) and a rail logistics department.
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SWT does not possess its own distribution network, instead cooperating with the big steel distributors and traders in Europe and other countries. All of our sales are on an order-by-order basis. The delivery time is related to the logistics chain and varies between two to six weeks depending on the relevant Incoterms and section type. As a result, our production levels closely reflect our order log book status. We forecast sales trends in both the European and export markets based on the historical data available from the last two years and the general economic outlook for the near future. We believe that our presence in the export market outside of Europe gives us more flexibility to optimize production and maximize our profitability.
Sections are not sold based on uniform pricing in Europe, as wide differences exist in terms of size, quality and specifications. In general, exports are priced based on international spot prices of steel at the time of sale in U.S. dollars or euros, depending on the destination. Sales are normally paid within 30 days and, in the case of exports, usually backed by a letter of credit and an insurance policy. SWT’s businesses are 100% covered by Euler Hermes risk insurance, a bank guarantee or a letter of credit. Sales are made primarily on cost and freight terms.
Long Steel – Volta Redonda
In 2013, we started the production of long steel in Volta Redonda. This plant has production capacity of 500 kt/year when fully operational, providing the domestic market with long steel products for civil and industrial construction.
Divided in wire rod, rebar CSN 50 and rebar CSN 25, we developed our products using high technology and in accordance with the highest quality and sustainability standards.
Our commercial team has its own sales force dedicated to meet all the needs of the long steel market: small customers as well as large wholesalers. We count with strategically located distribution centers to deliver our products throughout Brazil. In order to provide a wide range of long steel products for the civil construction segment, we include in our product portfolio, in addition to cement and structural section products derived from flat steel, products such as tiles and tubes, among others.
Iron Ore
Iron ore products are commercialized by our teams located in Brazil, Switzerland and Hong Kong. These three marketing units allow us to maintain close relations with our customers worldwide, understand the environment where they operate, monitor their requirements and provide all necessary assistance promptly. Market intelligence analysis, planning and administration of sales and third-party iron ore purchases are handled from Brazil by the staff in our Casa de Pedra mine and São Paulo headquarters, while our Switzerland and Hong Kong offices handle the export sales.
We supply our iron ore to the steel industry, and our main destinations are Brazil, Europe and Asia. Prevailing and expected levels of demand for steel products directly affect demand for iron ore. Demand for steel products is correlated to many factors, including GDP, global manufacturing production, urbanization, construction and infrastructure spending.
We believe our competitiveness has been improved by our customer service and market intelligence. It is paramount for us to have a clear understanding of our customers’ businesses in order to address their needs, surpass their expectations and build long-term relationships. We have a customer-oriented marketing policy and specialized local personnel in direct contact with our customers in order to help determine the product mix that best suits each specific customer.
We first entered the international iron ore market in February 2007, upon completion of the first phase of the expansion of our coal seaport terminal in Itaguaí, in the state of Rio de Janeiro, which enabled us to handle and export iron ore and to load from our own facilities the first shipment of our iron ore products.
In 2024, our iron ore sales reached 42.55 million tons, of which 38.5 million tons were sales to third parties and 4.04 million tons were sales to our steel mills, which represents a 0.3% decrease compared to 2023. Total mining net revenue increased 23.6% in 2024, mainly due to the downward curve in the price, despite the high operating results presented throughout the year due to growth in production. The share of mining segment revenue in our total net revenue decreased from 37.7% in 2023 to 30.0% in 2024.
In 2024, 78.7% of our iron ore export sales went to the Asian market, mainly China, and 7.1% were sold in the European market. Of our total sales volume to third parties, 91.9% were sinter feed and 8.1% were lump ore.
As global iron ore markets are highly competitive, we focus on our flexibility, reliability and efficient manner of supplying iron ore to the world market.
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Through our marketing offices, we have long-term relationships with most players in the steel industry in China, Japan, Taiwan, South Korea, Europe and Brazil.
Cement
Our cement strategy is centered on sustainable growth and is structured around key pillars: geographic expansion, operational optimization and brand strengthening. These strategic directions aim to consolidate our position in the national market while driving greater efficiency and innovation for our products.
We have adopted a strategic approach focused on expanding our geographic footprint and increasing production capacity to strengthen our position in the Brazilian cement market. CSN Cimentos is making significant investments in new production units and in the expansion of existing facilities. As of the end of 2024, CSN Cimentos operated 13 cement manufacturing plants, served over 15,000 customers and maintained 23 distribution centers across the country.
Our strategy is further supported by adjacent businesses that enhance vertical integration and value creation. This includes CSN Cimentos’ (i) retail subsegment, comprising 27 construction material stores under the Fortaço brand; (ii) downstream concrete and aggregates operations; and (iii) the production of agricultural limestone. Together, these segments contribute to diversification, synergies and resilience across our cement platform.
In 2024, our cement sales reached 13.5 million tons, which represents an increase of 5.9% compared to 2023. Total cement net revenue increased 5.7% in 2024, reflecting not only a greater commercial activity, but also the entire strategy to advance in the product chain with greater added value.
Energy
As part of our strategy in the energy segment, in April 2023, we entered into a lease agreement with Itauba and Passo Real HPPs for a consortia formed by our companies to assure a fixed income to CEEE-G, assuring self-production surcharges relief to the members of the consortia which represents energy cost reduction.
The energy sales strategy for CEEE-G involves a combination of a 15-year power purchase agreement, rolling power purchase agreements with short duration (of one to three years) and spot sales in order to maximize revenue.
The Floriano Complex, which is a solar project with an installed capacity of 1.2 GW, continues its development phase aiming to increase our energy capacity, which will support consumption increase and replace plants whose concession will expire starting 2030.
Insurance
We maintain various types of insurance policies as part of our risk management strategy across our business segments, and we seek to follow industry best practices in obtaining appropriate coverage. Our insurance portfolio includes, among others, coverage for domestic and international cargo transportation (import and export) via road, rail, sea or air, life insurance, personal accident, health, automobile, directors and officers (D&O) liability, general liability, construction and erection all risks, trade credit, surety, named perils, as well as port and terminal liabilities.
We also maintain an operational risk insurance policy covering property damage and business interruption for certain key subsidiaries, including Siderúrgica Presidente Vargas, CSN Mineração, and TECON. This policy is renewed annually with both domestic and international insurers and reinsurers. Our current policy, effective through September 2025, provides maximum indemnity coverage of US$225.0 million for a total insured value of US$11.0 billion, subject to a deductible of US$235.0 million for property damage and 45 days for business interruption losses.
Additionally, we maintain separate insurance policies for other entities operating within our steel, mining, cement, logistics, and energy segments, with a combined maximum coverage limit of US$293.0 million, each subject to its own applicable deductible.
There can be no assurance that the insurance coverage we maintain will be sufficient to cover all risks or the full extent of any losses we may incur. For more information, see “Item 3. Key Information—D. Risk Factors—Risks Related to Us and the Industries in Which We Operate—Our insurance policies may not be sufficient to cover all our losses.”
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Intellectual Property
We maintain a dedicated team to manage our intellectual property portfolio, which includes trademarks, patents, know-how, trade secrets and industrial designs. This team ensures adequate protection for our intellectual assets, the pursuit of best knowledge management practices and explores the possibility of new business generation through technology transfer agreements, among others.
Our intellectual property team also supports our innovation agenda through CSN Inova and provides the legal framework needed for the partnership agreements negotiated with third parties (including universities and research institutes) that are essential to strengthen our knowledge generation and foster technical cooperation for the development of new, improved and more sustainable processes, products and operations.
ESG – Environmental, Social and Governance Matters
We are committed, in particular by means of our integrated sustainability policy, to enhance the sustainability of our businesses ethically, transparently and through continuous improvement in our management mechanisms to protect the environment and prevent the occurrence of pollution and accidents. Our initiatives consider all applicable laws and regulations and include employee training to foster a common vision of sustainable development and social responsibility. We aim to promote a positive relationship and engagement with the local communities where our operations are located.
In furtherance of this commitment, we continuously evolve our ESG practices and invest in sustainability initiatives to mitigate the risks inherent to our business activities, present opportunities to enhance our processes and respond to the demands of an increasingly ESG-concerned market. These investments include processes and equipment that offer modern and reliable technologies for monitoring and control of environmental, health and safety risks.
The last few years were marked by important initiatives toward the growth and expansion of our operations and the development of our ESG agenda. In February 2021, we installed our ESG committee, which is a non-statutory advisory committee to our board of directors. Our ESG committee is responsible for (i) defining our ESG strategies, (ii) identifying ESG risks and opportunities, (iii) developing projects to further our innovation agenda and (iv) monitoring corporate projects in the following action pillars: sustainable finance, social practice, technology and operational sustainability, governance and diversity and inclusion.
We disclose detailed sustainability measures and data on our ESG webpage and in our annual integrated report on sustainability, which is available on our ESG webpage. The information on our ESG webpage and in our annual integrated report on sustainability is not part of, or incorporated by reference into, this annual report.
Environmental Matters
We continuously seek to transform natural resources into sources of economic prosperity through sustainable projects. In 2024, we continued our sustainability initiatives to mitigate and offset the environmental impacts of our activities by allocating R$1.3 billion to environmental initiatives. Our investments in environmental sustainability in 2024 were mainly related to: (i) operation, maintenance and retrofitting of environmental control equipment mainly related to air and water protection; (ii) development of environmental studies for permit applications; and (iii) environmental management and protection system.
Climate Change
Since 2013, we have conducted an inventory of greenhouse gas emissions, following the guidelines of the greenhouse gas Protocol. We have aimed to optimize our carbon management, risk mitigation and adaptation to climate change and, in 2024, for the 11th consecutive year, we received the Gold Seal for having reported the emissions from all our units and submitting them to external verification. All our operational units located in Brazil and Germany utilize electricity from renewable sources. As a result, emissions from scope two, as per the market-based approach, are considered zero greenhouse gas protocol for those two countries. Through our energy generating assets, we are considered 100% self-sufficient in renewable energy, with new investments in renewable power plants planned.
Moreover, we annually report to the Carbon Disclosure Project or CDP, an international non-profit organization that seeks to further transparency of the environmental impact of companies’ operations, specific information related to climate change and water security. The CDP rating as of February 2025, was B for climate change and A- for water security.
Our performance related to climate change reflects our adoption of the best practices and are aligned with recognized methodologies such as those primarily established by the task-force on climate-related financial disclosures and task force on nature-related financial disclosures. In 2024, we concluded a climate vulnerability study to evaluate the existing physical risks and support our climate adaptation plan. Through the risk analysis conducted in the study, six physical risks were prioritized: (i) slope instability (mining); (ii) storms (mining); (iii) loss of internal supply of raw materials (mining-port); (iv) changes in wind patterns for the mining industry; (v) changes in wind patterns for the steel industry; and (vi) storms for the energy industry. These six risks were selected for an economic cost analysis and prioritization in the climate adaptation plans.
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The cement segment accounts for more than 40% of our total emissions. In order to reduce its carbon dioxide emissions, CSN Cimentos took an important step by approving a science-based target in 2024. The target consists of a 23% reduction in emission’s intensity by 2030, based on the emission intensity registered in 2020, and the continued use of renewable energy by our cement plants. To set this new target, we integrated the decarbonization strategy of all our cement assets and updated the marginal abatement cost curve of the cement segment.
In the steel segment, our decarbonization target is a 20% reduction by 2035. In 2024, we achieved a reduction of approximately 8% compared to the base year. Moreover, we initiated investments to develop a 5 MW hydrogen plant at the CSN Paraná branch.
CSN Mineração has set a target to reduce its emissions intensity by 30% by 2035 (measured in tCO₂e per ton of production) and to achieve carbon neutrality by 2044, covering Scope 1 and 2 emissions. Regarding Scope 3, CSN Mineração is investing in the Itabirito Plant P15, which will produce 16.5 Mt of high-grade iron ore (67% Fe content), supporting the decarbonization of the steel segment. This product is suitable for use in direct reduction processes combined with electric arc furnaces, offering an alternative to traditional blast furnace routes with potential emissions reductions of up to 98% when hydrogen is used as the reducing agent. We expect these reductions in greenhouse gas emissions will result from our existing expansion and efficiency projects and demand specific investments in order to meet these targets.
Water Resources
Water is one of the primary natural resources for our production processes, especially for the steel and mining segments. Based on risk assessment methodologies of the World Wildlife Fund’s Water Risk Filter and the World Resources Institute’s Aqueduct, since 2021 we began to analyze our exposure to water risks in all our production plants, considering our processes and nearby watersheds. We have been monitoring the risks associated with water scarcity to assess the potential impacts that our businesses may face in case of unavailability of this resource. To monitor local factors related to water availability, quality, and ecological flow in hydrographic basins, we established a goal of systematizing and transparently presenting the volumes of water permitted, withdrawn, and discharged by our main operational units, linking this data to water scarcity risks in the respective basins by 2025. The publicly accessible platform was launched in 2024.
Additionally, due to operational investments made in recent years, the recirculation rate, which considers ore beneficiation operations and consumed drinking water, increased from 77.6% in 2018 to 92% in 2024. With the startup of the Itabirito Plant P15, dams decommissioning projects, and other projects planned for phase one of the expansion plan for the coming years, we expect that the Casa de Pedra site will operate more efficiently in the coming years. Moreover, CSN Mineração also committed to achieve a 94% water recirculation rate by 2032.
Materials and Circular Economy
In our integrated sustainability, health & safety and environment policy, we set forth the importance of our environmental management through principles to reduce, reuse and recycle materials in our processes in order to optimize the use of natural resources. These principles are inherent in our processes as a fully integrated company. For example, we reuse all of our blast furnace slag in our production of cement and all of our metal scrap in our production of long steel. We constantly evaluate solutions and implement technologies for material reuse in our production processes or in our supply chains.
Additionally, our special sales department has been increasingly seeking opportunities to sell unused materials and by-products, aiming for zero landfill waste and for internal reutilization. In 2024, the special sales department achieved over R$324.7 million in revenue from commercializing unused materials and by-products.
The Revalora platform is responsible for managing industrial and urban waste that can be used as an alternative fuel in cement kilns. The Revalora platform leverages our existing co-processing initiatives and strengthens our sustainable operations.
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Biodiversity and Ecosystem Services
We protect approximately 90,500 hectares of natural areas representing approximately four times the area occupied by our operations. In addition, for more than 20 years we have carried out programs for monitoring fauna and flora in the areas potentially impacted by our operations.
Our ESG committee has biodiversity as one of its priority agenda items and has formed a working group to develop action plans to protect the biomes where our operations are conducted. In 2024, we implemented the Biodiversity Index for Operations in all our applicable units, which is based on the Biodiversity Indicator and Reporting System guide from the International Union for Conservation of Nature and measures the biodiversity condition of operational units.
Moreover, in 2024, we established the integration of the process and mapping of critical risks related to climate and nature through a single matrix.
Tailings Dams
All of our tailings dam structures meet the declaration of dam stability condition. Our tailings dam structures are biannually submitted to stringent audits and independent inspections in accordance with Brazilian regulations.
The operation of the tailings dam structure is carried out by strict operational parameters and limits, and by 24-hour monitoring system. The significant investments in filtering of tailings and piling of tailings enabled us to reach our ore beneficiation capacity in a sustainable manner, avoiding the use of tailings dams.
For more information on our dams, see “―Our Mining Segment―Dams.”
Social Matters
Human Rights
Since 2020, we are a signatory of the Global Compact, to which we committed to abide by its principles to support and respect the protection of human rights and to ensure that we are not complicit in any human rights violations. Moreover, we are committed to upholding human rights and adopt measures and tools to ensure and promote the protection and respect of all individuals to prevent, mitigate, and remedy any potential impacts that may violate human rights.
In 2023, a formal human rights diligence process took place in the municipality of Congonhas, state of Minas Gerais, where Casa de Pedra Mine is located. The work was developed based on the framework of the UN Guiding Principles for Business & Human Rights, used as the main tool to identify risks and impacts on human rights associated with our business activities.
The due diligence process, along with the action plan, aims to mitigate potential human rights risks, strengthening our practices. In 2024, 56% of these actions were already completed or underway, reinforcing our commitment to human rights protection. The unit continues to implement the mitigation plan, led by a dedicated multidisciplinary team.
Gender Balance
We promote a zero-tolerance commitment to any type of discrimination, as set forth in our Code of Conduct. We believe that an inclusive and diverse environment is critical to stimulate innovation and guarantee the continuity of our business. We also believe that an inclusive approach is essential to eliminate barriers in hiring and retaining women employees and executives and to reap the improved performance generated by gender diversity.
In 2020, we set a goal to double our female workforce by 2025, from 14% to 28%, focusing on our commitment to the UN Global Compact. In 2024, we reached the milestone of a 25% female workforce. We also increased the female representation at our leadership positions from 15% in 2023 to 15.5% in 2024. Additionally, CSN Mineração and CSN Cimentos now have, respectively, one and two women members on their board of directors.
Local Communities
We monitor the social impacts of our operations in the communities where we are located. The socio-environmental impact studies we develop allow us to identify the intensity, duration, and actions necessary to minimize or mitigate social risks and impacts, considering the characteristics of each community and of our operations. We implement tailored action plans to mitigate the identified impacts.
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Additionally, through the CSN Foundation, we collaborate with local communities to foster social, educational, and cultural development. In 2024, we invested R$66 million in social responsibility initiatives. This included the granting of scholarships to 389 young people and support for projects that impacted over 6 thousand youths. In total, the initiatives we supported reached an audience of more than 380 thousand people.
Safety and Health
Safety is a top priority for us, and in 2024, we achieved a significant milestone, with no fatalities recorded across more than 100 million hours worked in our operations, which reflects the continuous strengthening of our safety culture. Our Health and Safety guidelines are based on best market practices, guided by regulatory standards and national and international recommendations. Additionally, through guidelines established in our policies and manuals, all direct and indirect employees are trained in actions and behaviors related to occupational safety, proactivity, legal compliance, hazard and risk mitigation and control, and the prevention of occupational accidents and illnesses.
Lusosider in Portugal and SWT in Germany hold Health Management System and Management System and Occupational Safety certifications by ISO 45.001:2018. CSN Cimentos is undergoing an adaptation process to comply with ISO 45.001:2018.
Governance Matters
We are dedicated to the continuous enhancement of our governance framework through the development and refinement of mechanisms within our governance committees.
We have a Code of Conduct that reinforces our ethical standards and the values that apply to all of our employees, including executive officers and directors. Instances of non-compliance with our Code of Conduct or with other policies, whether by employees, executive officers, directors, suppliers, or service providers, are subject to disciplinary measures, ranging from verbal or written warnings to suspension or dismissal or, in the case of third parties, termination of the relationship. We maintain a whistleblower channel for reports of suspected instances of non-compliance with our Code of Conduct or with other policies. In 2024, 100% of our employees were trained in compliance, covering our Code of Conduct and Anti-Corruption Policy.
For more information on our Code of Conduct, see “Item 16. Reserved—16B. Code of Ethics.”
Regulatory Matters
Environmental Regulation
We are subject to Brazilian federal, state and municipal environmental laws and regulations governing air emissions, water waste discharges, solid and hazardous waste handling and disposal, wildlife management, forest maintenance, dangerous products transportation and preservation of traditional communities. We are committed to controlling the substantial environmental impact caused by our steelmaking, mining, cement, logistics and energy operations, in accordance with international standards and in compliance with environmental laws and regulations in Brazil. We believe we are in material compliance with applicable environmental requirements. While the Brazilian government has authority to promulgate environmental regulations setting forth minimum standards of environmental protection, state and local governments have the power to enact more stringent environmental regulations.
We are subject to regulation and supervision by the Brazilian Ministry of Environment (Ministério do Meio Ambiente), or MMA, the environmental national council (Conselho Nacional do Meio Ambiente), which is responsible for enacting technical regulations and environmental protection standards, and the Brazilian Institute of Environment and Renewable Natural Resources (Instituto Brasileiro do Meio Ambiente e dos Recursos Naturais Renováveis), or IBAMA, which is responsible for enforcing environmental laws at the federal level. The environmental regulations of the state of Rio de Janeiro, in which the Presidente Vargas Steelworks and Cantagalo cement plant are located, are enforced by the governments of the state of Rio de Janeiro and of its applicable municipalities, and supervised by the state environment institute (Instituto Estadual do Ambiente), or INEA, and the municipal environmental secretariat of each of Volta Redonda and Cantagalo.
In the state of Minas Gerais, where our main mining operations and certain of our cement operations are located, we are subject to regulations and supervision by the Environmental Policy Council (Conselho Estadual de Política Ambiental – COPAM), the Regional Superintendent of Environment and Sustainable Development (Superintendência Regional de Meio Ambiente – SUPRAM), the Water Management Institute of Minas Gerais (Instituto Mineiro de Gestão das Águas – IGAM), the State Forestry Institute (Instituto Estadual de Florestas – IEF) and the State Environmental Foundation (Fundação Estadual do Meio Ambiente – FEAM), which are the competent bodies of the Secretary of State for the Environment and Sustainable Development of Minas Gerais (Secretaria de Estado de Meio Ambiente e Desenvolvimento Sustentável – SEMAD). We are also subject to local regulators, including the municipal environmental secretariats of Congonhas, Belo Vale, Ouro Preto and Rio Acima for our mining operations, and Arcos, Barroso, Montes Claros and Pedro Leopoldo, for our cement operations.
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We are exposed to laws and regulations such as the law the state of Rio de Janeiro, through INEA, which requires steelmaking and cement facilities to present action plans to reduce greenhouse gas emissions when renewing or applying for operational licenses. At the federal level, the environmental national council (Conselho Nacional do Meio Ambiente), which is responsible for enacting technical regulations and environmental protection standards, issued Resolution No. 436/2011 to address air emissions that obliged steel companies to comply with certain emission standards as of December 2018, including adjustments in the filters of plant chimneys. Moreover, the Brazilian government has established a national policy for solid waste (Política Nacional de Resíduos Sólidos), which provides for strict guidelines for solid waste management and industry targets for reverse logistics as part of the environmental licensing process. Finally, a new regulatory framework for mining operations was issued in June 2018, which has imposed regulations on our mining operations, including requests for environmental recovery of areas and investments for the granting of mining concessions.
In the second half of 2022, we initiated cement operations in certain Brazilian states, and consequently, new regional environmental agencies started to regulate our activities, such as: superintendence of environmental administration (Superintendência de Administração do Meio Ambiente) and the executive water management agency (Agência Executiva de Gestão das Águas do Estado da Paraíba) in the state of Paraíba; institute of the environment and water resources (Instituto do Meio Ambiente e Recursos Hídrico) in the state of Bahia; Secretary of State for environment and sustainable development (Secretaria de Estado de Meio Ambiente e Desenvolvimento Sustentável) in the state of Goiás; environmental company of the state of São Paulo (Companhia Ambiental do Estado de São Paulo); department of water and electric energy of the department of sanitation and water resources (Departamento de Águas e Energia Elétrica da Secretaria de Saneamento e Recursos Hídricos) in the state of São Paulo; and institute of environment and water resources (Instituto de Meio Ambiente e Recursos Hídricos) and state water resources agency (Agência Estadual de Recursos Hídricos) in the state of Espírito Santo.
Specific goals and standards are established in operating permits or environmental accords issued to each company or plant. These specific operational conditions complement the standards and regulations of general applicability and are required to be observed throughout the duration of the permit or accord. The terms of such operating permits are subject to change and are likely to become stricter. All of our facilities currently have or are in the process of obtaining or renewing their operating permits.
Considering the current mining environment in Brazil following recent accidents of other mining companies in the cities of Mariana and Brumadinho, in the state of Minas Gerais, involving the breaking of upstream mining dams, changes in applicable laws or regulations could require us to modify our technologies and operations and to make unexpected capital expenditures. Capital expenditures that we have already made may not generate the returns we expected, if any. In addition, new or more stringent environmental licensing requirements for our project operations, specifically for our dams, could be imposed on us and we may encounter delays in obtaining environmental or other operating licenses, or not be able to obtain or renew them. These events and additional costs may have a negative impact on us and the return from our projects and may render certain projects economically or otherwise unfeasible. For more information, see “Item 3. Key Information—3D. Risk Factors—Risks Relating to Us and the Industries in Which We Operate—Our activities depend on authorizations, concessions, licenses and permits, and changes in applicable laws, regulations or government measures could adversely affect us” and “—We are subject to environmental, health and safety incidents and current, new or more stringent regulations may result in liability exposure and increased capital expenditures.”
Mining Regulation
Under the Brazilian Federal Constitution of 1988, or the Brazilian Constitution, all mineral resources in Brazil belong to the federal government. The Brazilian Constitution, the Brazilian Mining Code (Código de Mineração) enacted through Decree Law No. 227/1967, or the Mining Code, and mining regulations enacted through Decree No. 9,406/2018 impose various regulatory restrictions on mining companies relating to, among other things:
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| · | manner in which mineral deposits must be exploited; |
| · | health and safety of workers and the safety of residential areas located near mining operations; |
| · | protection and restoration of the environment; |
| · | prevention of pollution; and |
| · | support of local communities where mines are located. |
The Mining Code also imposes certain notifications and reporting requirements.
Mining companies in Brazil can only prospect and mine pursuant to prospecting authorizations or mining concessions granted by the ANM. The ANM grants prospecting authorizations to a requesting party for an initial period of one to three years. These authorizations are renewable at the ANM’s discretion, provided that the requesting party is able to show that the renewal is necessary for proper conclusion of prospecting activities. Upon completion of prospecting activities and geological exploration at the site, the holder of the prospecting authorization must submit a final report to the ANM. If the geological exploration reveals the existence of a mineral deposit that is technically and economically exploitable, the grantee has one year (which the ANM may extend) from approval of the report by the ANM to apply for a mining concession by submitting an economic exploitation plan or to transfer its right to apply for a mining concession to an unrelated party. When a mining concession is granted, the holder of such mining concession must begin on-site mining activities within six months. The ANM grants mining concessions for an indeterminate period of time lasting until the exhaustion of the mineral deposit. After extraction, the mineral products that are specified in the concession belong to the holder of the concession. With the prior approval of the ANM, the holder of a mining concession can transfer it to an unrelated party that is qualified to own concessions. Under certain circumstances, unrelated parties may challenge mining concessions.
After accidents involving the breaking of upstream mining dams operated by other mining companies in the cities of Mariana and Brumadinho in the state of Minas Gerais, the ANM and Brazilian environmental regulatory authorities have applied more stringent environmental licensing requirements for mining project operations, specifically for dams. For more information, see “Item 3. Key Information—3D. Risk Factors—Risks Relating to Us and the Industries in Which We Operate—Our activities depend on authorizations, concessions, licenses and permits, and changes in applicable laws, regulations or government measures could adversely affect us” and “—We are subject to environmental, health and safety incidents and current, new or more stringent regulations may result in liability exposure and increased capital expenditures.”
Mining Concessions
We operate our iron ore mining activities at Casa de Pedra mine under a mining concession known as Manifesto de Mina under Brazilian regulations, which gives us the right to extract the iron ore deposits existing within our property limits. Our iron ore mining activities at Engenho and Fernandinho mines are based on a concession by the MME, which grants us the right to exploit mineral resources from the mine for an indeterminate period of time lasting until the exhaustion of the mineral deposit. Our limestone and dolomite mining activities at Bocaina mine and our tin mining activities at Ariquemes (ERSA mine) are based on concessions under similar conditions.
The Manifesto de Mina for Casa de Pedra mine and the Engenho mining concession are held by CSN Mineração, while the Fernandinho mining concession and the mining rights of Cayman and Pedras Pretas are held by Minérios Nacional.
For further information on our concessions, see “—4D. Property, Plant and Equipment.”
Mineral Rights and Ownership
Our mineral rights for Casa de Pedra mine include the mining concession, a beneficiation plant, roads, a loading yard and a railway branch, and are duly registered with the ANM. We have also been granted by the ANM easements in 19 mine areas located in the surrounding region. These areas are needed to expand our operations and as operating support areas. In addition, we have obtained and are in compliance with all environmental licenses and authorizations for our operations and projects at Casa de Pedra mine.
Quality requirements (chemical and physical) are the key “modifying factors” in the definition of ore reserves at Casa de Pedra mine and were properly accounted for by our mine planning department.
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The Brazilian government charges us a royalty known as CFEM, which calculation considers gross revenue, excluding taxes on sales. The ANM is responsible for auditing mining companies and enacting regulations to ensure proper payment of CFEM.
Current CFEM rates vary between 1% and 3.5%, as follows:
| · | 1%: rocks, sand, gravel, clay and other minerals used in civil construction; ornamental rocks and mineral and thermal water; |
| · | 1.5%: gold; |
| · | 2%: diamond and other minerals; |
| · | 3%: bauxite, manganese, niobium and rock salt; and |
| · | 3.5%: iron ore. |
The Mining Code and ancillary mining laws and regulations also impose other financial obligations. For example, mining companies must compensate landowners for the damages and loss of income caused by the use and occupation of the land (either for exploitation or exploration) and must also share with landowners the results of their exploration (at a rate of 50% of the applicable CFEM). Mining companies must also enter into agreements with the Brazilian government to use public lands and eventually compensate the government for damages caused to such public lands. A substantial majority of our mines and mining concessions are on lands owned by us or on public lands for which we hold mining concessions.
Antitrust Regulation
We are subject to various laws in Brazil which seek to maintain a competitive commercial environment. Competition law and practice in Brazil are governed by Law No. 12,529, dated November 30, 2011, which came into force on May 30, 2012, and provided for significant changes in the Brazilian antitrust system’s structure, including the creation of the Brazilian antitrust authority (Conselho Administrativo de Defesa Econômica), or CADE. This law introduced a mandatory pre-merger notification system, as opposed to the post-merger review system previously in force. CADE is composed of an Administrative Tribunal of Economic Defense (Tribunal Administrativo de Defesa Econômica), a General-Superintendence (Superintendência-Geral) and a Department of Economic Studies (Departamento de Estudos Econômicos).
CADE is responsible for the control of anti-competitive practices in Brazil. If CADE determines that certain companies have acted collusively to raise prices, it has the authority to impose fines on the offending companies, prohibit them from receiving loans from Brazilian government sources and bar them from bidding on public projects. In addition, CADE has the authority to prevent, or impose certain conditions or restrictions to, mergers and acquisitions transactions (for instance, require a company to divest assets or adopt other measures that CADE deems appropriate to guarantee a competitive environment) should it determine that the relevant industry is insufficiently competitive or that the transaction creates a market concentration that can affect competition. For further antitrust-related information, see “Item 8. Financial Information—8A. Consolidated Statements and Other Financial Information—Legal and Administrative Proceedings.”
Protectionist Measures
Over the past several years, exports of steel products from various countries and companies, including Brazil and us, have been the subject of anti-dumping, countervailing duty and other trade related investigations from importing countries. These investigations resulted in duties that limit our access to certain markets. Worldwide, our exports are subject to the protectionist measures summarized below.
United States: Anti-dumping (AD) and Countervailing Duties (CVD)
In the United States, we are subject to regulation and supervision by the U.S. Department of Commerce, the ITC, the International Trade Administration, or ITA, and the Import Administration, or IA.
Corrosion Resistant Products
In September 2024, Steel Dynamics, Inc., Nucor Corporation, United States Steel Corporation, Wheeling-Nippon Steel, Inc., and the United Steel, Paper and Forestry, Rubber, Manufacturing, Energy, Allied Industrial and Service Workers International Union, filed an antidumping petition with respect to certain corrosion resistant steel products (CORE) from Australia, Brazil, Canada, Mexico, the Netherlands, South Africa, Taiwan, Turkey, the UAE, and Vietnam. The anti-dumping petitions were accompanied by countervailing duty petitions concerning imports of CORE from Brazil, Canada, Mexico, and Vietnam.
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In October 2024, the U.S. Department of Commerce initiated both antidumping and countervailing duty investigations with respect to corrosion resistant steel from Brazil and the ITC announced affirmative preliminary injury determinations with respect to corrosion resistant steel imports from Brazil.
On February 4, 2025, the U.S. Department of Commerce announced the affirmative preliminary determinations in the countervailing duty investigations of CORE from Brazil, Canada, Mexico, and Vietnam. Our preliminary subsidy rate was 1.72%. The final determination is expected to be announced by June 2025.
Section 232
In April 2017, the President of the United States, Donald Trump, requested an investigation under Section 232 of the U.S. Trade Expansion Act to determine if steel imports were harming U.S. national security. As a result of this investigation, in March 2018, the U.S. government implemented Section 232 measures and imposed an ad valorem tariff of 25% on imported steel. Brazil obtained a temporary suspension of the measure until the end of April 2018, which was extended to the end of May 2018. After the suspension, Brazil entered into an agreement with the United States, which established quotas for semi-finished steel products based on average exports between 2015 and 2017 and quotas for finished steel products based on average exports between 2015 and 2017 with a reduction of 30%. Section 232 subjected us to a quota for exports of slabs, cold and hot-rolled steel sheets, pre-painted corrosion resistant, Al-Zn and tin mill products.
In February 2025, President Donald Trump signed new executive orders that raised tariffs on steel and aluminum and “derivative” products from all countries to a flat 25% tariff, with no exceptions or exemptions. This directly impacts suppliers in Brazil and other countries, including us.
In April 2025, President Donald J. Trump signed an executive order (regulating imports with a reciprocal tariff to rectify trade practices that contribute to large and persistent annual United States goods trade deficits), declaring a national emergency with respect to the threat from various foreign trade and economic policies and practices and imposing new tariffs on imports of all articles into the United States customs territory, subject to certain exceptions. The executive order directs the imposition of a new baseline 10% ad valorem rate of duty on imports from almost all U.S. trading partners, as well as jurisdiction-specific ad valorem rates of duty on 57 countries and territories. Currently, Brazil will be subject to the original 10% tariff baseline and some goods, such as steel products that are already subject to Section 232 tariffs, are currently not subject to the reciprocal tariff. The executive order follows several other tariff-related measures that were imposed by the Administration earlier this year, including with respect to imports from Canada, China and Mexico, and imports of steel, aluminum, automobiles, and automobile parts.
European Union: Anti-dumping
In the European Union, we are subject to regulation and supervision by the European Commission.
Hot-Rolled Products
In July 2016, the European Commission initiated an anti-dumping investigation concerning imports of certain hot-rolled flat steel products originating from Brazil, Iran, Russia, Serbia and Ukraine. The investigation was limited to a reasonable number of exporting producers by using a sample in accordance with Article 17(1) of Regulation (EU) 2016/1036 of the European Parliament. Three companies; CSN, Usiminas and Arcelor Mittal, collectively responsible for 97% of total steel exports from Brazil to the European Union, were chosen as part of the sample subject to investigation.
In January 2017, the European Commission issued a regulation establishing that imports of hot-rolled flat steel products originating from Brazil and Russia be subject to customs registration, meaning that all imports cleared after January 7, 2017 would be exposed to the risk of retroactive collection of duties against Brazil at the end of the investigation.
In October 2017, the European Commission issued a final determination imposing definitive anti-dumping duties for the exports of hot-rolled steel products into the European Union from Brazil. The duties imposed were a tariff rate of 53.4 euros/ton for CSN, 63 euros/ton for Usiminas, 54.5 euros/ton for Arcelor Mittal and 55.8 euros/ton for Gerdau.
In October 2022, the European Commission initiated the five year “sunset review” of anti-dumping duties on imports of certain hot-rolled flat steel products originating from, among other countries, Brazil. The final result was issued in December 2023, maintaining the anti-dumping order for another five years.
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Tin Free Steel
In September 2021, the European Commission initiated an anti-dumping investigation concerning imports of electrolytic chromium coated steel (tin free steel) products originating from Brazil and China. The European Commission issued a preliminary determination in May 2022, opting not to impose provisional duties on the imports of hot-rolled products from Brazil into the European Union. In October 2022, the European Commission issued a final determination imposing definitive anti-dumping duties for the exports of electrolytic chromium coated steel products into the European Union from Brazil. The duties imposed were a tariff rate of €348.39/ton for CSN.
Safeguard Measures
Prompted by the United States’ adoption of Section 232 measures, the European Union initiated, in April 2018, an investigation into safeguards for imports of 26 categories of steel products. In February 2019, a definitive European Union regulation imposed safeguard measures on imports of hot-rolled, cold-rolled and tin mill products and imposed quotas for the next three years. The quota system is divided into specific quotas for countries which participation in exports is above 5% on all European Union imports, and global quotas for the countries which participation is below 5% of European Union imports. Unlike the U.S. quotas pursuant to Section 232, the European Union quotas provide for imports above the quota, subject to a 25% tariff. Because our hot-rolled products are already subject to anti-dumping duties, these exports are unaffected by the European Union quotas. In the case of our cold-rolled and tin mill products, because the European Union quotas have not been reached since implemented, these exports have also been unaffected.
Consequently, the European Commission extended the measures until July 2026.
CBAM
European Union Regulation No. 2023/956, establishing the Carbon Border Adjustment Mechanism (CBAM) aimed at combating carbon leakage from cement, iron, steel and aluminum, has entered into force in October 2023. The regulation institutes a carbon tax on these products originated in other countries and destined for trade within the European Union. European Union importers have to report import volumes and the quantity of greenhouse gases originated in the imported goods as of October 1, 2023. As this is a transition phase, no financial adjustment will be required at this time.
During the CBAM transition period, CBAM goods importers are subjected to a reporting obligation. The first CBAM report had to be submitted by January 31, 2024 (for imports in the fourth quarter of 2023). The last CBAM report must be submitted by January 31, 2026 (for imports in the fourth quarter of 2025).
The transition phase will serve as a learning period and it will allow the European Commission to collect useful information on embedded emissions to refine the methodology for the definitive period, which begins in 2026.
Canada
In Canada, we are subject to regulation and supervision by the Canadian International Trade Tribunal, the Canada Border Services Agency and the Anti-dumping and Countervailing Directorate.
Since 2001, Canada has had an anti-dumping order in place relating to hot-rolled sheets and coils from Brazil. However, as of the date of this annual report, we are not affected by this anti-dumping order since we do not export hot-rolled sheets or coils to Canada.
Brazil
In Brazil, we are subject to regulation and supervision by the MDIC, the Secretary of Foreign Trade (Secretaria de Comércio Exterior), and the Brazilian Department of Trade Defense (Departamento de Defesa Comercial), or DECOM.
Ongoing Anti-dumping Investigations
Tin mill products: In February 2024, DECOM initiated an anti-dumping investigation concerning the imports of tin mill products (tin free steel and tin plate) originating from China.
In October 2024, the executive management committee of Brazil’s Foreign Trade Chamber approved the affirmative preliminary determination and application of provisional anti-dumping of tin mill products from China. The provisional duties were applied for a period of up to six months, in the form of a specific rate set in U.S. dollars per ton. The final determination is expected to be released by June 2025.
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Cold Rolled Products: In March 2024, DECOM initiated an anti-dumping investigation concerning the imports of pre-painted products originating from China.
In March 2025, DECOM’s preliminary findings concluded that the effects of dumping in the exports of cold-rolled flat products to Brazil caused the deterioration in the domestic industry’s indicators. According to DECOM, the dumping profit margins found ranged from 74% to 115%. The final determination is expected by September 2025.
Corrosion resistant products (HDG and AlZn): In September 2024, DECOM initiated an anti-dumping investigation concerning the imports of corrosion resistant products originating from China.
In April 2025, DECOM’s preliminary findings concluded that the effects of dumping in the exports of corrosion resistant products to Brazil caused the deterioration in the domestic industry’s indicators. According to DECOM, the dumping profit margins found ranged from 67% to 76%. The final determination is expected by October 2025.
Pre-painted products: In September 2024, DECOM initiated an anti-dumping investigation concerning the imports of pre-painted products originating from China and India. In April 2025, DECOM’s preliminary findings concluded that the effects of dumping in the exports of pre-painted products to Brazil caused the deterioration in the domestic industry’s indicators. According to DECOM, the dumping profit margins found ranged from 31.9% to 46.9% for China and 21.7% for India. The final determination is expected by October 2025.
For more information, see “Item 3. Key Information––3D. Risk Factors—Risks Relating to Us and the Industries in Which We Operate—Protectionist and other measures adopted by foreign governments could adversely affect our export sales.”
Brazilian Import Tariffs
In April 2024, the Brazilian government approved the inclusion of eleven steel items (including four hot-rolled, two cold-rolled, hot-deep galvanized, galvalume, wire-rod and two tubes items) on a list to raise the import tax to 25% and established import volume quotas, implying that the tariff will only increase by 25% once the established quotas are exceeded. The method to calculate quotas is the average imports from 2020 to 2022 for each tariff code number of The Southern Common Market, or Mercosul, with an additional 30%. The measure is effective for twelve months and will be overseen by the Ministry of Industry, Foreign Trade, and Services (Ministério do Desenvolvimento, Indústria, Comércio e Serviços), or MDIC.
Overview of Steel Industry
Global Steel Industry
The global steel industry comprises hundreds of steelmaking facilities divided into two major categories: integrated steelworks and non-integrated steelworks, depending on the method used for producing steel. Integrated plants, which accounted for approximately two-thirds of worldwide crude steel production in 2024, typically produce steel by smelting in blast furnaces the iron oxide found in ore and refining the iron into steel, mainly through the use of basic oxygen furnaces or, more rarely, in electric arc furnaces. Non-integrated plants (sometimes referred to as mini-mills), which accounted for approximately one-third of worldwide crude steel production in 2024, produce steel by melting scrap metal, occasionally complemented with other metallic materials, such as direct reduction iron or hot-briquette iron, in electric arc furnaces. Industry experts expect that a lack of a reliable and continuous supply of quality scrap metal, as well as the high cost of energy, may restrict the growth of mini-mills.
Steel continues to be the material of choice in the automotive, construction, machinery and other industries. Notwithstanding potential threats from substitute materials such as plastics, aluminum, glass and ceramics, especially for the automotive industry, steel continues to demonstrate its economic advantage.
In 2022, global crude steel production was 1,879 million tons, which represented a decrease of 81 million tons, or 4.2%, as compared to 2021, due to a decrease in crude steel production of the main steel producing countries, including China, Japan, United States, Russia and Ukraine.
In 2023, global crude steel production was 1,892 million tons and was stable as compared to 2022. In 2024, global crude steel production was 1,885 million tons, maintaining a stable level with a decrease of 0.4% compared to 2023, due to the production in India, Turkey and Vietnam and a high performance of Chinese blast furnace managing to offset a stronger slowdown in North American, Russia, Asia and Oceania.
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Brazilian Steel Industry
Since the 1940s, steel has been of vital importance to the Brazilian economy. During the 1970s, significant government investments were made to provide Brazil with a steel industry able to support the country’s industrialization boom. After a decade of investment scarcity in the sector in the 1980s, the government selected the steel sector as the first for privatization commencing in 1991, resulting in a more efficient group of companies operating today.
Privatization
During almost 50 years of state control, the Brazilian flat steel sector was coordinated on a national basis under the auspices of Siderbrás, the national steel monopoly. The state had far less involvement in the non-flat steel sector, which has traditionally been made up of smaller private sector companies. The larger integrated flat steel producers operated as semi-autonomous companies under the control of Siderbrás and were each individually privatized between 1991 and 1993. We believe that the privatization of the steel sector in Brazil has resulted in improved financial performance, as a result of increased efficiencies, higher levels of productivity, lower operating costs and an increase in investment.
Domestic Demand
Historically, the Brazilian steel industry has been affected by substantial fluctuations in domestic demand for steel. Although national per capita consumption varies with GDP, fluctuations in steel consumption tend to be more pronounced than changes in economic activity. Crude steel consumption per capita in Brazil has decreased from 147 kilograms in 2010 to 110 kilograms in 2019. It is considered low when compared to the levels of developed countries such as the United States and Germany.
According IBGE, Brazil’s GDP, grew by 3.0%, 2.9% and 3.4% in 2022, 2023 and 2024, respectively. In 2024, the global crude steel production was 1,885 million tons, maintaining a stable level with a decrease of 0.4% compared to 2023.
The Brazilian flat steel sector is shifting production to the higher value-added consumer durable sector, which is highly dependent on domestic consumer confidence that, in turn, is affected by economic policies and certain expectations of the current government administration. Over the past years, automobile manufacturers made significant investments in Brazil. In 2024, the apparent consumption of steel in Brazil increased 8.7% compared to 2023.
Capacity Utilization
Installed capacity in Brazil in 2024 was estimated at 51.0 million tons.
Exports/Imports
Brazil has been playing an important role in the export market, primarily as an exporter of semi-finished products. The Brazilian steel industry has taken several steps towards expanding its capacity to produce value-added products. The Brazilian steel industry has experienced periods of overcapacity, cyclicality and intense competition during the past several years. Demand for finished steel products, as measured by domestic apparent consumption, has consistently fallen short of total supply (defined as total production plus imports). In 2024, steel imports reached 5.95 million tons, which represented an increase of 18% as compared to 2023, and steel exports reached 9.5 million tons, or a decrease of 18.3%, as compared to 2023.
For information on the production by the largest Brazilian steel companies, see “—Market Participants and Competition—Competition in the Brazilian Steel Industry.”
Market Participants and Competition
Both the worldwide and the Brazilian steel markets are intensely competitive. The primary competitive factors in these markets are quality, price, payment terms and customer service. Further, continuous advances in materials, sciences and resulting technologies have given rise to improvements in products such as plastics, aluminum, ceramics, glass and concrete, permitting them to serve as substitutes for steel for certain purposes.
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Competition in the Global Steel Industry
In 2024, Brazil maintained its place as the largest producer of crude steel in South America, with a production output of 33.751 million tons and a 2% share of total global production, according to data from the World Steel Association, or WSA. In 2024, Brazil maintained the ninth position in the global steel production ranking, accounting for 61% of total production in South America.
We compete on a global basis with the world’s leading steel manufacturers. We have positioned ourselves in the world market with a product mix characterized by high margins and strong demand, such as tin plate and galvanized products. We have relatively low-cost, and sufficient availability of labor and energy resources, and own high-grade iron ore reserves. These global market advantages are partially offset by costs of transporting steel throughout the world, usually by ship. Shipping costs, which protect the domestic steel market, put pressure on our export prices. To maintain our position in the world steel market in light of the highly competitive international environment with respect to price, we must maintain our product quality and customer service at a high level. See “—Regulatory Matters—Protectionist Measures” for a description of protectionist measures adopted by steel-importing countries that could adversely affect our competitive position in the global steel industry.
Competition in the Brazilian Steel Industry
Brazil’s principal competitive advantages are its abundant supply of low-cost, high-grade iron ore and energy resources. Brazil also benefits from a vast internal market with large growth potential; a privatized industry making investments in plant and equipment; and deep-water ports that permit the operation of large ships and facilitate access to export markets.
According to the Brazilian Steel Institute (Instituto Aço Brasil), the Brazilian steel industry comprises 31 mills managed by eleven corporate groups, with an aggregate installed annual capacity of approximately 51 million tons, producing a full range of flat, long, carbon, stainless and specialty steel.
The following table sets forth the production of crude steel by Brazilian companies in the periods indicated:
|
2022 |
2023 | |
| (in millions of tons) | ||
| Production | ||
| Flat Steel | ||
| Gerdau | 6.5 | 5.8 |
| Usiminas | 2.7 | 2.1 |
| ArcelorMittal Tubarão | 6.6 | 6.6 |
| CSN | 3.8 | 3.1 |
| Long Steel | ||
| Ternium Brasil | 4.4 | 4.4 |
| Other |
10.1 |
10.0 |
| Total |
34.1 |
32.0 |
_____________
Source: Brazilian Steel Institute (Instituto Aço Brasil).
*2024 data was not available as of the date of this annual report.
Overview of Mining Industry
Global Mining Industry
Currently, several countries play a significant role as iron ore producers, including Australia, Brazil, South Africa, Canada, China, India, Guinea, Russia, Sweden, Ukraine, Chile, Peru, and others.
Australia is the world’s largest exporter, with annual exports of approximately 975 Mt. Most of this iron ore is shipped to the Asian market, with China receiving 85%, and Japan, South Korea, and Taiwan collectively receiving 12%, while the remainder is distributed globally.
Brazil is the second largest iron ore producer in the world, with annual exports of 400 Mt. Most of Brazil’s production comes from major companies such as us, Vale, Samarco and Anglo American (Minas Rio Project). Recently, junior miners have also been investing to access the export market. Brazil has two main iron ore production states: Pará and Minas Gerais.
Several factors differentiate Brazil from Australia. Firstly, the market destination for Brazilian ore is diverse, reaching Asian, European, and American (both South and North America) markets. Secondly, the quality of iron ore; Australian ore typically has higher alumina and lower silica contents, whereas Brazilian ore is the opposite. Despite these differences, Brazil remains in the first quartile of the cost curve, similar to Australia, due to its premium products, efficient processing systems, relatively low labor costs, and integrated owned-operated transport systems.
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China also plays a significant role in supplying domestic iron ore to its steel mills, with an average production of 280 million tons per annum. However, Chinese iron ore is predominantly low-grade magnetite, with an average raw ore grade estimated at 25% Fe. Consequently, most of it must undergo industrial processing to concentrate it to a usable 62% Fe content for steel mills. The main production regions are in North and Southwest China, and 75% of this iron ore is either captive to steel mills or sourced from regions less sensitive to international prices.
Brazilian Mining Industry
The Brazilian mining industry is focused on the extraction of iron, copper, gold, aluminum, nickel and niobium, which provides a surplus in Brazil’s trade balance, seizing vast natural mineral reserves and creating a high number of direct and indirect jobs. In 2024, the Brazilian mining industry accounted for 16% of Brazil’s total exports and 10% of Brazil’s trade balance.
According to The Commodity Exchange Inc., or Comex, in 2024, China was the country that most imported from the Brazilian mining industry, having imported a total of US$27.9 billion. Of the total exports of the Brazilian mining industry in 2024, 71.2% were related to iron ore, 10% to copper, 8% to precious metals and 10.8% to others.
Brazil is well-positioned as a supplier of the world’s iron ore demand. In 2024, Brazil accounted for 21% of the global production of iron ore, with 440 million metric tons, according to the global research and consulting firm Wood Mackenzie.
In addition, according to the MME, Brazil’s total iron ore reserves represented a volume of 34 billion metric tons in 2024, which accounted for approximately 15% of global iron ore reserves, evidencing the importance of Brazil to the global iron ore extraction sector.
Brazilian iron ore is considered as high quality and contains a low level of contaminants in its composition. Due to these characteristics, exported iron ore has gained ground in international markets, particularly in China, where recent regulatory changes have led Chinese steel producers to turn to higher quality iron ore.
Furthermore, as a result of the depreciation of the real, iron ore prices have become more competitive due to the increased purchasing power of international players that purchase Brazilian iron ore. This sets a favorable scenario for us since most of our mining production costs are denominated in reais while our mining revenues are mostly denominated in U.S. dollars, which increases the margin of our products.
Extracted iron ore can be used to manufacture several types of steel, so there is a strong correlation between steel production and the consumption of iron ore.
Overview of Cement Industry
Cement is one of the primary inputs used in construction and, as such, the cement industry is closely tried to trends and developments in the civil construction market, which is, in turn, highly sensitive to macroeconomic conditions. In particular, GDP growth and declining interest rates tend to increase credit availability, thereby stimulating demand in the civil construction sector.
In Brazil, the civil construction market in Brazil is largely driven by infrastructure and affordable housing projects, which together account for a significant share of overall construction activity. One of the key government-led initiatives in this area is the Green and Yellow Housing Program (Programa Casa Verde e Amarela) designed to address the country’s housing deficit through affordable housing projects. As of December 31, 2024, Brazil faced an estimated deficit of approximately 6.3 million residential units, according to the Union of Real Estate Purchase, Sale and Administration Companies (Sindicato das Empresas de Compra, Venda e Administração de Imóveis), or SECOVI.
Additionally, Brazil’s infrastructure sector presents considerable opportunities for expansion. Despite being the tenth largest economy in the world in 2024 in terms of GDP, according to the World Bank, the country continues to experience significant infrastructure bottlenecks. These structural gaps represent a major opportunity for growth in civil construction and, consequently, in cement demand.
Overview of Logistics Industry
Brazil’s logistics industry plays a critical role in supporting national economic activity, given the country’s continental dimensions and its reliance on the transportation of goods over long distances. The sector is characterized by its heavy dependence on road transport, which accounts for the majority of freight movement, followed by rail, maritime, and air transport. However, the country’s logistical infrastructure still faces significant challenges that impact efficiency and cost competitiveness.
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The Brazilian transportation network is marked by structural bottlenecks, including limited railway coverage, underutilization of inland waterways, and port congestion. Road infrastructure, while extensive, is often inadequately maintained, particularly in remote or rural areas. These conditions result in high logistical costs, extended lead times, and increased operational risks, especially for companies reliant on integrated supply chains and bulk commodity transport.
In recent years, the sector has seen increased private and public investment through concessions and public-private partnerships aimed at modernizing and expanding key infrastructure assets.
Overview of Energy Industry
The Brazilian energy market is characterized by a diverse energy matrix, with hydropower accounting for about 60% of the country’s installed capacity. This reliance on hydropower is due to Brazil’s extensive river systems and favorable geographical conditions, which make it an ideal location for hydroelectric plants. Additionally, Brazil has significantly invested in renewable sources such as solar and wind energy. These investments are driven by government policies aimed at reducing carbon emissions and promoting sustainable development, as well as the growing demand for clean energy from both consumers and industries. In 2023, the internal energy supply recorded a growth of 3.5%, reflecting the post-pandemic economic recovery and increased final consumption. This growth indicates a robust energy sector that is adapting to changing economic conditions and consumer needs.
4C. Organizational Structure
We conduct our business directly and through subsidiaries. For more information on our organizational structure, see note 9 to our audited consolidated financial statements included elsewhere in this annual report.
4D. Property, Plant and Equipment
Our principal executive offices are located in the city of São Paulo, state of São Paulo, and our main production operations are located in the city of Volta Redonda, state of Rio de Janeiro. Presidente Vargas Steelworks, our steel mill, is an integrated facility covering approximately four square km and is located in the city of Volta Redonda, state of Rio de Janeiro. Our iron ore, limestone and dolomite mines are located in the state of Minas Gerais, which borders the state of Rio de Janeiro to the north. Each of these mines lies within 500 km of, and is connected by rail and paved road to, the city of Volta Redonda.
The table below sets forth certain material information regarding our properties as of December 31, 2024. For more information, see note 10 to our audited consolidated financial statements included elsewhere in this annual report.
| Description | Activity | Country | State | City | Title | |
| CSN | Presidente Vargas Steelworks | Steel Mill | Brazil | Rio de Janeiro | Volta Redonda | Owned |
| CSN | CSN Paraná | Galvanized and Pre-Painted Products | Brazil | Paraná | Araucária | Owned |
| CSN | CSN Porto Real | Galvanized Steel Producer | Brazil | Rio de Janeiro | Porto Real | Owned |
| CSN | Service Center | Distributor | Brazil | São Paulo | Mogi das Cruzes | Owned |
| CSN | Service Center | Distributor | Brazil | Bahia | Camaçari | Owned |
| CSN | Thermoelectric Plant | Energy | Brazil | Rio de Janeiro | Volta Redonda | Owned |
| CSN | Long Steel Plant | Long steel Manufacturer | Brazil | Rio de Janeiro | Volta Redonda | Owned |
| CSN | Distribution Center | Distributor | Brazil | Rio Grande do Sul | Canoas | Third Parties |
| CSN | Steel Distribution Center | Distributor | Brazil | Minas Gerais | Contagem | Third Parties |
| CSN | Distribution Center | Steel Distributor | Brazil | Rio Grande do Sul | Caxias do Sul | Third Parties |
| CSN | Distribution Center | Steel | Brazil | São Paulo | Jacareí | Third Parties |
| CSN | Distribution Center | Steel Distributor | Brazil | Bahia | Camaçari | Third Parties |
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| Description | Activity | Country | State | City | Title | |
| CSN | Distribution Center | Steel Distributor | Brazil | Santa Catarina | Joinville | Third Parties |
| CSN | Distribution Center | Distributor | Brazil | São Paulo | Vargem G. Paulista | Third Parties |
| CSN | Office | Office | Brazil | São Paulo | São Paulo | Third Parties |
| CSN Cimentos | Distribution Center | Cement Distributor | Brazil | São Paulo | Mogi das Cruzes | Owned |
| CSN Cimentos | Distribution Center | Cement Distributor | Brazil | Minas Gerais | Uberlândia | Owned |
| CSN Cimentos | Arcos Mine | Limestone Mine | Brazil | Minas Gerais | Arcos | Owned |
| CSN Cimentos | Clinker and Cement Plant | Cement Manufacturer | Brazil | Minas Gerais | Arcos | Owned |
| CSN Cimentos | Distribution Center | Cement Distributor | Brazil | São Paulo | Mauá | Third Parties |
| CSN Cimentos | Distribution Center | Cement Distributor | Brazil | São Paulo | Ribeirão Preto | Third Parties |
| CSN Cimentos | Distribution Center | Cement Distributor | Brazil | São Paulo | Americana | Third Parties |
| CSN Cimentos | Distribution Center | Cement Distributor | Brazil | São Paulo | São José dos Campos | Third Parties |
| CSN Cimentos | Distribution Center | Cement Distributor | Brazil | São Paulo | Osasco | Third Parties |
| CSN Cimentos | Cement Plant | Cement Manufacturer | Brazil | Rio de Janeiro | Volta Redonda | Third Parties |
| CSN Cimentos | Distribution Center | Cement Distributor | Brazil | Rio de Janeiro | Rio de Janeiro (Arará) | Third Parties |
| CSN Cimentos | Distribution Center | Cement Distributor | Brazil | Rio de Janeiro | Rio de Janeiro (Campo Grande) | Third Parties |
| CSN Cimentos | Distribution Center | Cement Distributor | Brazil | Rio de Janeiro | Queimados | Third Parties |
| CSN Cimentos | Distribution Center | Cement Distributor | Brazil | Rio de Janeiro | Itaboraí | Third Parties |
| CSN Cimentos | Distribution Center | Cement Distributor | Brazil | Rio de Janeiro | Barra Mansa | Third Parties |
| CSN Cimentos | Distribution Center | Cement Distributor | Brazil | Minas Gerais | Arcos | Third Parties |
| CSN Cimentos | Mine | Limestone Mine | Brazil | Paraíba | Pitimbu | Owned |
| Companhia Metalúrgica Prada | Service Center | Distributor | Brazil | São Paulo | Mogi das Cruzes | Owned |
| Companhia Metalúrgica Prada | Service Center | Distributor | Brazil | São Paulo | Bebedouro | Owned |
| Companhia Metalúrgica Prada | Steel Can Manufacturer | Packaging | Brazil | São Paulo | São Paulo | Owned |
| Companhia Metalúrgica Prada | Steel Can Manufacturer | Packaging | Brazil | Minas Gerais | Uberlândia | Owned |
| Companhia Metalúrgica Prada | Metallic Packaging Plant |
Packaging | Brazil | Rio de Janeiro | Resende | Third Parties |
| Companhia Metalúrgica Prada | Metallic Packaging Plant |
Packaging | Brazil | Rio Grande do Sul | Pelotas | Third Parties |
| Companhia Metalúrgica Prada | Metallic Packaging Plant |
Packaging | Brazil | Rio de Janeiro | Barão de Juparanã | Owned |
| Companhia Metalúrgica Prada | Distribution Center | Steel Roll | Brazil | São Paulo | Salto | Third Parties |
| Companhia Metalúrgica Prada | Distribution Center | Distributor | Brazil | São Paulo | Piracicaba | Third Parties |
| Companhia Metalúrgica Prada | Distribution Center | Distributor | Brazil | Minas Gerais | Contagem | Third Parties |
| CSN Mineração | Iron Ore Mine | Iron Ore Mine | Brazil | Minas Gerais | Congonhas | Owned and Third Parties |
| CSN Mineração | Ouro Preto Mine | Iron Ore Mine | Brazil | Minas Gerais | Ouro Preto | Owned |
| CSN Mineração | TECAR – Coal Terminal | Iron Ore Shipment | Brazil | Rio de Janeiro | Itaguaí | Third Parties |
| Minérios Nacional | Fernandinho Mine | Iron Ore Mine | Brazil | Minas Gerais | Rio Acima | Third Parties |
| ERSA | ERSA Office | Tin Mine | Brazil | Rondônia | Ariquemes | Owned |
| ERSA | ERSA Mine | Tin Mine | Brazil | Rondônia | Itapuã do Oeste | Owned |
| Companhia Siderúrgica Nacional, LLC | CSN LLC Office | Office | USA | Illinois | Chicago | Third Parties |
| Lusosider | Lusosider | Flat Steel Producer | Portugal | Seixal | Seixal | Owned |
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| Description | Activity | Country | State | City | Title | |
| SWT | SWT | Steel Profile | Germany | Saalfeld-Rudolstadt | Unterwellenborn | Owned |
| Consórcio Usina Hidrelétrica de Igarapava | Hydroelectric Facility | Energy | Brazil | São Paulo | Igarapava | Owned |
| Itá Energética S.A. | Hydroelectric Facility | Energy | Brazil | Rio Grande do Sul | Aratiba | Owned |
| TECON | TECON – Terminal de Containers | Logistics | Brazil | Rio de Janeiro | Itaguaí | Third Parties |
| MRS | Railway | Railway Logistics | Brazil | Several | Several | Third Parties |
| FTL | Railway | Railway Logistics | Brazil | Several | Several | Third Parties |
| TLSA | Railway | Railway Logistics | Brazil | Several | Several | Third Parties |
| Elizabeth Cimentos S.A. | Cement Plant | Cement Manufacturer | Brazil | Paraíba | Alhandra | Owned |
| Elizabeth Cimentos S.A. | Distribution Center | Cement Distributor | Brazil | Bahia | Salvador | Third Parties |
| CSN Cimentos | Cargo Terminal | Cargo Terminal | Brazil | São Paulo | Ribeirão Preto | Owned |
| CSN Cimentos | Cargo Terminal | Cargo Terminal | Brazil | Pernambuco | Recife | Third Parties |
| CSN Cimentos | Cargo Terminal | Cargo Terminal | Brazil | Rio Grande do Norte | Macaíba | Third Parties |
| CSN Cimentos | Rio Blender e Cargo Terminal | Rio Blender e Cargo Terminal | Brazil | Rio de Janeiro | Rio de Janeiro | Owned |
| CSN Cimentos | Cement plant and limestone mine | Cement plant and limestone mine | Brazil | Rio de Janeiro | Cantagalo | Owned |
| CSN Cimentos | Cargo Terminal | Cargo Terminal | Brazil | Minas Gerais | Barbacena | Owned |
| CSN Cimentos | Cement plant Capoeira Grande | Cement plant Capoeira Grande | Brazil | Minas Gerais | Barroso | Owned |
| CSN Cimentos | Small hydroelectric power plant Macacos | Small hydroelectric power plant Macacos | Brazil | Minas Gerais | Sacramento | Owned |
| CSN Cimentos | Cement plant and limestone mine | Cement plant and limestone mine | Brazil | Minas Gerais | Montes Claros | Owned |
| CSN Cimentos | Cement plant and Matozinhos Mine | Cement plant and Matozinhos Mine | Brazil | Minas Gerais | Pedro Leopoldo | Owned |
| CSN Cimentos | Clay mine | Clay mine | Brazil | Minas Gerais | Matozinhos | Owned |
| CSN Cimentos | Limestone extraction | Limestone extraction | Brazil | Minas Gerais | Prados | Owned |
| CSN Cimentos | Cement plant | Cement plant | Brazil | Paraíba | Caaporã | Owned |
| CSN Cimentos | Cement grinding | Cement Grinding | Brazil | Bahia | Candeias | Owned |
| CSN Cimentos | Cement grinding and limestone mine | Cement grinding and limestone mine | Brazil | Goiás | Cocalzinho de Goiás | Owned |
| CSN Cimentos | Cement grinding | Cement grinding | Brazil | Espírito Santo | Serra / Vitória | Owned |
| CSN Cimentos | Cement grinding and aggregate | Cement grinding and aggregate | Brazil | São Paulo | Sorocaba | Owned |
| CSN Cimentos | Aggregate | Aggregate | Brazil | São Paulo | Mairiporã | Owned |
| CSN Cimentos | Aggregate | Aggregate | Brazil | São Paulo | Cajamar | Owned |
| CSN Cimentos | Aggregate | Aggregate | Brazil | São Paulo | Barueri | Owned |
| CSN Cimentos | Concrete plant | Concrete plant | Brazil | São Paulo | São José dos Campos | Third Parties |
| CSN Cimentos | Concrete plant | Concrete plant | Brazil | São Paulo | São Vicente | Owned |
| CSN Cimentos | Concrete plant | Concrete plant | Brazil | São Paulo | Guarujá | Owned |
| CSN Cimentos | Cargo Terminal and Concrete plant | Cargo Terminal and Concrete plant | Brazil | São Paulo | Santo André | Owned |
| CSN Cimentos | Office | Office | Brazil | São Paulo | São Paulo (Verbo Divino) | Owned |
| Metalgráfica Iguaçu | Manufacture of metal packaging | Manufacture of metal packaging | Brazil | Paraná | Ponta Grossa | Owner |
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| Description | Activity | Country | State | City | Title | |
| Metalgráfica Iguaçu | Manufacture of metal packaging | Manufacture of metal packaging | Brazil | Goiás | Goiânia | Third Parties |
| CEEE-G | PCH Capigui | Energy | Brazil | Rio Grande do Sul | Marau | Third Parties |
| CEEE-G | PCH Forquilha | Energy | Brazil | Rio Grande do Sul | Maximiliano de Almeida | Third Parties |
| CEEE-G | PCH Guarita | Energy | Brazil | Rio Grande do Sul | Erval Seco | Third Parties |
| CEEE-G | PCH Herval | Energy | Brazil | Rio Grande do Sul | Santa Maria do Herval | Third Parties |
| CEEE-G | PCH Ijuizinho | Energy | Brazil | Rio Grande do Sul | Eugênio de Castro | Third Parties |
| CEEE-G | PCH Ivaí | Energy | Brazil | Rio Grande do Sul | Júlio de Castilhos | Third Parties |
| CEEE-G | PCH Passo do Inferno | Energy | Brazil | Rio Grande do Sul | São Francisco de Paula | Third Parties |
| CEEE-G | PCH Santa Rosa | Energy | Brazil | Rio Grande do Sul | Santa Rosa | Third Parties |
| CEEE-G | PCH Toca | Energy | Brazil | Rio Grande do Sul | São Francisco de Paula | Third Parties |
| CEEE-G | UHE Canastra / PCH Bugres | Energy | Brazil | Rio Grande do Sul | Canela | Third Parties |
| CEEE-G | UHE Ernestina | Energy | Brazil | Rio Grande do Sul | Tio Hugo | Third Parties |
| CEEE-G | UHE Itaúba | Energy | Brazil | Rio Grande do Sul | Pinhal Grande | Third Parties |
| CEEE-G | UHE Jacuí (Leonel Brizola – Maia Filho) | Energy | Brazil | Rio Grande do Sul | Salto do Jacuí | Third Parties |
| CEEE-G | UHE Passo Real | Energy | Brazil | Rio Grande do Sul | Salto do Jacuí | Third Parties |
| CEEE-G | Reservatório Blang | Energy | Brazil | Rio Grande do Sul | São Francisco de Paula | Third Parties |
| CEEE-G | Reservatório Divisa | Energy | Brazil | Rio Grande do Sul | São Francisco de Paula | Third Parties |
| CEEE-G | Reservatório João Amado | Energy | Brazil | Rio Grande do Sul | Três Passos | Third Parties |
| CEEE-G | Reservatório Salto | Energy | Brazil | Rio Grande do Sul | São Francisco de Paula | Third Parties |
| CEEE-G | Sede administrativa Salto do Jacuí | Office | Brazil | Rio Grande do Sul | Salto do Jacuí | Third Parties |
| CEEE-G | UHE D. Francisca(1) | Energy | Brazil | Rio Grande do Sul | Nova Palma | Third Parties |
| Companhia Energética Chapecó | Hydroelectric Plant(²) | Hydroelectric Plant | Brazil | Santa Catarina | Ipuaçu | Third Parties |
| Brasil Central Energia | Small Hydroelectric Power Station | Small Hydroelectric Power Station | Brazil | Mato Grosso | Brasnorte | Third Parties |
| Santa Ana Energética | Small Hydroelectric Power Station | Small Hydroelectric Power Station | Brazil | Santa Catarina | Angelina | Third Parties |
| CERAN – Companhia Energética Rio das Antas | UHE – Monte Claro(3) | Energy | Brazil | Rio Grande do Sul | Monte Claro | Third Parties |
| Jaguari Energética | PCH – Furnas de Segredo(7) | Energy | Brazil | Rio Grande do Sul | Jaguari | Third Parties |
| CERAN – Companhia Energética Rio das Antas | UHE – 14 de Julho(8) | Energy | Brazil | Rio Grande do Sul | Bento Gonçalves | Third Parties |
| CERAN – Companhia Energética Rio das Antas | UHE – Castro Alves(9) | Energy | Brazil | Rio Grande do Norte | Castro Alves | Third Parties |
_____________
| (1) | 15% of participation. |
| (2) | 9% of participation. |
| (3) | 30% of participation. |
| (4) | 10% of participation. |
| (5) | 10% of participation. |
| (6) | 10% of participation. |
| (7) | 10.5% of participation. |
| (8) | 30% of participation. |
| (9) | 30% of participation. |
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For information on environmental matters with respect to certain of the facilities described above, see “Item 8. Financial Information—8A. Consolidated Statements and Other Financial Information—Legal and Administrative Proceedings.” In addition, for information on our plans to construct, expand and improve our facilities, see “—4B. Business Overview—Investments and Divestitures” and note 21 to our audited consolidated financial statements included elsewhere in this annual report.
Item 4A. Unresolved Staff Comments
Not applicable.
Item 5. Operating and Financial Review and Prospects
The following discussion should be read in conjunction with our audited consolidated financial statements included elsewhere in this annual report.
5A. Operating Results
Factors Affecting our Results of Operations and Financial Condition
Brazilian Macroeconomic Scenario
As a company with most operations and a large portion of its sales in Brazil, we are affected by the general macroeconomic conditions in Brazil. The rate of economic growth in Brazil is important in determining our own growth capacity and results of operations.
The following table sets forth select Brazilian macroeconomic indicators for the periods indicated:
|
Year ended December 31, | |||
|
2022 |
2023 |
2024 | |
| GDP growth (contraction) rate | 3.0% | 2.9% | 3.5% |
| Inflation (IPCA)(1) | 5.8% | 4.7% | 4.8% |
| Inflation (IGP-M)(2) | 5.5% | (3.2)% | 6.5% |
| CDI(3) | 12.4% | 13.0% | 10.9% |
| Appreciation (depreciation) of the real against the U.S. dollar (end of period) | (6.5)% | (7.2)% | 27.9% |
| Exchange rate at the end of period (US$1.00) | R$5.218 | R$4.8413 | R$6.1923 |
| Average exchange rate (US$1.00) | R$5.165 | R$4.995 | R$5.3885 |
| Unemployment rate(4) | 9.3% | 7.8% | 6.6% |
_____________
Sources: IBGE, Fundação Getúlio Vargas, Central Bank and CETIP.
| (1) | The IPCA is measured by the IBGE. |
| (2) | The IGP-M is measured by the Fundação Getúlio Vargas. |
| (3) | The Interbank Deposit Rate, or CDI, represents the average interbank deposit rate performed during a given day in Brazil (accrued as of the last month of the period, annualized). |
| (4) | The unemployment rate (Pesquisa Nacional por Amostra de Domicílios) is measured by the IBGE. |
Effects of Exchange Rate Fluctuations
Our export revenues are substantially denominated in U.S. dollars and our domestic revenues are denominated in Brazilian reais.
A significant portion of our cost of products sold is commoditized raw materials, the prices of which are denominated in U.S. dollars. The balance of our cost of products sold and our cash operating expenses (i.e., operating expenses apart from depreciation and amortization) are denominated in reais.
Therefore, the depreciation of the real against the U.S. dollar has the following effects on our results of operations:
| · | domestic revenues tend to be lower (in comparison with prior years), partially offset by an increase in foreign market sales; |
| · | the impact of real denominated costs of products sold and operating costs tends to be lower; and |
| · | financial expenses increase to the extent our exposure to U.S. dollar-denominated debt is not hedged. |
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On the other hand, the appreciation of the real against the U.S. dollar has the following effects on our results of operations:
| · | foreign revenues tend to be lower (in comparison with prior years), partially offset by an increase in domestic market sales; |
| · | the impact of real denominated costs of products sold and operating costs tends to be higher; and |
| · | financial expenses decrease to the extent our exposure to U.S. dollar-denominated debt is not hedged. protected. |
To the extent our future export transactions are hedged by our U.S. dollar denominated debt, we recognize our foreign exchange variation generated from debt used as a hedge instrument directly in net equity as other comprehensive income, which we charge against income at the time the future export transactions occur.
The impact of fluctuations in the exchange rate of the real against other currencies on our results of operations can be seen in the “foreign exchange and monetary gain (loss), net” line in our income statement, although that amount is partially offset by the net financial income (expenses) attributable to the profit (or loss) on the derivative transactions of our foreign currency-denominated debt. In order to minimize the effects of exchange rate fluctuations, we may use derivative transactions, including currency swap and foreign currency option agreements. For a discussion on the possible impact of exchange rate fluctuations on our principal financial instruments and positions, see “Item 11. Quantitative and Qualitative Disclosures About Market Risk.”
Effects of Inflation and Interest Rates
Inflation measured by the IPCA index was 5.8%, 4.7% and 4.8% in 2022, 2023 and 2024, respectively, and was 5.5%, (3.2)% and 6.5%, respectively, as measured by the IGP-M index.
Inflation affects our financial performance by increasing our costs and expenses denominated in reais that are not linked to the U.S. dollar. Our cash costs and operating expenses are substantially denominated in reais and have tended to follow the Brazilian inflation ratio, because our suppliers and service providers generally increase or decrease prices to reflect Brazilian inflation. In addition, certain of our real-denominated debt is indexed to consider the effects of inflation. The principal amount our real-denominated debt is generally adjusted based on inflation indices. Accordingly, a significant portion of our real-denominated debt bears interest based on the CDI rate, which is partially adjusted for inflation. The CDI rate as of December 31, 2022, 2023 and 2024 was 12.4%, 13.0% and 10.9%, respectively.
Effects of Protectionist Measures
The Brazilian government is stepping up protections for its steelmakers amid an influx of cheap imports, primarily from China, by imposing an import quota system on eleven types of alloy products. We cannot predict how long these measures will remain in place or whether there will be retaliation from other countries related to protectionist measures that could affect us. For more information on protectionist measures, see “Item 4. Information on the Company––4B. Business Overview—Regulatory Matters—Protectionist Measures.”
Steel Segment
Our results of operations and financial condition are also affected by global steel prices, which are impacted by global and domestic steel supply and demand, as well as the sales volume of our steel products. Unlike other commodity products, steel is not traded on an exchange, nor is there uniform pricing, due to wide differences in size, quality and specifications.
The steel segment has made a substantial contribution to our overall financial performance, accounting for 66.1%, 50.0%, and 53.1% of our net revenues in 2022, 2023, and 2024, respectively. The steel segment represents 45.7%, 14.3%, and 12.1% of our gross profit in in 2022, 2023, and 2024, respectively.
Steel Sector Overview
According to the World Steel Association, global crude steel production totaled 1,882.6 million tons in 2024, representing a decrease of 0.81% compared to 2023 and 0.32% compared to 2022. China remained the largest producer, accounting for 1,005.6 million tons, or approximately 53.4% of global output, a 1.7% decrease compared to 2023. India produced 149.6 million tons of crude steel in 2024, an increase of 6.3% compared to the previous year. Crude steel production in the European Union reached 129.5 million tons in 2024, up 2.6% year-over-year, while the United States produced 79.5 million tons, a 2.4% decline compared to 2023.
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According to the Brazilian Steel Institute (Instituto Aço Brasil), crude steel production in Brazil reached 33.7 million tons in 2024, representing an increase of 5.4% compared to 2023. Rolled steel production totaled 23.5 million tons in 2024, an increase of 7.9% year-over-year. Apparent domestic consumption of steel products in Brazil was 26.0 million tons in 2024, an increase of 8.7% compared to 2023. Domestic steel sales rose 8.7% to 21.2 million tons. Imports totaled 5.9 million tons in 2024, an increase of 18.6% compared to 2023, while exports decreased 18.3%, from 11.7 million tons in 2023 to 9.5 million tons in 2024.
Supply and Demand
Steel prices are highly sensitive to global and domestic supply and demand dynamics, which are influenced by broader economic cycles and available production capacity. While export prices, which are quoted in U.S. dollars or euros (depending on the export destination), are based on spot transactions, there is no exchange trading of steel or uniform pricing, and pricing lacks standardization due to variations in size, chemical composition, quality, and specifications. These factors contribute to limited price transparency and comparability. Additionally, steel producers often apply discounts to list prices for recurring customers, further complicating price visibility.
Historically, export prices and margins have been lower than those in the domestic market due to added logistics costs, taxes, and tariffs, many of which cannot be passed on to customers. The share of our production allocated to exports is determined by domestic demand levels, exchange rate fluctuations, and international market price conditions.
Sales Volume
Our steel products fall into four categories: hot-rolled, cold-rolled, coated (including zinc-coated, Al-Zn, and painted), and tin mill (tin-free steel and tin plate). We forecast sales trends, in both domestic and foreign markets, on a monthly basis using historical data and continuously monitor market developments through internal systems to adjust production and inventory strategies in line with demand fluctuations.
Our ability to flexibly shift between domestic and international markets, combined with proactive inventory management, is a key competitive advantage. The following table sets forth a breakdown of our sales volumes by market in the periods indicated:
| Sales Volumes | 2022 | 2023 | 2024 | |||||||
| Tons | In market* | % of Sales Volumes | Tons | In market* | % of Sales Volumes | Tons | In market* | % of Sales Volumes | ||
| Domestic sales | Slabs | - | 0.0% | 0.0% | - | 0.0% | 0.0% | - | 0.0% | 0.0% |
| Hot-rolled | 1,266 | 41.2% | 28.9% | 1,173 | 40.2% | 28.2% | 1,424 | 43.5% | 31.3% | |
| Cold-rolled | 421 | 13.7% | 9.6% | 355 | 12.2% | 8.5% | 393 | 12.0% | 8.6% | |
| Galvanized | 887 | 28.8% | 20.2% | 875 | 30.0% | 21.0% | 934 | 28.5% | 20.5% | |
| Tin Plate | 274 | 8.9% | 6.2% | 260 | 8.9% | 6.2% | 219 | 6.7% | 4.8% | |
| Long Steel | 227 | 7.4% | 5.2% | 254 | 8.7% | 6.1% | 303 | 9.3% | 6.7% | |
| Subtotal | 3,075 | 100.0% | 70.1% | 2,917 | 100.0% | 70.0% | 3,273 | 100.0% | 71.9% | |
| Sales abroad | Slabs | 8 | 0.6% | 0.6% | 0 | 0.0% | 0.0% | - | 0.0% | 0.0% |
| Hot-rolled | 68 | 5.1% | 5.1% | 92 | 7.3% | 2.2% | 95 | 7.4% | 2.1% | |
| Cold-rolled | 36 | 2.8% | 2.8% | 55 | 4.4% | 1.3% | 49 | 3.9% | 1.1% | |
| Galvanized | 418 | 31.8% | 31.8% | 479 | 38.3% | 11.5% | 434 | 33.9% | 9.5% | |
| Tin Plate | 65 | 5.0% | 5.0% | 18 | 1.5% | 0.4% | 22 | 1.7% | 0.5% | |
| Long Steel | 719 | 54.7% | 16.4%% | 605 | 48.4% | 14.5%% | 679 | 53.1% | 14.9% | |
| Subtotal | 1,314 | 100.0% | 29.9% | 1,249 | 100.0% | 30.0% | 1,279 | 100.0% | 28.1% | |
| Total | Slabs | 8 | 0.2% | 0 | 0.0% | - | 0.0% | |||
| Hot-rolled | 1,334 | 30.4% | 1,265 | 30.4% | 1,519 | 33.4% | ||||
| Cold-rolled | 457 | 10.4% | 411 | 9.9% | 442 | 9.7% | ||||
| Galvanized | 1,305 | 29.7% | 1,354 | 32.5% | 1,368 | 30.1% | ||||
| Tin Plate | 339 | 7.7% | 278 | 6.7% | 240 | 5.3% | ||||
| Long Steel | 946 | 21.5% | 859 | 20.6% | 982 | 21.6% | ||||
| TOTAL | 4,389 | 100% | 4,167 | 100% | 4,551 | 100% | ||||
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As part of our commercial strategy, we aim to increase the share of higher value-added coated products in our sales mix, particularly galvanized flat steel and tin plate. Galvanized products are primarily used in the automotive, construction, and home appliance industries, while tin plate serves the packaging market. The following table sets forth a breakdown of our net operating revenue from the sale of steel products by market in the indicated periods:
| Net Operations Revenue | 2022 | 2023 | 2024 | |||||||
| in millions of R$ | In market* | % of Sales Volumes | in millions of R$ | In market* | % of Sales Volumes | in millions of R$ | In market* | % of Sales Volumes | ||
| Domestic sales | Slabs | - | 0.0% | 0.0% | - | 0.0% | 0.0% | - | 0.0% | 0.0% |
| Hot-rolled | 7,126 | 35.7% | 24.9% | 5,325 | 182.5% | 127.8% | 5,875 | 179.5% | 129.1% | |
| Cold-rolled | 2,640 | 13.2% | 9.2% | 1,860 | 63.7% | 44.6% | 1,931 | 59.0% | 42.4% | |
| Galvanized | 6,531 | 32.7% | 22.8% | 5,353 | 183.5% | 128.5% | 5,413 | 165.4% | 118.9% | |
| Tin Plate | 2,556 | 12.8% | 8.9% | 2,556 | 87.6% | 61.3% | 2,073 | 63.3% | 45.5% | |
| Long Steel | 1,118 | 5.6% | 3.9% | 1,118 | 38.3% | 26.8% | 1,324 | 40.5% | 29.1% | |
| Beams | - | 0.0% | 0.0% | - | 0.0% | 0.0% | - | 0.0% | 0.0% | |
| Subtotal | 19,971 | 100.0% | 69.8% | 16,212 | 555.7% | 72.7% | 16,616 | 507.7% | 72.7% | |
| Sales abroad | Slabs | 25 | 0.3% | 0.0% | 0 | 0.0% | 0.0% | 75 | 5.9% | 1.7% |
| Hot-rolled | 379 | 4.4% | 0.0% | 402 | 6.6% | 1.8% | 285 | 22.3% | 6.3% | |
| Cold-rolled | 212 | 2.5% | 0.0% | 265 | 4.3% | 1.2% | 239 | 18.7% | 5.2% | |
| Galvanized | 3,030 | 35.1% | 0.0% | 2,514 | 41.3% | 11.3% | 2,386 | 186.6% | 52.4% | |
| Tin Plate | 604 | 7.0% | 0.0% | 140 | 2.3% | 0.6% | 226 | 17.7% | 5.0% | |
| Long Steel | - | 0.0% | 0.0% | - | 0.0% | 0.0% | - | 0.0% | 0.0% | |
| Beams | 4,371 | 50.7% | 0.0% | 2,765 | 45.4% | 12.4% | 3,021 | 236.3% | 66.4% | |
| Subtotal | 8,621 | 100.0% | 30.2% | 6,086 | 100.0% | 27.3% | 6,232 | 487.5% | 27.3% | |
| Total | Slabs | 25 | 0.1% | 0 | 0.0% | (75) | ☐%) | |||
| Hot-rolled | 7,501 | 25.6% | 5,727 | 25.2% | 6,160 | 26.6% | ||||
| Cold-rolled | 2,731 | 9.3% | 2,124 | 9.4% | 2,169 | 9.4% | ||||
| Galvanized | 9,561 | 32.6% | 7,867 | 34.6% | 7,799 | 33.7% | ||||
| Tin Plate | 3,151 | 12.0% | 2,695 | 11.9% | 2,299 | 9.8% | ||||
| Long Steel | 5,436 | 18.5% | 3,882 | 17.1% | 4,343 | 18.8% | ||||
| Other Products | 573 | 2.0% | 423 | 1.9% | 463 | 2.0% | ||||
| TOTAL | 28,978 | 100% | 22,718 | 100% | 23,158 | 100% | ||||
Mining Segment
Our results of operations and financial condition are also affected by the price for iron ore, which is pegged to a global commodity price, and our sales volume.
In 2022, 2023 and 2024, our mining segment represented 28%, 38% and 30% of our net revenues. In 2024, 88% of our mining revenues came from exports and 12% from the domestic market, compared to 89% and 11%, respectively, in 2023.
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Mining Sector Overview
From 2022 onwards, geopolitical factors such as the conflict between Russia and Ukraine and escalating tensions between Israel and Palestine, along with macroeconomic factors such as high global interest rates, created moments of instability in the global commodities market.
The beginning of 2023 was marked by a lifting of the COVID zero policies in China among a series of economic stimulus to reach the country’s GDP target by the end of the year and reignite the several sectors such as the civil construction, manufacturing, automotive and others. These measures had a positive short-term effect, but weren’t enough to prevent a slowdown in growth, especially in the property market, which was historically one of the main consumers of steel. By the second half of the year, the world saw an increase in the steel production in China with higher blast furnaces rates due to several economic packages from the Chinese government. One of the main objectives was to boost the consumption of goods, the manufacturing and infrastructure sectors in order to mitigate the deceleration of the property market sector and dissipate major risks of not reaching the GDP targets.
In 2024, iron ore prices experienced highs and lows throughout the year and the average iron ore prices decreased 9.3% to US$103.4dmt as compared to $128.30dmt in the same period of 2023. The beginning of the year was marked by the highest values, mainly due to expectations of Chinese fiscal stimulus and restocking activity for the Chinese New Year. However, once demand fell short and inventory built up, prices began to decline from higher levels until they reached a stable level in the second quarter, partially offset by increased steel production and Chinese stimulus for the property sector. Combining high port inventories, lack of domestic demand, and decreased Chinese steel production after the summer, prices experienced a sharp fall in third quarter, with some recovery towards the end of the year due to stimulus measures and improved steel fundamentals.
For more information regarding updates in the Chinese market, see “Item 3. Key Information––3D. Risk Factors—Risks Relating to Us and the Industries in Which We Operate—Adverse economic conditions in China and an increase in global iron ore production capacity could materially and adversely affect us.”
In 2022, 2023 and 2024, our mining segment represented 28%, 38% and 30% of our net revenues. In 2024, 88% of our mining revenues came from exports and 12% from the domestic market, compared to 89% and 11%, respectively, in 2023.
Cement Segment
Our results of operations and financial condition are also affected by the price for our cement products and our sales volume.
In 2022, 2023 and 2024, our cement segment represented 6.4%, 9.9% and 10.9% of our net revenues, respectively, and 6.4%, 7.2% and 11.8% of our gross profit, respectively.
According to the National Union of the Cement Industry (SNIC), the real estate market continued to heat up in the second half of the year, even with all the pressures of high interest rates, which shows a still poignant dynamism with new launches being announced, especially in the Minha Casa, Minha Vida segment. The year 2024 ended with a cement sales volume 3.4% higher than the previous year, reaching 64.7 million tons and highlighting all the resilience that the civil construction and infrastructure sectors have shown.
Logistics and Energy Segments
The performance of our logistics and energy segments is directly related to the performance of our steel and mining segments. In 2022, 2023 and 2024, these segments represented an aggregate of 6.6%, 7.6% and 8.6% of our net revenues, respectively, and an aggregate of 6.7%, 10.6% and 12.1% of our gross profit, respectively. A material portion of the revenues in these segments is derived from our steel and mining operations, which utilize our logistics network and energy output.
Accounting for Mining Production Used in Our Steel Production
We are currently self-sufficient for the iron ore used in our steel production, except for pellets. We extract iron ore from our mines owned by CSN Mineração, which mines, in 2024, provided approximately 3.5 million tons of iron ore. We sell the remainder of our iron ore production to third parties in Brazil and abroad.
We record the cost of iron ore for our steel production on our income statement in cost of products sold at its extraction cost plus transport cost from the mine. In 2022, 2023 and 2024, these costs were R$1,488 million, R$1,199 million and R$1,250 million, respectively.
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Critical Accounting Policies
We prepare our consolidated financial statements in accordance with IFRS Accounting Standards, as issued by the IASB, and present our accounting policies in the respective notes. The accounting policies adopted by us for the year ended December 31, 2024, are consistent to prior years. In preparing our consolidated financial statements, we make estimates concerning a variety of matters, some of which are highly uncertain, and our estimates involve judgments we make based on the information available to us. For more information, see notes 2.b and 2.d to our audited consolidated financial statements included elsewhere in this annual report.
Recently Issued Accounting Pronouncements Not Adopted by Us
The standards, amendments to standards and IFRS Accounting Standards interpretations issued by the IASB that are not yet effective and were not early adopted by us for the year ended December 31, 2024 are described in note 2.e to our audited consolidated financial statements included elsewhere in this annual report.
Results of Operations
The following table presents certain financial information with respect to our results of operations for each of the years ended December 31, 2022, 2023 and 2024:
|
Year ended December 31, | ||||
|
2022 |
2023 |
2024 |
2024(1) | |
| (in millions of R$, except per share data) | (in millions of US$, except per share data) | |||
| Net operating revenues | 44,362 | 45,437 | 43,687 | 7,055 |
| Cost of products sold |
(31,054) |
(33,475) |
(31,991) |
(5,166) |
| Gross profit | 13,308 | 11,962 | 11,696 | 1,889 |
| Operating expenses | ||||
| Selling | (2,576) | (3,729) | (5,453) | (881) |
| General and administrative | (674) | (761) | (856) | (138) |
| Equity in results of affiliated companies | 238 | 351 | 448 | 72 |
| Other expenses | (2,908) | (3,087) | (1,818) | (294) |
| Other income |
253 |
450 |
252 |
41 |
| Total | (5,667) | (6,776) | (7,427) | (1,200) |
| Profit before financial income (expenses) | 7,642 | 5,186 | 4,269 | 689 |
| Non-operating income (expenses), net | ||||
| Financial income | (78) | 1,656 | 1,398 | 226 |
| Financial expenses |
(3,437) |
(5,807) |
(7,211) |
(1,165) |
| (Loss) income before taxes | 4,127 | 1,035 | (1,544) | (250) |
| Income tax | ||||
| Current | (1,538) | (1,036) | (1,301) | (210) |
| Deferred |
(421) |
404 |
1,306 |
211 |
| Net income (loss) for the period | 2,168 | 403 | (1,539) | (249) |
| Net income (loss) attributable to noncontrolling interest | 6134 | 721 | 1,053 | 170 |
| Net income (loss) attributable to CSN |
1,554 |
(318) |
(2,592) |
(419) |
| Basic Earnings/(loss) per common share | 1.17108 | (0.23996) | (1.95450) | (0.31563) |
|
Diluted Earnings/(loss) per common share |
1.17108 | (0.23996) | (1.95450) | (0.31563) |
_____________
| (1) | Translated solely for the convenience of the reader at the rate of R$6.1923 to US$1.00, which was the U.S. dollar selling rate as of December 31, 2024, as reported by the Central Bank. |
Year 2024 Compared to Year 2023
We maintain integrated operations in five business segments: steel, mining, cement, logistics, and energy. We manage and control the performance of our various business segments considering our proportional interest in our jointly controlled entity MRS, reflected in the figures presented below.
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Our consolidated results for the years ended December 31, 2023 and 2024 by business segment are presented in the table below:
|
Year ended December 31, 2023 | ||||||||
|
Steel |
Mining |
Port |
Railway(1) |
Energy |
Cement |
Corporate Expenses/ Elimination |
Consolidated | |
| (in millions of R$) | ||||||||
| Net revenue | ||||||||
| Domestic market | 16,516 | 1,804 | 266 | 2,645 | 546 | 4,511 | (4,209) | 22,079 |
| Foreign market |
6,201 |
15,331 |
– |
– |
– |
– |
1,827 |
23,359 |
| Total net revenue |
22,717 |
17,135 |
266 |
2,645 |
546 |
4,511 |
(2,382) |
45,438 |
| Cost of sales and services |
(21,008) |
(9,932) |
(249) |
(1,493) |
(441) |
(3,644) |
3,292 |
(33,475) |
| Gross profit |
1,709 |
7,203 |
17 |
1,152 |
105 |
867 |
910 |
11,963 |
| Selling, general and administrative expenses | (1,219) | (421) | (11) | (219) | (58) | (558) | (2,005) | (4,491) |
| Other operating (income) expenses, net | (1,065) | (975) | (1) | 10 | 189 | (254) | (542) | (2,638) |
| Equity in results of affiliated companies |
– |
– |
– |
– |
– |
– |
351 |
351 |
| Operating result before net financial income (expenses) and taxes |
(575) |
5,807 |
5 |
943 |
236 |
55 |
(1,286) |
5,185 |
_____________
| (1) | Railway logistics in our segment break-down includes our investee MRS, which is not consolidated in our audited consolidated financial statements and is reflected only in equity in results of affiliated companies. |
|
Year ended December 31, 2024 | ||||||||
|
Steel |
Mining |
Port |
Railway(1) |
Energy |
Cement |
Corporate Expenses/ Elimination |
Consolidated | |
| (in millions of R$) | ||||||||
| Net revenue | ||||||||
| Domestic market | 16,901 | 1,511 | 353 | 2,892 | 521 | 4,766 | (4,604) | 22,340 |
| Foreign market |
6,277 |
11,582 |
– |
– |
– |
– |
3,488 |
21,347 |
| Total net revenue |
23,178 |
13,093 |
353 |
2,892 |
521 |
4,766 |
(1,116) |
43,687 |
| Cost of sales and services |
(21,759) |
(8,202) |
(262) |
(1,674) |
(419) |
(3,384) |
3,711 |
(31,989) |
| Gross profit |
1,419 |
4,891 |
91 |
1,218 |
102 |
1,382 |
2,595 |
11,698 |
| Selling, general and administrative expenses | (1,290) | (267) | (11) | (266) | (49) | (816) | (3,610) | (6,309) |
| Other operating (income) expenses, net | (864) | (11) | (13) | 270 | (61) | (95) | (791) | (1,565) |
| Equity in results of affiliated companies |
– |
– |
– |
– |
– |
– |
448 |
448 |
| Operating result before net financial income (expenses) and taxes |
(735) |
4,613 |
67 |
1,222 |
(8) |
471 |
(1,358) |
4,272 |
_____________
| (1) | Railway logistics in our segment break-down includes our investee MRS, which is not consolidated in our audited consolidated financial statements and is reflected only in equity in results of affiliated companies. |
Net Operating Revenues
Net operating revenues decreased R$1,751 million, or 4%, from R$45,438 million in 2023 to R$43,687 million in 2024, due to the reduction in the average iron ore price over the year.
Net domestic operating revenues increased R$262 million, or 1.2%, from R$22,079 million in 2023 to R$22,340 million in 2024, due to the increase in sales volume and prices in the steel segment.
Net revenues of exports and sales abroad decreased R$2,012 million, or 8.6%, from R$23,359 million in 2023 to R$21,347 million in 2024, due mainly to lower iron ore prices and a decrease in sales volume in our mining segment.
Steel
Steel net operating revenues increased R$461 million, or 2.0%, from R$22,717 million in 2023 to R$23,179 million in 2024. Sales volume increased 9.2%, from 4,166 million tons in 2023 to 4,551 million tons in 2024. Steel net domestic operating revenues increased R$385 million, or 2.3%, from R$16,516 million in 2023 to R$16,901 million in 2024. Steel net revenues of exports and sales abroad increased R$76 million, or 1.2%, from R$6,201 million in 2023 to R$6,277 million in 2024, due to higher steel prices and sales volume.
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Mining
Mining net operating revenues decreased R$4,043 million, or 23.6%, from R$17,136 million in 2023 to R$13,093 million in 2024, due to a decrease of 0.3% in sales volume, from 42.7 million tons in 2023 to 42.5 million tons in 2024. In 2024, iron ore production reached 42.0 million tons, which represented a 1.5% decrease over the same period in 2023, which reflects the strategy adopted throughout the year of prioritizing margin over volume, with a lower volume of iron ore purchases from third parties.
Cement
Our net operating revenues from the cement segment increased R$255 million, or 5.7%, from R$4,511 million in 2023 to R$4,766 million in 2024, mainly due to a 5.9% increase in sales volume. This increase in sales volume was due the strategy adopted to make the most of the logistics modal and distribution centers, to enter new markets, gain market share and leveraging efficiencies gains from synergies.
Logistics
In 2023, net operating revenues from railway logistics were R$2,645 million and net operating revenues from port logistics were R$266 million, while in 2024, net operating revenues from railway logistics were R$2,892 million and net operating revenues from port logistics were R$353 million. In 2024, port logistics handled 1,308 thousand tons of steel products, 58 thousand tons of general cargo, 135 thousand units of containers and 658 thousand tons of bulk.
Energy
Our net operating revenues from the energy segment decreased R$25 million, or 4.4%, from R$546 million in 2023 to R$521 million in 2024, mainly due to the normalization of operational activities after the severe flood event in the state of Rio Grande do Sul.
Cost of Products Sold
Cost of products sold decreased R$1,484 million, or 4.4%, from R$33,475 million in 2023 to R$31,991 million in 2024, mainly due to the lower volume of iron ore purchases from third parties.
Steel
Steel costs of products sold increased R$751 million, or 3.6%, from R$21,008 million in 2023 to R$21,759 million in 2024, mainly due to higher sales volume in the period.
Mining
Our mining costs of products sold decreased R$1,730 million, or 17.4%, from R$9,932 million in 2023 to R$8,202 million in 2024, mainly due to a reduction of 30.6% of sales volume, further supported by lower purchase activity tied to production costs during the period.
Cement
Cost of products sold attributable to our cement segment decreased R$260 million, or 7.1%, from R$3,644 million in 2023 to R$3,384 million in 2024, mainly due to the progress in leveraging efficiencies gains from synergies and the greater dilution of fixed costs.
Logistics
Cost of services attributable to our logistics segment increased R$195 million, or 11.2%, from R$1,742 million in 2023 to R$1,936 million in 2024, mainly due to adjustments in fuel prices.
Energy
Cost of products sold attributable to our energy segment decreased R$22 million, or 5.0%, from R$441 million in 2023 to R$419 million in 2024, mainly due to adjustments in energy prices and hydrological conditions.
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Gross Profit
Gross profit decreased R$266 million, or 2.2%, from R$11,963 million in 2023 to R$11,697 million in 2024, with an impact on gross margin of 0.5 p.p., mainly due to strong revenue growth in steel, with greater cost control in mining and cement.
Steel
Gross profit in the steel segment decreased R$290 million, or 17.0%, from R$1,709.5 million in 2023 to R$1,419.2 million in 2024, due to the reasons discussed above.
Mining
Gross profit in the mining segment decreased R$2,313 million, or 32.1%, from R$7,203.8 million in 2023 to R$4,890 million in 2024, due to the reasons discussed above.
Cement
Gross profit in the cement segment increased R$516 million, or 59.5%, from R$866 million in 2023 to R$1,382 million in 2024, due to the reasons discussed above.
Logistics
Gross profit in the logistics segment increased R$139 million, or 11.9%, from R$1,169 million in 2023 to R$1,308 million in 2024, due to the reasons discussed above.
Energy
Gross profit in the energy segment decreased R$2.2 million, or 2.9%, from R$105 million in 2023 to R$102 million in 2024, due to the reasons discussed above.
Selling, General and Administrative Expenses
Selling, general and administrative expenses increased R$1,819 million, or 58.7%, from R$4,490 million in 2023 to R$6,309 million in 2024. Selling expenses increased R$1,724 million, or 46.2%, from R$3,729 million in 2023 to R$5,453 million in 2024, mainly due to an increase in average freight rates, which effects were partially offset by a decrease in volume sold pursuant to cost, insurance and freight – CIF agreements. General and administrative expenses increased R$95 million, or 12.5%, from R$761 million in 2023 to R$856 million in 2024.
Other Operating Income (Expenses)
Other net operating income (expenses) decreased R$1,071 million, or 40.6%, from a net operating expense of R$2,637 million in 2023 to a net operating expense of R$1,565 million in 2024.
Other operating income decreased R$214 million, or 45.9%, from R$466 million in 2023 to R$252 million in 2024, mainly due to (i) R$248 million relating to a tax recuperation, and (ii) the gain on the sale of Consortium Machadinho in 2023 whose actual impact on variation is R$106 million.
Other operating expenses decreased R$1,285 million, or 41.4%, from R$3,103 million in 2023 to R$1,818 million in 2024, mainly due to R$1,356 million of cash flow hedge accounting realized.
Equity in Results of Affiliated Companies
Equity in results of affiliated companies increased R$97 million, or 27.6%, from a gain of R$351 million in 2023 to a gain of R$448 million in 2024, mainly due to an increase in the net income of our investee MRS and the Panatlantica’s evaluate through the equity method due to the acquisition of 18.61% of shares in 2023.
Operating Income
Operating income decreased R$918 million, or 17.7%, from R$5,187 million in 2023 to R$4,269 million in 2024, due to the reasons discussed above.
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Net Financial Income (Expenses)
Net financial expenses increased R$1,662 million, or 40.0%, from R$4,151 million in 2023 to R$5,813 million in 2024, mainly due to (i) a decrease of R$941 million in gains on our shares in Usiminas, (ii) an increase of R$127 million in income from financial investments, (iii) an increase of R$566 million in interest expense on borrowings, financing and debentures, (iv) a decrease of R$102 million in interest expenses on forfaiting risk operations, (v) an increase of R$174 million of commissions, bank fees and guarantee, which effects were partially offset by (vi) an increase of R$1,027 million in foreign exchange results and monetary variation, and, (vii) a decrease of R$702 million as the result of derivative operations.
Income Taxes
Income tax expense in Brazil refers to federal income tax and social contribution. The statutory rates for these taxes applicable to the periods presented were 25% for federal income tax and 9% for social contribution. Adjustments are made to income in order to reach the effective tax expense or benefit for each fiscal year. As a result, our effective tax rate is volatile among fiscal periods.
At statutory rates, we had an income tax and social contribution expense of R$352 million in 2023 and R$525 million in 2024, which represents 34% of our income before taxes. After adjustments to meet the effective income tax rates, we recorded an income tax and social contribution expense of R$633 million in 2023 and R$5 million in 2024. Expressed as a percentage of pretax income, our effective income tax rate was 61% in 2023 and 0% in 2024. In 2024, in order to meet the effective income tax rate, we had a negative net adjustment of R$520 million, mainly due to a negative impact of R$633 million in tax on the results of subsidiaries at different rates or not taxed.
It is not possible to predict future adjustments to federal income tax and social contribution statutory rates, as they depend on interest on shareholders’ equity, tax incentives and non-taxable factors, including income from offshore operations and tax losses from offshore operations.
For further information, see note 18.b to our audited consolidated financial statements included elsewhere in this annual report.
Net Income for the Year
In 2024, we recorded a net loss of R$1,538 million, as compared to a net income of R$403 million in 2023. The variation of R$1,941 million, or 482%, was due to the reasons discussed above.
Year 2023 Compared to Year 2022
For this discussion, see our annual report on Form 20-F for the fiscal year ended December 31, 2023, filed with the SEC on April 30, 2024.
5B. Liquidity and Capital Resources
Overview
Our main uses of funds are capital expenditures and debt repayments. We have historically met these requirements with cash generated by our operating activities and through the issuance of short and long-term debt instruments. In 2024, we met our cash needs primarily through a combination of operating cash flow, cash and cash equivalents on hand and newly issued long-term debt instruments in order to repay the portion of our total debt maturing in 2024.
In addition, we periodically review acquisition and investment opportunities and, if a suitable opportunity arises, we conduct selected acquisitions and investments to implement our business strategy. We generally make our investments directly or through subsidiaries, jointly controlled entities or affiliated companies, and fund these investments through internally generated funds, the issuance of debt or a combination of these.
Sources of Funds and Working Capital
Cash Flows
Cash and cash equivalents increased to R$23,310 million as of December 31, 2024, as compared to R$16,046 million as of December 31, 2023.
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Operating Activities
Cash provided by operating activities increased R$1,358 million, or 18.6%, from R$7,293 million in 2023 to R$8,651 million in 2024, mainly due to the R$1,941 million variation in our net income, adjusted by R$3,236 million in certain reconciling items that do not represent cash receipts or disbursements, the positive change of R$925 million in the fair value of our Usiminas shares, and the positive change of R$2,047 million in the foreign exchange variations, partially offset by the negative change of R$902 million in deferred income taxes.
Additionally, we had net changes in certain operating assets and liabilities, including an increase of R$442 million of a one-time assignment of credit rights of the amounts overpaid for rail freight from April 1994 to March 1996 to RFFSA, an increase of R$1,213 million in taxes recoverable, an increase of R$2,123 million in advance of customers, and an increase of R$898 million as settlement of our Platts iron ore index hedge, which effects were partially offset by a decrease of R$2,011 million in trade payables, and a variation of R$2,209 million in inventories.
Investing Activities
Cash used in investing activities decreased R$3,469 million, or 75.6%, from R$4,589 million in 2023 to R$1,120 million in 2024, mainly due to an increase of R$1,086 million to acquire certain property, plant and equipment, which effects were partially offset by our receipt of cash and equivalents in the amount of R$4,420 million from the sale of a minority stake of approximately 11% in our subsidiary CSN Mineração to Itochu Corporation, reflecting the variation of R$4,305 million on investing activities in cash flow.
Financing Activities
Cash used in financing activities varied R$1,428 million, or 107.8%, from cash provided by financing activities of R$1,324 million in 2023 to cash used in financing activities of R$104 million in 2024, mainly due to a decrease of R$2,965 million in debt amortization payments in 2024, as compared to 2023, and a decrease of R$5,491 million in new borrowings, financing and debentures. These effects were partially offset by a decrease of R$1,446 million in dividends and interest on shareholders’ equity paid in 2024, as compared to 2023.
Trade Accounts Receivable Turnover Ratio
Our trade accounts receivable turnover ratio, which is the ratio between our trade accounts receivable and our net operating revenues, measured in days of sales, was 23 days, 23 days and 21 days as of December 31, 2022, 2023 and 2024, respectively.
Inventory Turnover Ratio
Our inventory turnover ratio, which we measure by dividing our inventories by our annualized cost of products sold, measured in days of cost of products sold, was 119 days, 91 days and 105 days as of December 31, 2022, 2023 and 2024, respectively.
Trade Accounts Payable Turnover Ratio
Our trade accounts payable turnover ratio, which we measure by dividing our trade accounts payable by our cost of products sold, measured in days of cost of products sold, was 143 days, 136 days and 110 days as of December 31, 2022, 2023 and 2024, respectively. This decrease in extension of payment terms reflects our renegotiation of commercial terms with our suppliers and contractors.
Liquidity Management
Given the capital intensive and cyclical nature of our industry and the generally volatile Brazilian macroeconomic environment, we retain cash on hand to run our operations and to meet our short-term financial obligations. As of December 31, 2024, cash and cash equivalents were R$23,310 million, as compared to R$16,046 million as of December 31, 2023 and R$11,991 million as of December 31, 2022.
As of December 31, 2024, our short-term and long-term indebtedness accounted for 15.5% and 84.5%, respectively, of our total debt, and the average life of our existing debt was equivalent to approximately 54 months.
Capital Expenditures and Investments
| · | In 2024, we had capital expenditures and investments of R$5,526 million, mainly as follows: |
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| · | R$2,826 million related to our steel segment: productivity and modernization projects to improve performance, including major overhauls of coke batteries, automation and efficiency improvements, maintenance and spare parts across all of our steel facilities; |
| · | R$1,852 million related to our mining segment: mining expansion projects, investments in tailings filtering and expansion of the Itaguaí port; |
| · | R$601 million related to our cement segment: sustaining projects in our Barroso, Arcos, Volta Redonda, Pedro Leopoldo, Caaporã, Alhandra and Montes Claros units; and |
| · | R$247 million related to our logistics and energy segments. |
Debt and Derivative Instruments
As of December 31, 2023 and 2024, our total debt (composed of current and non-current portions of borrowings and financings) was R$44,859 million and R$56,915 million (including transactions costs), respectively, which represents 227.9% and 368.2% of shareholders’ equity as of December 31, 2023 and 2024, respectively. As of December 31, 2024, our short-term debt (comprising current borrowings and financings, which includes the current portion of long-term debt) was R$8,822 million and our long-term debt (comprising non-current borrowings and financings) was R$48,093 million.
As of December 31, 2024, approximately 34.6% of our debt was denominated in reais and substantially all of the remaining balance was denominated in U.S. dollars. Our policy is to protect ourselves against foreign exchange losses and interest rate losses on our debt, which we do through financial hedging instruments.
The following table sets forth our borrowings, financing and debentures, which we record at amortized cost, as of December 31, 2024:
|
As of December 31, 2024 | ||
|
Current liabilities |
Non-current liabilities | |
| (in millions of R$) | ||
| Debt agreements in the international market | ||
| Variable interest: | ||
| US$ | ||
| Prepayment | 2,331 | 7,586 |
| Fixed interest: | ||
| US$ | ||
| Bonds, perpetual bonds, facility, CCE and ACC | 2,804 | 24,162 |
| EUR | ||
| Facility |
658 |
305 |
| 5,793 | 32,053 | |
| Debt agreements in Brazil | ||
| Variable interest: | ||
| R$ | ||
| BNDES/FINAME, debentures, NCE and CCB |
3,109 |
16,603 |
| Total borrowings and financing | 8,902 | 48,656 |
| Transaction costs and issue premiums |
(81) |
(563) |
| Total borrowings and financing + transaction costs |
8,821 |
48,093 |
For more information, see notes 13 and 14 to our audited consolidated financial statements included elsewhere in this annual report.
Debt Maturity Profile
In January 2023, CSN Mineração entered into a long-term supply of iron ore agreement with the Swiss trader Glencore International AG, pursuant to which Glencore prepays up to US$500.0 million, with respect to the supply of approximately 13 million tons of iron ore over four years, commencing in 2024. In June 2023, CSN Mineração entered into an amendment to the advance agreement in the amount of US$300.0 million for the additional supply of 6.3 million tons of iron ore. The disbursement will occur when certain conditions precedent are met, which are customary for this type of transaction.
In March 2023, we signed a pre-payment export financing agreement, in the aggregate amount of US$1.4 billion for a term of twelve years. Up to US$980.0 million will be granted by Japan Bank for International Cooperation and up to US$420.0 million will be granted by a syndicate of banks. The agreement is part of our strategy to finance growth using financial instruments for long-term projects, including our project to build a new pellet feed plant in our Casa de Pedra mine. The consummation of this transaction is subject to the fulfillment of customary conditions precedent, including the signing of an offtake agreement with a Japanese customer for part of the volume contracted.
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In July 2023, Cargill International Trading Pte Ltd. concluded a prepayment of US$200.0 million to CSN Mineração for the supply of 4.3 million tons of iron ore during four years with six ships per year with 180,000 tons each, totaling 24 ships for the period of the contract.
In October 2023, we entered into an export credit note (nota de crédito de exportação – NCE) in an aggregate principal amount of R$680.0 million. The export credit note accrues interest at the Brazilian interbank deposit (certificado de depósito interbancário) rate, which is an average of interbank overnight rates in Brazil, plus 2.11% per annum, and one-third of the aggregate principal amount matures in each of 2026, 2027 and 2028.
In December 2023, CSN Resources S.A. issued US$500.0 million in aggregate principal amount of 8.875% senior notes due 2030, guaranteed by us. We used part of the proceeds from this issuance in our repurchase of US$117.0 million in aggregate principal amount of the 7.625% 2026 notes.
In February 2024, CSN Resources S.A. issued additional US$200.0 million in aggregate principal amount of 8.875% senior notes due 2030, which were initially issued in December 2023. The notes are guaranteed by us and were consolidated and formed a single fungible series with the issuer’s US$500.0 million in aggregate principal amount of 8.875% notes due 2030 initially issued in December 2023.
In April 2024, we issued non-convertible debentures, in two series, in an aggregate principal amount of R$800.0 million. The two series of debentures have a 10-year and a 15-year final tenor, with interest rate indexed to IPCA.
In June 2024, CSN Mining International GmbH entered into a long-term agreement for the supply of iron ore with the Swiss trader Glencore International AG, pursuant to which Glencore will prepay up to US$255.0 million, with respect to the supply of approximately 6.5 million tons of iron ore over four years, commencing in December 2024. In September 2024, CSN Mining International GmbH entered into an amendment to the advance agreement in the amount of US$300.0 million for the additional supply of 7.2 million tons of iron ore.
In September 2024, Cargill International Trading Pte Ltd. concluded a prepayment of US$450.0 million to CSN Mining International GmbH for the supply of 9.2 million tons of iron ore during four years with six ships per year with 180,000 tons each, totaling 54 ships for the period of the contract.
In November 2024, we issued non-convertible debentures, in two series, in an aggregate principal amount of R$500.0 million. The two series of debentures have a 10-year and a 15-year final tenor, with interest rate indexed to IPCA.
In December 2024, Cargill International Trading Pte Ltd. concluded a prepayment of US$175.0 million to CSN Mining International GmbH for the supply of approximately 3.8 million tons of iron ore during five years with six ships per year with 180,000 tons each, totaling 21 ships for the period of the contract, also in December 2024, CSN Mining International GmbH entered into a long-term agreement for the supply of iron ore with the Swiss trader Glencore International AG, pursuant to which Glencore prepays up to US$180.0 million, with respect to the supply of approximately 4.3 million tons of iron ore over five years, commencing in June 2025.
The following chart sets forth our debt maturity profile as of December 31, 2024 (amounts do not consider accrued interest, transaction costs or premiums on issuance):
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The following table sets forth the maturity profile of our long-term debt as of December 31, 2024, gross of transaction costs and premiums on issuance:
|
Maturity |
Principal Amount |
| (in millions of R$) | |
| 2025 | 8,903 |
| 2026 | 6,195 |
| 2027 | 7,053 |
| 2028 | 11,717 |
| 2029 | 1,750 |
| 2030 | 5,942 |
| 2031 | 7,299 |
| 2032 | 5,370 |
| 2033 | 744 |
| After 2033 |
2,587 |
| Total |
57,560 |
We expect to fully pay, using cash flows from operating activities or new financings, or refinance the portions of our indebtedness due in 2024 to 2026.
Contractual Obligations
The following table presents our long-term contractual obligations as of December 31, 2024:
|
Payment due by period | |||||
|
Total |
Less than 1 year |
1-3 years |
3-5 years |
More than 5 years | |
| (in millions of R$) | |||||
| Contractual Obligations | |||||
| Accrued finance charges(1) | 644 | 81 | 217 | 116 | 230 |
| Taxes payable in installments | 161 | 118 | 24 | 12 | 7 |
| Gross debt | 57,559 | 8,903 | 24,965 | 7,692 | 15,999 |
| “Take-or-pay” contracts | 7,686 | 2,575 | 3,064 | 525 | 1,522 |
| Derivatives swap agreements(2) | 306 | – | 5 | 23 | 278 |
| Leasing agreements(3) | 841 | 206 | 308 | 76 | 251 |
| Purchase Obligations | |||||
| Raw materials(4) | 4,035 | 3,899 | 114 | 22 | – |
| Maintenance(5) | 3,517 | 1,767 | 1,490 | 260 | – |
| Utilities/fuel(6) |
9,462 |
1,611 |
2,130 |
995 |
4,726 |
| Total |
84,211 |
19,160 |
32,317 |
9,721 |
23,013 |
_____________
| (1) | These accrued finance charges refer to the cash outflow related to the contractual interest expense of our long-term debt and were calculated using the contractual interest rates taken forward to the maturity dates of each contract. |
| (2) | Derivative swap agreements were calculated based on market prices as of December 31, 2024. |
| (3) | Refers to TECON, TECAR and FTL concessions agreements. |
| (4) | Refers mainly to purchases of coal, tin, aluminum and zinc, which comprise part of the raw materials for steel manufacturing and take-or-pay contracts. |
| (5) | We have outstanding contracts with several contractors in order to maintain our plants in good operating condition; due to the strong demand for specialized maintenance service, the term of some of these contracts is for more than one year. |
| (6) | Refers mainly to natural gas, power supply and cryogenics, which are provided by limited suppliers and with some of whom we maintain long-term contracts. |
Off-Balance Sheet Arrangements
In addition to the debt that is reflected on our balance sheet, we have the following guarantees of debt of other companies and “take-or-pay” contractual obligations:
Guarantees of Debt
We guarantee 100% of the loans granted by BNDES and Banco do Nordeste/FNE to TLSA and 47.3% of the debentures held by FDNE and issued by TLSA. The aggregate principal amount outstanding under the loans and debentures guaranteed by us as of December 31, 2024 was R$3,881 million.
Under the TLSA Investment Agreement we and our partners, Valec and FDNE, agreed that if the construction of Northeastern Railway System II requires funds in addition to the budget agreed on, they will be provided by us or third parties under trackage right agreements.
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“Take-or-Pay” Contractual Obligations
The following table sets forth our payment obligations under our “take-or-pay” agreements for the years presented:
|
Payments in the period | ||||||
|
2024 |
2025 |
2026 |
2027 |
After 2027 |
Total | |
| (in millions of R$) | ||||||
| Type of service | ||||||
| Transportation of iron ore, coal, coke, steel products, cement and mining products | 2,196 | 1,981 | 1,572 | 138 | 1,937 | 7,824 |
| Supply of power, natural gas, oxygen, nitrogen, argon and iron ore pellets | 567 | 558 | 457 | 495 | 309 | 2,386 |
| Processing of slag generated during pig iron and steel production | 21 | 2 | – | 33 | 5 | 61 |
| Oil storage and handling | 4 | 3 | 3 | 3 | 6 | 19 |
| Labor and consultancy services |
26 |
31 |
31 |
31 |
93 |
212 |
| Total |
2,814 |
2,575 |
2,063 |
700 |
2,350 |
10,502 |
MRS
Following is a description of our take-or-pay contractual obligations under our outstanding agreements with MRS:
Transportation of Iron Ore, Coal and Coke to Volta Redonda
In 2024, the volume set for iron ore and pellets was 6.8 mkt and the volume set for coal, coke and other smelter products was 3.2 mkt, with a guarantee of payment of at least 85% of forecast annual revenue.
Transportation of Iron Ore for Export from Itaguaí
In 2024, the volume set for iron ore was 40.5 mkt, with a guarantee of payment of at least 85%. We may increase by up to 10% or decrease by up to 15% the volume set in the agreement every year, considering the volume informed in the previous year.
Transportation of Steel Products
The agreement covers the transportation of steel products from the Presidente Vargas Steelworks to third-party terminals and customers. In 2024, the volume set for steel products was 1.8 mkt, with a guarantee of payment of at least 80%.
Cement Transportation
This agreement covers transportation of bagged cement from the cement plant at Presidente Vargas to our terminals. In 2024, the volume set was 1,147.5 kt, with a guarantee of payment of at least 80%.
Ferrovia Centro Atlântica
Following is a description of our take-or-pay contractual obligations under our outstanding agreements with Ferrovia Centro Atlântica. The calculation of “take-or-pay” contracts with Ferrovia Centro Atlântico considers the total volume performed in clinker and limestone contracts, regardless of the percentage transported of each.
Transportation of Limestone
This agreement covers transportation of limestone from the city of Arcos to the city of Volta Redonda. In 2024, the volume set under this agreement was 1.8 mkt, with 100% of performance volume guaranteed.
Transportation of Clinker
This agreement covers transportation of clinker products from the city of Arcos to the city of Volta Redonda. In 2024, the volume set under this agreement was 660 kt, with 100% of performance volume guaranteed.
The calculation of amounts under our “take-or-pay” contracts with Ferrovia Centro Atlântico considers the total volume transported of clinker and limestone, regardless of the percentage transported of each.
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5C. Research and Development, Patents and Licenses, Etc.
We have more than 70 years of research, development and innovation experience and were the first Brazilian steelmaker to produce coated and pre-painted steels. Innovation is a fundamental part of our strategy as a pioneer in process, product and commercial solutions in the businesses in which we operate. We remain committed to quality and the ongoing pursuit of initiatives that deliver enhanced value to our customers and stakeholders.
Innovation is a strategic pillar for CSN and a lever for sustainable growth. Since 2018, we have been strengthening CSN Inova, an innovation platform that catalyzes the transformation of our businesses towards management that is even more focused on ESG.
With four work pillars focused on resolving our challenges, CSN Inova has complementary tools to implement innovation strategies with impact in the short, medium and long term. Aiming to decarbonize our production processes and generate more efficiency in our operations, CSN Inova prioritizes development projects, partnerships and investments in technologies and solutions for industry 4.0, new production routes, digital transformation, data science, new materials and the circular economy.
On the first front, CSN Inova Open and Tech conducts a systemic and collaborative innovation process, aimed at solving strategic challenges and finding opportunities that represent a high operational, socio-environmental and financial impact for us, and opportunities to develop new and strategic technological pathways. The challenges and opportunities currently prioritized are reducing the consumption of fossil fuels and electricity, increasing the availability of assets, reducing logistical expenses, digitizing and optimizing processes for decision-making based on data, new products and materials, environmental recovery and reuse of waste and new forms of payment and financing to increase sales.
The innovation management methodology considers the elements of open innovation and is based on an in-depth diagnosis, which involves mapping processes in our various segments, areas and operations, including the analysis of pain points and related indicators. Based on these diagnoses, pilot projects (with reduced scope and quick implementation) are built and executed to test technologies and solutions that adhere to the mapped challenges. After evaluating these pilots using measurable indicators, the initiatives are escalated in an organized manner within our businesses.
In 2024, we had a total of 80 initiatives underway, of which eleven were in the planning phase, 16 were piloted and 22 were being scaled, representing a 27% increase in relation to the number of scaled projects in 2023, which demonstrates the maturity of CSN Inova’s portfolio. The main objective of innovation management is to prioritize challenges and projects that are in fact relevant to us, and such prioritization is carried out based on strategic alignment with our business, the materiality matrix, technological maturity, economic potential and, above all, in operational and financial indicators. Between 2019 and 2024, the projects led by CSN Inova resulted in substantial gains of approximately R$700 million, driven by cost reductions.
Additionally, in 2024, we developed new technological routes for processing steel slag and mine tailings to be use as cementitious material to reduce the clinker content. There was also an assessment of technologies for producing cold-agglomerated pellets and briquettes without the use of fossil fuels, representing a significant advance in the green steel production value chain.
Finally, for challenges where technologies are at lower maturity levels and require research and development (R&D), CSN Inova Open and Tech is bringing businesses closer to universities and research centers in Brazil and abroad, fostering the creation of projects for technology development.
On the second front, CSN Inova Ventures is one of the first Brazilian corporate venture capital vehicles focused on industry 4.0 and is responsible for bringing us closer to startups and solutions in Brazil and abroad, in addition to agents that are a reference in the venture capital ecosystem, investment funds and accelerators. The objective is to capture the best investment opportunities in disruptive technologies with high growth potential that allow the transition from traditional industries to a more intelligent, connected and sustainable future.
CSN Inova Ventures ended 2024 with seven companies in its portfolio, with new contributions expected to be made throughout 2025, maintaining the focus in investment verticals, defined according to our operational challenges.
Furthermore, as of the constitution of our ESG Committee in February 2021, CSN Inova Ventures has also consolidated itself as one of the corporate venture capital vehicles in the world whose ESG Transition is integrated to act as a tool of transition, seeking technologies, strategy and main objectives of each of our material sustainability topics. The integration of CSN Inova Ventures’ activities into our socio-environmental transition strategy contributes to our agility in accelerating its sustainability agenda.
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On the third front, aiming to ensure the continuity of our operations and the evolution of our development purpose, CSN Inova Bridge is responsible for the integrated management of our ESG innovation strategy, working together with various leaders and areas of businesses to identify how, with whom and what are the main challenges and transition opportunities related to our materiality matrix. Our ESG committee, which advises our board of directors, is the result of extensive research on governance models in sustainability and innovation in public companies, banks and funds conducted by CSN Inova Bridge. Our ESG committee operates as a socio-environmental innovation laboratory, whose risks and opportunities are discussed based on our sustainability materiality matrix in a systemic, integrated, experimental and participatory manner. Always in a network and with multidisciplinary teams from the operation to the corporate level, it unlocks and leverages resources for critical structural projects, mobilizes the connection between knowledge from the social innovation ecosystem and trains employees in order to stimulate the dissemination and scale of the culture of sustainability. In addition, it centralizes the ESG communication activities of our businesses, in an effort to gradually establish transparent communication with its stakeholders.
Finally, CSN Inova Bridge operates in continuous collaboration with the sustainability area and the CSN Foundation and focuses on the transformation of territories through the joint construction of an innovative local economy. The construction of local territorial development strategies prioritizes the dialogue with local communities, which strengthens their autonomy, and generates social development and environmental sustainability.
CSN Inova also focuses on mapping and developing new partnerships, products, and revenue sources for us, acting as a venture builder. CSN Inova’s goal is to drive innovation in our operations and businesses, while offering market solutions with a focus on a more sustainable future and value creation. Additionally, CSN Inova has developed new business ventures with strategic partners, contributing technical knowledge, scaling strategies, and technology adaptation for other sectors. In return, it receives a share of the revenue generated from these products. Partnerships have already been established in supply and green hydrogen sectors.
CSN’s Research and Development Center, with more than seven decades of experience, is located in Volta Redonda and plays a key role in promoting innovation and technological advancement in the steel industry. At the center of this structure is our General Management of Product Development, which is responsible for developing new products and strengthening our competitiveness. With a focus on excellence, this area works in the diversification of the portfolio, the optimization of our product mix and the implementation of new technologies, contributing to the continuous evolution of our industrial processes. The laboratory infrastructure of our Research Center is composed of 17 high-tech laboratories, specialized in physical, chemical, mechanical and metallographic analysis of our steels and other alloys that are equipped with advanced technologies, such as optical and scanning electron microscopy. These laboratories ensure compliance with the strictest standards of quality.
5D. Trend Information
Steel: Crude steel production was resilient and stable in 2024 as compared to 2023, with the Chinese market accounting for over 50% of the global volume produced, offsetting the decrease in Europe. The trend for 2025 is the maintenance of a solid activity level, with the Chinese government’s incentives boosting several strategic sectors such as consumption, manufacturing, infrastructure and automakers, and helping to offset and mitigate the slowdown seen in the civil construction and a sluggish demand in real estate and property market, which increases the risks of a decrease in iron ore demand. This situation is expected to continue putting pressure on the Brazilian steel market, driven by the significant presence of imported products from China, particularly as U.S. tariffs on China increase, potentially limiting China’s access to U.S. markets.
Looking ahead to 2025, the iron ore market is expected to face significant challenges. Although the beginning of the year was marked by higher prices compared to the second half of 2024, the overall trend points to an oversupplied market.
Domestic Steel Demand in China: China’s steel demand is crucial for the global iron ore market. Despite several stimulus measures by the Chinese government, the property sector remains weak, which impacts steel demand. Approximately 30% of China’s steel demand is linked to its property market. Furthermore, China's steel production is expected to decline in the next five to ten years. This decline in steel production will likely reduce demand for lower-grade iron ore used in blast furnaces, while demand for higher-grade iron ore suitable for low-carbon steelmaking may rise.
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New Economic Scenario with US Import Policies: The new import policies from the USA, including tariffs on Chinese steel imports, can disrupt the current supply chain and demand for steel globally. These policies may lead to short-term demand fluctuations, with steel mills potentially cutting production and delaying restocking of iron ore. In the long term, Chinese steel mills may increase investments in overseas bases, boosting local iron ore demand and indirectly supporting global iron ore prices. Additionally, geopolitical tensions and protectionist measures can create instability in the global commodities market.
Mining: The worldwide outlook for iron ore in 2024 was driven by China’s macroeconomic environment comprising not only the governmental interventions through its stimulus packages, but also the high utilization capacity of its steel plants, inventory levels that remained below historical averages and a surge in steel exports. The commodities’ price dynamics resulted in greater outcomes for the mining sector, with higher production and sales volumes to cover the strong demand. On the other hand, the production subsidies on the Chinese steel market increased price competitiveness in Brazil, bringing a weaker domestic dynamic and a challenging internal scenario.
New Trends for High-Grade Material: The demand for high-grade iron ore is increasing due to the shift towards greener steelmaking technologies, such as direct reduction processes using green hydrogen. High-grade iron ore, with an iron (Fe) content of 67% or more, is essential for these processes. However, the supply of suitable high-grade iron ore is limited, which could hinder the transition to zero-emissions steelmaking. To address this, mining companies are focusing on developing mines that can produce high-quality iron ores and further processing existing ores to improve their grade (beneficiation).
Price Pressure: Iron ore prices are projected to decline in 2025 due to the economic slowdown in China and of stricter protectionist measures limiting market demand for iron ore. Additionally, the upcoming Guinea Project mine, set to begin production in by late 2025, is expected to further disrupt the iron ore market by increasing supply. This oversupply, if not accompanied by a depletion of current reserves, will likely put downward pressure on prices.
Cement: In Brazil, despite the recent rise in interest rates, the economy remains quite resilient, with strong GDP performance driving higher consumption of steel and cement. Brazilian steel production remains buoyant, with a growth of 5.3% in 2024, driven by the operational normalization of local producers and steel consumption by sectors such as automotive, agricultural machinery and infrastructure projects. In the cement market, it is possible to observe a still poignant dynamism mainly in housing programs for low-income families. In addition, the Brazilian government has expressed interest in strengthening federal programs for housing, which we expect will provide important growth opportunities for the steel and cement segments.
For more information, see “Item 3. Key Information—3D. Risk Factors—Risks Relating to Brazil—Developments and the perception of risk in other countries may adversely affect the trading price of Brazilian securities, including our common shares and the ADSs,” “Item 3. Key Information—3D. Risk Factors—Risks Relating to Us and the Industries in Which We Operate—We are exposed to substantial changes in commodities prices, including oil prices, which significantly affect the prices of our inputs and the prices of our products, and may adversely affect us” and “—Measures adopted by, or conflicts between, foreign governments could adversely affect us.”
5E. Critical Accounting Estimates
Not applicable.
Item 6. Directors, Senior Management and Employees
6A. Directors and Senior Management
General
We are managed by our board of directors (conselho de administração), which consists of up to eleven members, and our board of executive officers (diretoria executiva), which consists of two to nine executive officers (one of whom is the chief executive officer). In accordance with our bylaws (estatuto social), each director is elected for a term of two years by our shareholders at an annual shareholders’ meeting. Our bylaws require our employees to be represented by one director on the board of directors. The members of our board of executive officers are appointed by our board of directors for a two-year term.
Our board of directors is responsible for setting general guidelines and policies for our business and our board of executive officers is responsible for the implementation of such guidelines and policies and for our day-to-day operations. As of the date of this annual report, our board of directors comprises five members, and our board of executive officers comprises our chief executive officer and five executive officers.
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Our board of directors holds at least six ordinary meetings per year and extraordinary meetings whenever necessary.
Our directors and executive officers as of the date of this annual report are:
|
Name |
Position |
Age(1) |
First Elected on |
Last Elected on |
| Board of Directors | ||||
| Benjamin Steinbruch | Member | 71 | April 23, 1993 | April 30, 2025 |
| Fabiam Franklin | Member | 58 | April 28, 2016 | April 30, 2025 |
| Yoshiaki Nakano | Member | 80 | April 29, 2004 | April 30, 2025 |
| Antonio Bernardo Vieira Maia | Member | 65 | April 30, 2013 | April 30, 2025 |
| Miguel Ethel Sobrinho | Member | 79 | April 26, 2019 | April 30, 2025 |
| Board of Executive Officers | ||||
| Benjamin Steinbruch | Chief Executive Officer | 71 | April 30, 2002 | September 22, 2021 |
| Antonio Marco Campos Rabello | Chief Financial and Investor Relations Officer | 52 | March 18, 2024 | March 18, 2024 |
| Marcelo Cunha Ribeiro | Executive Officer | 47 | September 29, 2017 | March 18, 2024 |
| David Moise Salama | Executive Officer | 58 | August 2, 2011 | September 22, 2021 |
| Luis Fernando Barbosa Martinez | Executive Officer | 61 | August 2, 2011 | September 22, 2021 |
| Enéas Garcia Diniz | Executive Officer | 65 | August 13, 2024 | August 13, 2024 |
| Stephan Heinz Josef Victor Weber | Executive Officer | 63 | June 7, 2021 | September 22, 2021 |
| Rogério Bautista da Nova Moreira | Executive Officer | 49 | March 18, 2024 | March 18, 2024 |
_____________
| (1) | Age as of the date of this annual report. |
Board of Directors
Following is a brief biography of the members of our board of directors:
Benjamin Steinbruch. Mr. Steinbruch has been a member of our board of directors since April 1993, where he held the position of Chairman of the Board of Directors from April 1995 until April 2023, and our chief executive officer since April 2002. He is in charge of our mining, railways and institutional strategy. He also holds the position of chairman of the board of directors and executive officer of most of the companies that are directly or indirectly controlled by us. In the past five years, he has served as first vice president of the Federation of Industries of the state of São Paulo (Federação das Indústrias do Estado de São Paulo), or FIESP, member of FIESP’s Superior Strategic Board, advisor to the Robert Simonsen Institute, chairman of the board of directors of Nacional Minérios S.A. (merged into CSN Mineração in 2015), member of the Economic and Social Development Council, and a member of the Interinstitutional Consultative Council of the São Paulo State Court of Justice. Mr. Steinbruch graduated from the Fundação Getúlio Vargas – FGV/SP Business School and specialized in marketing and finance also at Fundação Getúlio Vargas – FGV/SP.
Fabiam Franklin. Mr. Franklin is a member of our board of directors since 2016. He was a member of the board of directors of the Brazilian Association of Metallurgy and Mining (Associação Brasileira de Metalurgia, Materiais e Mineração) from 2015 to 2017. He is also chairman of the advisory board of CSN Invest Equity Investment Fund since April 4, 2016, and as director of metallurgy since May 2021. He also coordinated the CSN Financial Education Program from 2008 to 2017, and he has been working at the company as a production general manager since November 2002. Mr. Franklin graduated in metallurgical engineering from Universidade Federal Fluminense – UFF/RJ and specialized in reduction metallurgy at the McMaster University, Hamilton, Canada. He holds a master’s in business management from Fundação Dom Cabral – Belo Horizonte/MG and a master’s degree in economics from IBMEC.
Yoshiaki Nakano. Mr. Nakano has been a member of our board of directors since April 2004, and a member of our audit committee since June 2005, serving as chairman of the audit committee since October 2017. He also holds the position of member of the board of directors at Transnordestina Logística S.A. and independent member of the board of directors and coordinator of the audit committee of CSN Mineração S.A. In the past five years, Mr. Nakano was a professor of economics at Fundação Getúlio Vargas and has served as director of the School of Economics of Fundação Getúlio Vargas since 2003. Previously, he held the positions of special secretary for economic affairs at the Ministry of Finance and Secretary of Finance for the State of São Paulo. He holds a degree in business administration from Fundação Getúlio Vargas and earned his master’s and Ph.D. degrees from Cornell University in the United States.
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Antonio Bernardo Vieira Maia. Mr. Maia was elected member of our board of directors in April 2013 and has been a member of our audit committee since August 2013. He served as chairman of the audit committee from May 2014 to October 2017. He was also a member of our Financial Committee from October 2014 to December 2016. He graduated in business and public administration from Fundação Getúlio Vargas.
Miguel Ethel Sobrinho. Mr. Sobrinho has been a member of our board of directors since April 2019 and a member of our audit committee since May 2019. He also holds the position of member of the board of directors of certain companies that are directly or indirectly controlled by us. He graduated in production engineering from the Polytechnical School of the University of São Paulo and holds a master’s in business administration from the School of Economics and Administration of the University of São Paulo. He was a professor of project and investment analysis at the School of Economics and Administration of the University of São Paulo and member of the Curator Board and founder of the Administration Institute Foundation of the University of São Paulo.
Board of Executive Officers
Following is a brief biography of the members of our board of executive offers:
Benjamin Steinbruch. See “—Board of Directors.”
Antonio Marco Campos Rabello. Mr. Rabello has held the position of chief financial officer at the company since March 18, 2024, being responsible for the treasury, controllership, tax and accounting areas, accumulating the functions of investor relations officer. Prior to joining the company, he served as Unipar’s chief financial and investor relations officer between 2022 and 2024. He also held the position of chief financial officer at Novonor from 2018 to 2022; at Odebrecht engineering and construction, from 2013 to 2018; at Novonor Energia, from 2011 to 2013; and at Ocyan, between 2008 and 2011. In addition, between 2003 and 2008 he worked at Braskem as manager and controllership officer. He holds a degree in business administration from the University of Salvador and a master’s in business in administration and finance from Fundação Getúlio Vargas.
Marcelo Cunha Ribeiro. Mr. Ribeiro was elected as an executive officer in September 2017. He was our chief financial officer and our chief investor relations officer from March 2018 until March 2024. He is a member of the board of directors and an executive officer of certain companies that are directly or indirectly controlled by us. Prior to joining us, Mr. Ribeiro was chief financial officer of St. Marche Group, vice president of finance and investor relations of Restoque Comércio e Confecções de Roupas S.A., chief financial officer of Grupo SBF (GP Investimentos Ltd.) and held other director positions at several companies. Mr. Ribeiro graduated in production engineering from the University of São Paulo and has a master’s in business administration from Harvard Business School.
David Moise Salama. Mr. Salama was elected as an executive officer in August 2011 and is in charge of the real estate, insurance and credit areas. He has been with us since 2006, having acted as investor relations officer. He also holds the position of member of the board of directors and executive officer of certain companies that are directly or indirectly controlled by us. Mr. Salama graduated in accounting and has a master’s in business administration in finance, both from the School of Economics, Business and Accounting of the University of São Paulo. He complemented his academic education by attending the Oxford Advanced Management and Leadership Program of Saïd Business School at Oxford University, England, and the Harvard Law School Program on Negotiation at Harvard University.
Luis Fernando Barbosa Martinez. Mr. Martinez was elected as an executive officer and has been an effective member of August 2011. He is in charge of the commercial and logistics areas of the steel, cement and special sales segment. He has been with us since 2002, having previously acted as sales officer. He also holds the position of member of the board of directors and executive officer of certain companies that are directly or indirectly controlled by us. Mr. Martinez graduated with a degree in Metallurgical Engineering from Instituto Mauá de Tecnologia, has a graduate degree in industrial management from the School of Production Engineering of the University of São Paulo and completed the Corporate Management Development Program at Alcan Aluminum Limited in Montreal, Canada. In addition, he is certified as an experienced board member by the Brazilian Institute of Corporate Governance (Instituto Brasileiro de Governança Corporativa), or the IBGC.
Enéas Garcia Diniz. Mr. Diniz joined us in 1985, and held several key positions, including General Manager of Hot Rolling, Director of Metallurgy, Director of the Presidente Vargas Steelworks, and Director of Nacional Minérios S.A. He worked at CSN from 2005 to 2016, having previously held several managing and executive positions on companies that are directly or indirectly controlled by us. He currently also serves as Director at Fundação CSN and Minérios Nacional S.A., as well as a member of the Board of Directors of MRS Logística S.A. He holds a degree in mechanical engineering from the Pontifical Catholic University of Rio de Janeiro, a master’s in business administration from Fluminense Federal University, and from Fundação Dom Cabral.
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Stephan Heinz Josef Victor Weber. Mr. Weber joined us as executive officer in June 2021 and is responsible for investments. Before joining us, he served as chief executive officer of Scorpius Gold Brasil S.A., three Scorpius Gold Mineração S.A. and Brasil Calcarium S.A., from 2018 to 2021. He has also served, in Brazil and abroad, in companies in the steel and mining industry, including African Minerals, Anglo American and Rio Tinto. Mr. Weber holds a degree in metallurgical engineering from the Federal University of Ouro Preto and a master’s degree in metallurgical engineering from the Federal University of Minas Gerais. In addition, he completed a program in global business from the Saïd Business School at Oxford University in the United Kingdom.
Rogério Bautista da Nova Moreira. Mr. Moreira has held the position of executive legal officer since March 2024. Before joining us, he served as legal and governance director at the following companies: Odebrecht Engenharia e Construção S.A., from 2022 to 2024; Novonor S.A., from 2019 to 2022; and OR Empreendimentos Imobiliários S.A., from 2016 to 2019. He holds a law degree from Universidade Católica de Salvador, with a postgraduate degree and a master’s in tax law from the Pontifical Catholic University of São Paulo and an MBA in business management from Fundação Getulio Vargas.
Indemnification of Officers and Directors
There is no provision for or prohibition against the indemnification of officers and directors under Brazilian law or our bylaws. Pursuant to Brazilian Corporate Law, officers are generally not individually liable for acts performed within the course of their duties. Subject to the terms of the indemnity agreements entered into by us and our directors and officers, we may indemnify, or maintain liability insurance covering, our directors, officers and certain key employees against liabilities incurred in connection with their respective positions with us.
6B. Compensation
In 2024, the total compensation paid by us to all members of our board of directors and board of executive officers for services in all capacities was R$59.6 million, which includes salaries, bonuses, profit sharing arrangements and benefits, such as medical care, pension plan contributions and life insurance, among others. In 2024, the aggregate compensation paid by us to all members of our fiscal committee for services rendered was R$0.64 million.
See “—6D. Employees” for a brief description of our profit-sharing arrangements.
6C. Board Practices
Fiscal Committee
Under Brazilian Corporate Law, shareholders may request the appointment of a fiscal committee (conselho fiscal), which is a corporate body independent of management and our external auditors. The primary responsibility of the fiscal committee is to monitor management’s activities, review financial statements and report findings to shareholders. As of the date of this annual report, we have a fiscal committee in place, which was most recently elected by our annual shareholders’ meeting in April 2025. Our fiscal committee comprises three effective members and three alternate members, of which one effective member and the respective alternate were appointed by our minority shareholders.
The effective members of our fiscal committee as of the date of this annual report are:
|
Name |
Position |
Age(1) |
First Elected on |
Last Elected on |
| Angélica Maria de Queiroz | Chairwoman | 68 | June 29, 2018 | April 30, 2025 |
| André Coji | Member | 61 | June 29, 2018 | April 30, 2025 |
| Paulo Roberto Evangelista de Lima | Member | 68 | April 30, 2025 | April 30, 2025 |
_____________
| (1) | Age as of the date of this annual report. |
Following is a brief biography of the members of our fiscal committee:
Angélica Maria de Queiroz. Ms. Queiroz has been the chairwoman of our fiscal committee since April 2022 (she was previously an alternate member and then an effective member since June 2018). She has also served as a member of the Audit Committee of CSN Mineração S.A. since January 2021. She is an associate director of the Brazilian Public Policy Debate Center (Centro de Debate de Políticas Públicas – CDPP) and has been a member of the advisory board of the Brazilian Institute of Management and Technology (Instituto Brasileiro de Gestão e Tecnologia – IBGT) since 2005, a founding partner of Clear Horizon in 2002, a strategy consultant for national and international companies (focused on supply and distribution, production, sales and finance) and member of the fiscal committee of the non-governmental organization Américas Amigas. Ms. Queiroz was an independent consultant for our audit committee from 2011 to 2017. She holds a degree in economic sciences from the Pontifical Catholic University of Rio de Janeiro and a postgraduate degree in finance from Fundação Getúlio Vargas in Rio de Janeiro.
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André Coji. Mr. Coji has been a member of our fiscal committee since June 2018. In the last five years, Mr. Coji served as an effective member of the board of directors of Via Varejo S.A. and was treasury director for a non-profit organization, Unibes, and a member of the advisory board of several Brazilian families, responsible for asset management, fiscal planning, tax and succession planning. Mr. Coji graduated in business administration from Fundação Getúlio Vargas and in law from the University of São Paulo. He has also a board of directors’ certificate from the IBGC.
Paulo Roberto Evangelista de Lima. Mr. Lima serves as an independent member of our of our fiscal committee. Mr. Lima has extensive experience in the financial and corporate governance sectors. He worked for over 20 years at Banco do Brasil S.A., where he held senior positions including director of internal controls and director of risk management, overseeing market, credit, liquidity, and operational risk across the financial conglomerate. He has held various board and fiscal council positions in major companies, including Celesc S.A., Usiminas, Cecrisa, Ipiranga, and CPFL. He holds a degree in business administration, a master’s in business administration from Fundação Dom Cabral, and has completed postgraduate studies in financial administration at IBMEC, as well as specializations in business management from Fundação Dom Cabral and in corporate governance from University of São Paulo.
Audit Committee
In June 2005, we appointed an audit committee (comitê de auditoria), which comprises independent members of our board of directors with a term of office of two years, with reelection permitted. Our audit committee is responsible for recommending to our board of directors the appointment of independent auditors, reporting on our auditing policies and our annual audit plan prepared by our internal auditing team, as well as monitoring and evaluating the activities of our independent auditors. Our audit committee has also been tasked with identifying, prioritizing and submitting actions to be implemented by our executive officers, analyzing our annual report and financial statements and making recommendations to our board of directors. As of the date of this annual report, our audit committee comprises Mr. Yoshiaki Nakano, Mr. Antonio Bernardo Vieira Maia and Mr. Miguel Ethel Sobrinho. As of the date of this annual report, our audit committee is assisted by an external consultant. All members of our audit committee satisfy the audit committee membership independence requirements set forth by the SEC and the NYSE. All members of our audit committee have been determined by our board of directors to qualify as an “audit committee financial expert” within the meaning of the rules adopted by the SEC relating to the disclosure of financial experts on audit committees in periodic filings pursuant to the Exchange Act.
Our audit committee holds at least one ordinary meeting every three months and extraordinary meetings whenever necessary.
For information on the date of election and term of office of the members of our board of directors and board of executive officers, see “—6A. Directors and Senior Management.”
Service Contract
We permit our directors to continue to participate in our employee pension plan after ceasing to be a director.
6D. Employees
As of December 31, 2024, 2023, and 2022, we had 29,695, 26,563, and 26,766 employees, respectively. As of December 31, 2024, 96.3% of our employees were based in Brazil, and 3.7% were located in other countries where we operate, including the United States, Portugal, Germany, Switzerland, and Hong Kong.
As of December 31, 2024, our workforce was primarily concentrated in the steel, mining, cement, logistics, and energy divisions. The breakdown of employees by segment was as follows: (i) steel segment, with 15,518 employees, representing 52.3% of our total workforce; (ii) mining segment, with 8,341 employees, representing 28.1% of our total workforce; (iii) cement segment, with 3,635 employees, representing 12.2% of our total workforce; (iv) logistics segment, with 2,102 employees, representing 7.1% of our total workforce; and (v) energy segment, with 159 employees, representing 0.5% of our total workforce.
We believe we have historically maintained a constructive relationship with labor unions, and we have not experienced any material labor disputes in recent years. A significant portion of our employees are unionized, and we maintain collective bargaining agreements with several unions, which cover 100% of our employees.
We place strong emphasis on workforce development, health, and safety. In 2024, we invested approximately 837 thousand hours in training and development programs and implemented initiatives focused on employee well-being, diversity, and inclusion.
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In addition, we maintain an employee profit-sharing plan for all of our employees, which allows them to earn bonuses based on our consolidated results and the results of each business unit.
We are also the main sponsor of a non-profit entity, Caixa Beneficente dos Empregados da CSN, created in July 1960. The main objective of this entity is to pay benefits that complement the Brazilian government’s social security payments to former employees. For more information, see note 30 to our audited consolidated financial statements included elsewhere in this annual report.
As part of our workforce, we also hire third-party employees. As of December 31, 2024, 2023, and 2022, we had 24,202, 19,673, and 9,726 third-party employees, respectively. The significant increase in the number of third-party employees in 2024 was primarily due to the expansion of the Itabirito Plant P15 project and our operations modernization project at UPV, both of which required additional workforce support during their implementation phases.
6E. Share Ownership
The Steinbruch family, which includes Mr. Benjamin Steinbruch, our chief executive officer, holds an indirect majority ownership interest in Vicunha Aços S.A. and Rio Iaco Participações S.A., our controlling shareholders.
Our executive officers and the members of our board of directors directly held an aggregate of 501,502 of our outstanding common shares as of December 31, 2024.
6F. Disclosure of a Registrant’s Action to Recover Erroneously Awarded Compensation
Not applicable.
Item 7. Major Shareholders and Related Party Transactions
7A. Major Shareholders
In March 2023, the holding companies of our controlling shareholders underwent a reorganization, which did not result in a change of control. As of December 31, 2024, our capital stock comprised 1,326,093,947 common shares, each of which entitles its holder to one vote at our shareholders’ meetings. Our major shareholders do not have different voting rights from our other shareholders. For more information, see “Item 3. Key Information—3D. Risk Factors—Risks Relating to Our Common Shares and the ADSs—Our controlling shareholder has the ability to direct our business and affairs and its interests could conflict with yours.”
The following table sets forth the number of our common shares owned by our major shareholders as of December 31, 2024:
|
Common Shares |
Percent of | |
| Vicunha Aços S.A.(1) | 552,412,693 | 41.66% |
| Rio Iaco Participações S.A.(1) | 45,706,242 | 3.45% |
| CFL Ana Participações S.A. | 132,523,251 | 9.99% |
| NYSE (ADS) | 283,799,438 | 21.40% |
| Others |
311,652,323 |
23.50% |
| Total |
1,326,093,947 |
100.00% |
_____________
| (1) | Owned indirectly by the Steinbruch family, which includes Mr. Benjamin Steinbruch, a member of our board of directors |
and our chief executive officer.
7B. Related Party Transactions
Our transactions with related parties consist of (i) transactions with subsidiaries, jointly controlled entities, associates, exclusive funds and other related parties; and (ii) transactions with other unconsolidated related parties.
Following is an overview of the types of related party transactions we enter into:
| · | Our commercial and financial transactions with our subsidiaries, jointly controlled entities, associates, exclusive funds and other related parties are carried out at market prices and under market conditions, based on common terms and rates applicable to third parties. |
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| · | We maintain relations with other unconsolidated related parties, which include, among others, CBS Previdência, Fundação CSN, Banco Fibra, Ibis Participações e Serviços Ltda., Party Negócios e Participações Ltda., Vicunha Imóveis Ltda., Vicunha Serviços Ltda., and Jockey Club de São Paulo. |
In addition, we guarantee certain indebtedness of related parties. For more information, see “Item 5. Operating and Financial Review and Prospects—5B. Liquidity and Capital Resources—Off-Balance Sheet Arrangements—Guarantees of Debt.”
We maintain internal controls to detect, prevent and address potential conflicts of interest in our transactions, including those with related parties, in order to ensure that all transactions are appropriately documented, characterized and accounted for. Our related party transactions are subject to approval based on our best interest and market terms and conditions. For more information on our related party transactions, see note 22 to our audited consolidated financial statements included elsewhere in this annual report.
7C. Interests of Experts and Counsel
Not applicable.
Item 8. Financial Information
8A. Consolidated Statements and Other Financial Information
See our audited consolidated financial statements included elsewhere in this annual report.
Legal and Administrative Proceedings
In the ordinary course of our business, we are party to several administrative, judicial and arbitration proceedings, which are incidental and arise out of our regular course of business. We have established provisions for all amounts in dispute that represent a probable risk of loss based on the legal opinion of our internal and external legal counsel. We have not established provisions for any amounts in dispute that represent a possible or remote risk of loss based on the legal opinion of our internal and external legal counsel. For more information, see “Item 3. Key Information—3D. Risk Factors—Risks Relating to Us and the Industries in Which We Operate—We are exposed to the risks of litigation.”
Labor Contingencies
As of December 31, 2024, we and our subsidiaries were defendants in 10,526 labor claims, for which we recorded a provision of R$388 million. Most of these claims relate to alleged subsidiary and/or joint liability with respect to our independent contractors, salary equalization, health hazard premiums and hazardous duty premiums, overtime pay, health plan, indemnity claims resulting from other alleged occupational diseases or on-the-job accidents, breaks between working hours and differences in profit sharing from 1997 to 1999 and from 2001 to 2003.
We update our provisions for labor contingencies as a result of the closing of lawsuits and our constant revision of accounting estimates, which consider, among other factors, the nature of the claims involved.
Civil Contingencies
Our civil contingencies relate mainly to indemnity claims resulting from contractual disputes and collections, claims for damages and compensation related to our commercial and industrial activities and real estate disputes. As of December 31, 2024, we had recorded a provision of R$815 million for these civil contingencies.
Tax Contingencies
Our main tax contingency relates to a tax assessment notice involving R$10,246 million (as of December 31, 2024) issued against us for an alleged failure to submit to taxation a capital gain resulting from the alleged sale of 40% of our shares in former subsidiary Namisa (merged into our subsidiary CSN Mineração as of December 31, 2015) to the Asian Consortium. In May 2017, the São Paulo regional judgment office (Delegacia Regional de Julgamento), which is a lower administrative court, issued a decision cancelling the tax assessment notice. This decision was reversed and the tax assessment was upheld by the second level administrative court – the Administrative Board of Tax Appeals (Conselho Administrativo de Recursos Fiscais), or CARF. We have challenged the merits of the tax assessment at the judicial level and also challenged the legality of the CARF judgment at the administrative level. In 2020, we offered certain assets as collateral for our potential liability under this proceeding. In May 2024, the administrative court issued a final decision that cancelled the fine of R$4.4 million. However, the decision is still subject to discussion in the administrative level and the merits of the assessment are still under discussion in the judicial level. As of the date of this annual report, the case is pending final judgment by the judicial court. Our assessment remains that our risk of loss is possible.
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This same tax assessment notice resulted in another contingency issued against Namisa (merged into our subsidiary CSN Mineração as of December 31, 2015) involving R$2,998 million, as of December 31, 2024. This tax assessment is for income tax and social contribution not paid due to allegedly improper goodwill amortization from 2008 to 2011. In May 2013, the São Paulo regional judgment office issued a decision favorable to us and cancelled the tax assessment notice, which decision was confirmed by CARF. After an appeal filed by the Federal Prosecutor’s Office, the Superior Chamber of CARF reversed the decision and reinstated the tax assessment. We challenged the formal requirements of the Federal Prosecutor’s Office’s appeal at the judicial level. In 2020, we filed an annulment lawsuit to contest the merits of the tax assessment and entered into an agreement (negócio jurídico processual) that was approved by the court. Following the closing of the administrative proceeding, a tax enforcement was ordered and, pursuant to the agreement we entered into, we will present certain collateral and installment payments. In May 2024, the administrative court issued a decision that cancelled the fine of R$997 million, which is being discussed in the administrative level. In October 2024, the federal judicial court of appeal issued a favorable decision to cancel the CARF judgment at the administrative level due to the non-fulfillment of the formal requirements. This decision was challenged by the Federal Prosecutor’s Office. As of the date of this annual report, the appeal filed the Federal Prosecutors’ Office is pending judgement.
In December 2018, another contingency related to allegedly improper goodwill amortization from 2013 to 2014 was issued against Namisa. This tax assessment demands the payment of income tax and social contribution involving approximately R$1,347 million, as of December 31, 2024. In June 2019, we filed our appeal to CARF, which issued a decision favorable to us in December 2019. In May 2024, this decision was reversed and the tax assessment was upheld by the Superior Chamber of CARF. We will challenge the merits of the tax assessment at the judicial level, which has not yet been filed as of the date of this annual report.
In addition, we received tax assessment notices in December 2015 and December 2016 for R$869 million and R$1,415 million as of December 31, 2024, respectively, for an allegedly improper deduction of interest expenses in pre-payment contracts between us and Namisa. With regards to the December 2015 tax assessment, after a partially favorable decision issued by CARF that reduced the amount of the tax assessment, we filed an annulment lawsuit to challenge the remainder of the tax assessment, which, as of the date of this annual report, is pending judgment. The Federal Prosecutor’s Office filed a tax foreclosure, to which we presented a response that, as of the date of this annual report, is pending judgment. With regards to the December 2016 tax assessment, we filed an annulment lawsuit to contest the tax assessment, which, as of the date of this annual report, is pending judgment. The Federal Prosecutor’s Office filed a tax foreclosure, to which we presented a response that as of the date of this annual report, is pending judgment.
Other Tax Contingencies
In addition, we have the following relevant tax contingencies:
| · | Corporate Income Tax – Application of International Agreement: Tax assessments arising from the application of international treaties to avoid double taxation, which determines that profits from foreign subsidiaries are not taxable in Brazilian jurisdiction. As of December 31, 2024, the amount relating to this contingency was R$6,239 million; |
| · | CFEM royalty: Charges related to the value of the tax base for the compensation of mineral resource extraction. As of December 31, 2024, the amount relating to this contingency was R$1,570 million; |
| · | Non-cumulative credits of PIS and COFINS: Contingency resulting from the divergence in the classification of goods as inputs for the purpose of PIS and COFINS tax credits. As of December 31, 2024, the amount relating to this contingency was R$1,499 million; and |
| · | ICMS – Tax-advantaged area: State Government of Rio de Janeiro disputes the application of a tax incentive to the sale of our goods. As of December 31, 2024, the amount relating to this contingency was R$1,460 million. |
Antitrust
In October 1999, we received a fine from CADE claiming that certain practices adopted by us and other Brazilian steel companies before 1997 allegedly constituted a cartel. We challenged the cartel allegation and the imposition of the fine in court and, in June 2003, obtained a partially favorable decision by a federal trial court. CADE appealed the lower court decision and, in June 2010, the federal court reversed the lower trial court’s decision and confirmed the cartel allegation, as well as the fine imposed by CADE in the amount of R$65 million. We appealed the decision of the appellate court to the Brazilian Superior Court of Justice, which upheld the ruling in favor of CADE. We subsequently appealed the decision of the Superior Court of Justice to Brazil’s Supreme Court. In November 2024, CADE started an institutional initiative to settle non-tax related fines called Desenrola program, allowing us to adhere and settle this matter.
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In July 2012, CADE issued a preliminary injunction limiting our ability to, among other things, increase our equity stake in Usiminas or exercise our voting rights with respect to the shares already owned. In April 2014, CADE issued its decision and an agreement (Termo de Compromisso de Desempenho), or TCD, was executed between CADE and us. Under the terms of the TCD, we must reduce our equity stake in Usiminas within a specified timeframe. The timeframe and reduction percentages are confidential. Furthermore, our political rights in Usiminas would continue suspended until we reach the thresholds established in the TCD.
In March 2016, we applied to CADE to partially suspend the TCD so as to exercise certain rights, such as appointing independent directors and members of the fiscal committee, which request has been granted by CADE. Following such decision, at Usiminas’ annual general shareholders’ meeting held in April 2016, we appointed two independent directors and one independent member of Usiminas’ fiscal committee, as well as their respective substitutes. The 2016 appointments were under litigation and, although there has been no judicial order overturning or otherwise suspending their effects, since 2016 we have been unable to appoint new members to Usiminas’ fiscal committee. In April 2018, CADE denied our request for partial suspension of the TCD. In 2019, CADE approved an amendment to the TCD, establishing a new timeframe for us to reduce our equity stake in Usiminas. In April 2021, we requested an additional extension of this timeframe, which was granted in September 2022 by CADE.
Due to this latest decision from CADE, granting us additional extension, Usiminas filed a mandamus against CADE, seeking to suspend the effects of CADE’s decision. In July 2023, the court suspended CADE’s decision and established a different deadline for CSN to conclude the divestment. Usiminas, CADE and CSN filed appeals against such ruling, which were dismissed. We appealed to the superior courts (STJ and STF) against this decision. In March 2025, a favorable decision was granted by the court to our preliminary injunction request, suspending any preliminary enforcement by Usiminas, until a final and unappealable decision is reached. As of the date of this annual report, decisions on the appeals are pending.
Northeastern Railway System Proceedings
The TCU initiated proceedings in 2016 questioning the legality of governmental authorizations for the segregation of the Northeastern Railway System into two sub-railway systems: Northeastern Railway System I (in operation by FTL) and Northeastern Railway System II (under construction by TLSA). According to the claim, the Brazilian federal government should have undergone a new bidding process to grant the concession for the construction of the new tracks of the Northeastern Railway System (Northeastern Railway System II).
We are unable to anticipate the outcome of this proceeding. The consequences of an unfavorable decision may include the loss by TLSA of the concession for Northeastern Railway System II, the imposition of additional investments in developing this sub-railway system and the acceleration of loans granted to TLSA, for which we are guarantors. See “Item 5. Operating and Financial Review and Prospects—5B. Liquidity and Capital Resources—Off-Balance Sheet Arrangements—Guarantees of Debt.” In addition, even if we are entitled to any indemnification in connection with a termination of the TLSA concession agreement for our investments in developing Northeastern Railway System II, this indemnification may be insufficient to cover our costs, expenses or losses and may be paid long after a decision is rendered terminating the concession, if at all.
In the course of this proceeding, the TCU approved an injunction suspending further disbursements by government agencies, including the state-owned railway company Valec and FDNE, for the development of Northeastern Railway System II, which has adversely affected the pace of construction of the new tracks.
In 2019, we revised the engineering project for the development of Northeastern Railway System II and delivered an update regarding the completed and ongoing project phases in order to validate our budget and revise our schedule, which has not been altered since then.
Additionally, in 2013, ANTT initiated proceedings claiming that FTL did not meet certain transportation targets for the Northeastern Railway System I in 2013 and seeking to terminate the TAC executed by FTL that year, which had settled all claims of non-compliance by us with respect to the original concession agreement of the Northeastern Railway System until 2012. This proceeding resulted in the reopening of the administrative proceeding which began in 2012 for ANTT to evaluate the occurrence of any relevant breach to FTL’s concession agreement.
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Following a valuation conducted by ANTT, ANTT concluded that FTL did not comply with the TAC regarding its failure to meet 2013 production targets. ANTT recommended that the Brazilian federal government terminate the FTL concession agreement and initiate an administrative proceeding before the Superintendence of Infrastructure and Railroad Cargo Transport Services (Superintendência de Infraestrutura e Serviços de Transporte Ferroviário de Cargas). FTL has appealed, and the federal government issued a final decision, which ruled to proceed without the recommendation issued by ANTT.
Furthermore, in 2017, ANTT also initiated proceedings claiming that TLSA did not comply with certain of its obligations arising from its concession agreement. ANTT’s technical area and board, in a unilateral opinion, concluded that TLSA breached its contractual obligations under the concession agreement and recommended that the Brazilian federal government terminate TLSA’s concession to operate the Northeastern Railway System II.
In September 2020, we filed a request for reconsideration and suspension of the injunction with the TCU. We requested that the TCU’s understanding be revised in order for disbursements by government agencies to be immediately released or, alternatively, that disbursements by the government agency FINOR be immediately released. These disbursements would provide reimbursement of the amounts already proved to have been applied in the project, and which we understand are not subject to suspension by the TCU.
In July 2021, the ANTT approved a regulatory budget of R$8.9 billion, which amount was revised to R$10.8 billion in December 2021, following a request for reconsideration.
In November 2022, after TCU determined the repeal of the injunction suspending further disbursements by government agencies, TLSA required and received R$70.0 million from FINOR and is negotiating the receipt of the FDNE disbursement.
In December 2022, after long negotiations with ANTT, TCU and federal government leaders of Brazil about the continuity of the project and effective solutions for the problems, TLSA achieved excellent results by signing the first amendment with the grantor of the Northeastern Railway System II concession to redefine the project scope to a 1,206 km project with a deadline due in December 2029.
In November 2023, TLSA received R$811 million from FDNE. The Northeastern Railway System II represents one of the Brazilian federal government’s most significant strategic initiatives with respect to the economic and social development of the Northeastern region of Brazil.
In December 2024, TLSA and Banco do Nordeste executed an amendment to the concession agreement, providing for an additional R$3.61 billion in funding and increasing the total project investment to R$7.48 billion through the issuance of debentures, 50% of which are convertible. The amendment also establishes new rules regarding fund disbursement, use of proceeds, guarantees, and other contractual terms.
With respect to the Northeastern Railway System I, which is operated by our subsidiary FTL, the concession contract for the Northeastern Railway System I remains valid in all its terms until 2027, with a request for extension of the contract under analysis by the federal government.
Environmental Proceedings
Our main environmental contingencies comprise: (i) notices of alleged environmental infractions; (ii) annulment lawsuits arising from fines; and (iii) public civil actions. As of December 31, 2024, we had recorded an aggregate provision of R$42.6 million relating to these environmental contingencies.
As of December 31, 2024, we had provisions for environmental liabilities in the total amount of R$155.5 million, as compared to R$176.2 million as of December 31, 2023. We believe our provisions are sufficient to cover all probable losses in environmental proceedings.
The following table sets forth our provisions for environmental liabilities as of the dates indicated:
| (in millions of R$) | |
| December 31, 2023 | 176.2 |
| TACs(1) | 12.1 |
| Decommissioned coal mines (Santa Catarina) | 102.1 |
| Landfills and other(2) | 40.9 |
| December 31, 2024 | 155.5 |
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| (1) | Refers to environmental compensation agreed to in environmental proceedings. |
| (2) | Refers to an estimated calculation of recovery costs related to landfill remediation obligations. |
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Environmental Proceedings Related to Presidente Vargas Steelworks in Volta Redonda
In October 2024, we signed an amendment to TAC 07/2018 with the state of Rio de Janeiro, through the State Secretariat for the Environment and Sustainability (Secretaria de Estado do Ambiente e Sustentabilidade – SEAS), the State Environmental Institute (Instituto Estadual do Meio Ambiente – INEA) and the State Environmental Control Commission (Comissão Estadual de Controle Ambiental – CECA), setting new deadlines for the completion of the obligations set forth in TAC 07/2018 by December 19, 2026.
TAC 07/2018 aims to carry out new studies and investments to update the environmental control equipment at the Presidente Vargas Steelworks, ensuring the full continuity of its operations. In parallel, INEA issued a new environmental license (autorização ambiental de funcionamento) valid until December 19, 2026, which authorizes the regular operation of the Presidente Vargas Steelworks while the TAC is being complied with.
The amended TAC foresees investments of approximately R$303 million in environmental projects and actions in the region until December 19, 2026, reaffirming our commitment to the sustainability of our activities and to the communities of Volta Redonda and the region.
In July 2012, the Rio de Janeiro State Prosecutor’s Office filed a public civil action against us claiming that we must (i) remove all waste disposed in an area used as an industrial landfill in the city of Volta Redonda and (ii) relocate 750 residences located in the adjacent neighborhood Volta Grande IV Residential. In August 2013, the Federal Prosecutor’s Office filed a judicial civil proceeding against us based on these same claims. In both cases, the court denied these requests but ordered that we present a timetable to investigate the area and, if necessary, to remediate the potential issues raised by the Rio de Janeiro State Prosecutor’s Office. We presented a timetable considering the conclusion of all studies related to our investigation, including a risk assessment and intervention plan, which were concluded in April 2014. In January 2019, the Superior Court of Justice ordered that both lawsuits be decided by the federal court, and the beginning of the evidentiary phase is awaited. We have also received, as of the date of this annual report, 51 notices for lawsuits brought by certain homeowners at Volta Grande IV Residential, claiming indemnification for alleged moral and material damages, and, in January 2020, an additional public civil action was filed against us relating to adverse health effects allegedly caused by water contamination from our operations. We presented our defense in October 2021 and the court ordered that this public civil action be ruled upon together with the prior proceedings.
In April 2013, INEA fined us R$35 million in relation to Volta Grande IV Residential, in response to which we filed an annulment action in January 2014 to the Tenth Public Treasury Court of the Capital District (Rio de Janeiro). INEA, in response, filed a fiscal execution action in May 2014 for enforcement of the fine. The fiscal execution action is suspended until judgment is rendered in the annulment action, which in turn is also suspended until the expert examination that will be carried out as part of the public civil action filed in 2012 by the Federal Prosecutor’s Office.
In addition, we were defendants, together with certain current and former members of our management, in a criminal proceeding alleging our failure to adopt precautionary measures required by INEA regarding the risk of environmental damage in the Volta Grande IV neighborhood in the city of Volta Redonda. This criminal action was dismissed at first and second instances. As of the date of this annual report, the proceeding has already been archived.
In July 2018, the Federal Prosecutor’s Office and the Rio de Janeiro State Prosecutor’s Office filed a public civil action against us, Harsco Metals Ltda. and INEA, for immediate removal of slag piles, owned by us and operated by Harsco Metals Ltda., in the city of Volta Redonda that adjoin the Paraíba do Sul River. The plaintiffs claim inadequate environmental control measures and lack of enforcement by INEA. Relief sought includes cleaning of the entire effluent collection chute, presentation of the volume of slag stored in the area, presentation of a project to control atmospheric emissions of slag piles and partial embargo of the activity, material damages and collective moral damages.
A preliminary injunction was granted to require us, Harsco Metals Ltda. and INEA to immediately limit the amount of slag received monthly, as well as the height of the piles at four meters. Any non-compliance with the preliminary injunction may result in fines of approximately US$600,000 per month. We filed an appeal against this preliminary injunction, which is pending a final decision. In 2022, the proceeding was suspended according to the Federal Prosecutor’s request, due to the interest of the parties to enter into a TAC.
Concerning other allegedly contaminated areas in Volta Redonda, the Federal Prosecutor’s Office has filed three additional public civil actions for the environmental remediation and indemnification of certain areas, as well as for moral and material damages of residents of neighboring areas. Of these actions, two are in the evidentiary phase, while one is being appealed by us. Following our environmental studies to determine possible environmental damage and to ensure our compliance with all applicable laws, we presented our defense in each of these public civil actions.
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In June 2015, the Federal Prosecutor’s Office filed a public civil action against us, INEA and the state of Rio de Janeiro in the federal court in Volta Redonda seeking (i) suspension of our sintering activities at Presidente Vargas Steelworks, (ii) to have INEA abstain from renewing or granting any license to us until we comply with applicable law and (iii) moral and material damages allegedly caused by water and atmospheric pollution deriving from noncompliant operations. As of the date of this annual report, we have presented our defense and await the next steps in the proceeding.
Other Environmental Proceedings
In the late 1980s, the Federal Prosecutor’s Office, the Rio de Janeiro State Prosecutor’s Office and the Macaense Association filed four public civil actions against us for alleged environmental contamination and pollution of the Paraíba do Sul River, allegedly caused by our industrial activity in the area. The court ruled against us and demanded that we compensate the environmental damage caused. We appealed this decision to the Superior Court of Justice, which upheld our appeal and returned the proceeding to its initial stage in order to carry out expert investigations, which, as of the date of this annual report, are still ongoing.
We are also party to two public civil actions filed against us by the Federal Prosecutor’s Office and the Rio de Janeiro State Prosecutor’s Office in the federal court of Volta Redonda seeking moral and material damages due to alleged environmental damage caused in the 1980s and 1990s by our use of certain landfills in Volta Redonda without the appropriate environmental license. One of these claims is in the approximate amount of R$300.0 million. In December 2021, after presenting our defense, the court ordered a conciliatory session to clarify technical matters relating to the environmental management of the area with INEA, as well as suspension of the proceedings pending completion of the environmental management schedule of the area until 2025. Regarding the other public civil action, the proceedings resumed in 2023. By court order, the magistrate has been regularly informed of the progress of the remediation phases, which have been verified as completed.
In 2009 and 2010, we signed agreements with the Public Prosecutor’s Office regarding environmental liabilities caused by coal mining in the Southern Region of the state of Santa Catarina until the 1990s. The environmental liabilities covered by the agreements include restoration of certain areas. Our compliance with the agreement was questioned in 2015 by the Public Prosecutor’s Office, which may seek to impose fines, freeze our bank accounts or initiate a criminal investigation. In June 2018, we settled a new judicial agreement in order to extend the deadlines for this restoration. We expect to enter into a third agreement with government authorities and other parties involved in this claim in order to set cost-effective and functional standards for restoration.
In December 2019, the Public Prosecutor’s Office filed a public civil action against TECON and INEA to suspend the environmental licensing process of TECON’s container terminal until completion of the study on the environmental support capacity of the Sepetiba Bay. In December 2019, the court rejected the preliminary injunction requested by the Public Prosecutor’s Office to suspend the licensing process. As of the date of this annual report, the proceeding is pending decision by the court.
In June 2019, we filed a lawsuit to contest a notification from INEA regarding suspension of the solid bulk operations at TECON due to these operations allegedly not being within the scope of permitted activities under TECON’s operating license. We also requested a preliminary injunction, which was granted, to suspend the effects of the notification and to continue operations pending final judgment of the lawsuit. As of the date of this annual report, this proceeding remains in the initial phase, and we are awaiting the parties’ comments on the expert witness opinion on the matter.
In April 2021, CSN Mineração and TECON were fined by the municipality of Itaguaí, state of Rio de Janeiro, for alleged non-compliance with environmental legislation and embargo terms on port operations. On the same day, the embargo terms were canceled by the municipality, but the fines were maintained. CSN Mineração and TECON proposed an annulment action against the municipality to cancel the fines and bans. As of the date of this annual report, the proceeding remains in the initial phase.
In 2015, CSN Cimentos Brasil, formerly LafargeHolcim, aiming to guarantee the operation of the limestone mine until a new license was issued, filed an annulment action to invalidate the infraction notices issued by the state and federal environmental agencies due to alleged lack of environmental license in the cement plant located in Pedro Leopoldo, state of Minas Gerais. An injunction was granted in the same year, which remains in effect as of the date of this annual report. As a result, CSN Cimentos is allowed to continue its operations and is not obligated to pay any fines. The proceeding remains in the initial phase. We filed for operating license, which has not been granted yet by the environmental agency.
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As a result of an accident involving a Brazilian mining company in November 2015, the state of Minas Gerais filed judicial proceedings against several mining companies, including us, based on a State Dam Inventory disclosed in 2014. The state seeks to investigate structures that do not provide technical stability guaranteed by an external auditor or which stability has not been attested to.
We are party to public civil actions filed by, among others, the Minas Gerais State Prosecutor’s Office to compel our mining entity (Minérios Nacional) to take security measures at the Fernandinho dam complex. These public civil actions have pleaded, among other things, an injunction for us to present an emergency plan in relation to the Fernandinho dam complex and evidence of adoption of preventive structural measures, as well as definitive implementation of an emergency plan and a monthly security audit report. In December 2022, CSN Mineração entered into an agreement with the Public Prosecutor’s Office to end the lawsuits.
In April 2019, the Minas Gerais State Prosecutor’s Office filed a public civil action to compel us to adopt mitigating measures regarding the psychological risks and losses allegedly generated by the Casa de Pedra dam, including relocating residents and indemnifying the value of their homes, bearing rent and social assistance expenses and relocating the children who attended the daycare center and school that have been closed. The Minas Gerais State Prosecutor’s Office also pleaded for the payment of collective moral damages. In November 2021, a lower trial court ruling ordered that we pay rent for residents to relocate and that we construct the daycare center and school that were closed. We filed an appeal, which revoked the decision. However, in 2022, another decision reaffirmed the 2021 decision. As of the date of this annual report, we await the continuation of the process at the primary court.
We are also subject to public civil investigations at the federal and state levels that monitor the regularity of our dams. In 2019, we signed a preliminary agreement term with the Federal Prosecutor’s Office, referring to five of our dams, with which we have fully complied.
In October 2017, CSN Mineração entered into an agreement with the Minas Gerais State Prosecutor’s Office agreeing to adopt certain measures, including some specified in the technical report prepared by the Minas Gerais State Prosecutor’s Office regarding the Casa de Pedra dam complex in order to comply with the emergency plan for mining dams, as well as general recommendations on the location, works, types of dams and audits of the Casa de Pedra dam complex. We fulfilled the commitments listed in the agreement and have requested a certificate of full compliance (Certidão de Cumprimento Integral) and the closure of the investigation, which, as of the date of this annual report, are pending.
In February 2022, CSN Mineração and Minérios Nacional signed certain TACs with the Federal Prosecutor’s Office, the Minas Gerais State Prosecutor’s Office, the state of Minas Gerais, the State Environmental Foundation and the ANM in order to define the necessary security measures and the procedures and timeline required for the de-characterization of our B4, Vigia, Vigia auxiliary, B2 and B2 auxiliary dams.
Since 2021, there are a total of 365 indemnification proceedings filed by professional fishermen for alleged material and moral damages derived from an event that occurred in April 2021 at the Port of Itaguaí. Plaintiffs allege that TECAR and TECON dumped iron ore that disrupted fishing activities. As of December 31, 2024, thirteen decisions have been issued, all of which fully dismissed the plaintiffs’ claims. A criminal investigation is currently underway to examine the conduct of the plaintiffs and their lawyers in connection with these actions.
On December 23, 2021, CEEE-G filed a repossession action against the MBYA-GUARANI indigenous community and the National Indigenous Peoples Foundation (Fundação Nacional dos Povos Indígenas, or FUNAI), alleging that a group of indigenous individuals had occupied the Horto Florestal Bugres/Canastra area. The injunction to reinstate possession was revoked by the federal regional court, which ordered the case to be referred to the conciliation sector. A technical site visit took place in July 2024, and a mediation hearing has been scheduled for 2025.
On July 22, 2022, the federal public prosecutor’s office filed a public civil action against the state of Rio Grande do Sul and CEEE-G, seeking the exclusion of five CEEE-G properties which were occupied by Indigenous communities from an auction on July 29, 2022. The aim was to transfer the properties to the state of Rio Grande do Sul and subsequently to the federal government for indigenous usufruct, or alternatively, to prohibit CEEE-G from interfering with the communities’ possession of the land. Currently, the action has been narrowed to a possessory dispute, as the request to exclude the properties from the auction became moot. Since December 5, 2024, the case has been pending a final ruling.
On June 19, 2023, CEEE-G submitted a petition to FUNAI requesting the resettlement of the Caigangue Indigenous group, referencing a final and unappealable judgment from 2007 stemming from a repossession action concerning the Horto Florestal in Salto do Jacuí, state of Rio Grande do Sul. The request cited ongoing environmental damage in the conservation area and security concerns related to energy production. By court order, the case was forwarded to the land conflicts commission. A technical visit and mediation session have already occurred, and a follow-up visit is scheduled for 2025.
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Other Environmental Liabilities
Our main environmental liabilities as of December 31, 2024 were associated with environmental recovery at former coal mines decommissioned in 1989 in the state of Santa Catarina, as well as environmental recovery due to previous operations in Presidente Vargas Steelworks.
We record a provision for remediation costs and environmental claims when a loss is probable, the amount can be reasonably estimated, and we may incur a legal obligation. This provision is included in our income statements as other operating income (expenses). We do not include in our reserves environmental liabilities related to ERSA, as these are contractually supported by its former owner.
Arbitration
In the first quarter of 2021, we were notified of the commencement of a confidential arbitration regarding its alleged default under certain iron ore supply agreements, involving the amount of US$1.0 billion. We believe the allegations are unfounded, due to the lack of damages, and are not aware of the basis used by the claimant to determine the amount involved in this proceeding. As of the date of this annual report, the arbitration proceeding is ongoing.
Other Legal and Administrative Proceedings
We are defendants in other legal and administrative proceedings involving claims in the aggregate amount of R$48,454 million as of December 31, 2024, as compared to R$53,651 million as of December 31, 2023, of which (i) R$41,326 million relate to tax contingencies as of December 31, 2024 (R$47,173 million as of December 31, 2023); (ii) R$2,964 million relate to civil contingencies as of December 31, 2024 (R$2,985 million as of December 31, 2023); (iii) R$2,580 million relate to labor contingencies and social security contingencies as of December 31, 2024 (R$2,091 million as of December 31, 2023); and (iv) R$1,583 million relate to environmental contingencies as of December 31, 2024 (R$1,112 million as of December 31, 2023). Our legal counsel has assessed these contingencies as entailing a risk of possible loss and, therefore, no provision has been recorded for these contingencies.
In November 2012, we filed a complaint against Ternium Group, concerning its acquisition of a controlling stake in Usiminas. We contend that this transaction constituted a change of control, which should have triggered compliance with the tag-along rights mandated by Brazilian Corporate Law. In June 2024, the Superior Court of Justice ruled in our favor; however, Ternium Group appealed the decision. The case is currently pending a decision.
Dividend Policy
General
Subject to certain exceptions set forth in Brazilian Corporate Law, our bylaws require that we pay an annual minimum dividend equal to 25% of our adjusted net profits, calculated in accordance with Brazilian Corporate Law. Proposals to declare and pay dividends in excess of the statutory minimum dividend requirement are generally made at the recommendation of our board of directors and approved by the vote of our shareholders. Any such proposal will be dependent upon our results of operations, financial condition, cash requirements for our business, future prospects and other factors deemed relevant by our board of directors. We have a policy of paying dividends equal to all legally available net profits, after taking into consideration the following priorities: (i) our business strategy; (ii) the performance of our obligations; (iii) our required investments; and (iv) the preservation of our liquidity and solid capital structure.
Brazilian companies are also permitted to pay limited amounts of interest on shareholders’ equity to holders of equity securities and to treat these payments as an expense for Brazilian income tax purposes. These payments, net of withholding income tax, may be included in determining whether the statutory minimum dividend requirement has been met, subject to shareholder approval.
Amounts Available for Distribution
At each annual shareholders’ meeting, our board of directors is required to recommend how our earnings for the preceding fiscal year are to be allocated. For purposes of Brazilian Corporate Law, a company’s income, net of income tax and social contribution for any fiscal year, any accumulated losses from prior fiscal years and amounts allocated to employees’ and management’s participation in earnings, represents its “net profits” for that fiscal year.
In accordance with Brazilian Corporate Law, shareholders are entitled to receive as a mandatory dividend for each fiscal year either (i) the portion of the profits as may be stated in our bylaws or, if not set forth in our bylaws, (ii) an amount equal to 50% of the net profits as increased or reduced by: (a) amounts allocated to the legal reserve; (b) amounts allocated to the contingency reserve and the tax incentive reserve, if any; and (c) any reversion of contingency reserves constituted in prior years. The payment of dividends may be limited to the amount of net profits realized during the fiscal year, provided that the difference is recorded as a reserve for unrealized profits. Profits recorded in the reserve for unrealized profits, when realized and not absorbed by losses in subsequent years, must be added to the first dividend declared after their realization. Under our bylaws, we are required to distribute to shareholders as dividends in respect of each fiscal year ending on December 31, to the extent profits are available for distribution, an amount equal to at least 25% of our adjusted net profits. See “––Mandatory Dividend” below.
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Legal Reserve. Under Brazilian Corporate Law, we are required to maintain a “legal reserve” to which we must allocate 5% of our “net profits” for each fiscal year until the amount of the reserve equals 20% of our paid-in capital. However, we are not required to make any allocations to our legal reserve in a year in which the legal reserve, when added to our other established capital reserves, exceeds 30% of our capital stock. The amounts allocated to such reserve must be approved by our shareholders in our annual shareholders’ meeting and may be used to increase our capital stock or to offset losses and, therefore, are not available for the payment of dividends.
Discretionary (or Statutory) Reserves. Under Brazilian Corporate Law, any corporation may provide in its bylaws for the creation of additional reserves, provided that the maximum amount that may be allocated to such reserves, the purpose of such reserves and the allocation criteria of such reserves are specified. There cannot be any allocation to such reserves if it affects payment of the mandatory dividend (as defined below). Our bylaws currently provide that our board of directors may propose to our shareholders the deduction of at least 1% from our net profits to be allocated to a working capital and investments reserve. Without prejudice to payment of the mandatory dividend. Our bylaws do not provide for any other discretionary reserve.
Contingency Reserve. Under Brazilian Corporate Law, a percentage of our “net profits” may be allocated to a contingency reserve for estimable losses that are considered probable in future years. Any amount so allocated in a prior year must either be reserved in the fiscal year in which the loss had been anticipated, if the loss does not occur as projected, or be written off in the event that the anticipated loss occurs.
Tax Incentive Reserve. Our shareholders in a shareholders’ meeting may, following a proposal by management, allocate to a tax incentive reserve the portion of our “net profits” resulting from donations or governmental grants for investments, which may be excluded from the taxable basis of the mandatory dividend.
Unrealized Profits Reserve. Under Brazilian Corporate Law, we may allocate the amount by which the mandatory dividend exceeds our realized net profits in a given fiscal year to an unrealized profits reserve. Brazilian Corporate Law defines “realized net profits” for the period as the amount by which our “net profits” exceeds the sum of (i) positive equity net results and (ii) the net profits, gains or returns that will be realized after the end of the subsequent fiscal year. “Net profits” allocated to the unrealized profits reserve must be added to the next mandatory dividend distribution after those profits have been realized if they have not been used to absorb losses in subsequent periods.
Retained Earnings Reserve. Under Brazilian Corporate Law, our shareholders may decide at a general shareholders’ meeting to retain a portion of our net profits as provided for in a previously approved capital expenditure budget. No allocation of net profits may be made to the retained earnings reserve in case such allocation affects payment of the mandatory dividend. The balance of our retained earnings reserve may not be greater than our capital stock; if it is, the distribution of this surplus is decided at a shareholders’ meeting.
For purposes of determining reserve amounts, the calculation of “net profits” and allocations to reserves for any fiscal year are determined on the basis of financial statements prepared in accordance with Brazilian Corporate Law. Our audited consolidated financial statements included elsewhere in this annual report have been prepared in accordance with IFRS Accounting Standards and, although our allocations to reserves and dividends are reflected in the financial statements, investors will not be able to calculate the allocations or required dividend amounts from these financial statements.
Capital Reserve. Under Brazilian Corporate Law, the capital reserve consists of premiums from the issuance of shares, goodwill reserves from mergers, sales of founders’ shares and sales of warrants. We do not consider amounts allocated to our capital reserve for purposes of determining mandatory dividends. Our capital stock is not currently represented by founders’ shares. In our case, any amounts allocated to the capital reserve may only be used to increase our capital stock, to absorb losses that surpass accumulated profits and profit reserves, or to redeem, reimburse or purchase shares.
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Mandatory Dividend
Under our bylaws, we are required to distribute to shareholders as dividends in respect of each fiscal year ending on December 31, to the extent profits are available for distribution, an amount equal to at least 25% of our adjusted profits, or the mandatory dividend, which amount shall include any interest paid on capital during that year. See “––Additional Payments on Shareholders’ Equity” below. In addition to the mandatory dividend, our board of directors may recommend that shareholders receive an additional payment of dividends from other funds legally available. Any payment of interim dividends may be netted against the amount of the mandatory dividend for that fiscal year. Under Brazilian Corporate Law, if the board of directors determines prior to the annual shareholders’ meeting that payment of the mandatory dividend for the preceding fiscal year would be inadvisable in view of our financial condition, the mandatory dividend does not need to be paid. This type of determination must be reviewed by the fiscal committee, if one exists, and reported, together with the appropriate explanations, to our shareholders and to the CVM. Mandatory dividends not distributed as described above must be registered as a special reserve and, if not absorbed by losses in subsequent fiscal years, must be paid as a dividend as soon as our financial condition permits.
Payment of Dividends
We are required to hold annual shareholders’ meetings within the first four months after the end of our fiscal year at which an annual dividend may be declared. Additionally, our board of directors may declare interim dividends. Under Brazilian Corporate Law, dividends are generally required to be paid to the holder of record on a dividend declaration date within 60 days following the date the dividend was declared, unless a shareholders’ resolution sets forth another date of payment, which, in either case, must occur prior to the end of the fiscal year in which the dividend was declared. A shareholder has a three-year period from the dividend payment date to claim dividends (or interest on shareholders’ equity as described under “––Additional Payments on Shareholders’ Equity” below) in respect of the common shares it holds, after which we will no longer be liable for the dividend payments.
Our payments of cash distributions on common shares underlying the ADSs will be made in Brazilian currency reais to our ADR custodian on behalf of our ADR depositary. Our ADR custodian will then convert the proceeds into U.S. dollars and will cause the U.S. dollars to be delivered to our ADR depositary for distribution to holders of ADSs.
Additional Payments on Shareholders’ Equity
Brazilian companies are permitted to pay interest on shareholders’ equity to holders of equity securities and to treat those payments as a deductible expense for Brazilian income tax purposes. The amount of interest payable on shareholders’ equity is calculated based on the TJLP as determined by the Central Bank on a quarterly basis and applied to each shareholder’s portion of net equity.
The TJLP is based on the annual profitability average of Brazilian public internal and external debt. The TJLP for 2024 was 7.43% per annum.
Interest on shareholders’ equity is deductible up to the greater of the following amounts: (i) 50% of our net income (before taking into account the amounts attributable to shareholders as interest on shareholders’ equity and the provision of corporate income tax but after the deduction of the provision of the social contribution on net profits) related to the period in respect of which the payment is made; or (ii) 50% of the sum of retained profits and profit reserves as of the date of the beginning of the fiscal year in respect of which the payment is made.
8B. Significant Changes
None.
Item 9. The Offer and Listing
9A. Offer and Listing Details
Our capital stock comprises common shares without par value (ações ordinárias) and each ADS represents one common share. Our common shares are traded on the B3 under the symbol “CSNA3.” The ADSs, which are issued under a deposit agreement with Citibank, N.A., as depositary, and substantially all of which are held of record by the Depository Trust Company, are traded on the NYSE under the symbol “SID.” There were no significant trading suspensions of our common shares or the ADSs in the last three years.
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9B. Plan of Distribution
Not applicable.
9C. Markets
Trading on the B3 and NYSE
The B3 is the only Brazilian stock exchange on which private equity and private debt may be traded. The B3 is one of the largest exchanges worldwide in terms of market value, the second largest in the Americas and the leading exchange in Latin America.
When shareholders trade in common and preferred shares on the B3, the trade is settled in three business days after the trade date without adjustment of the purchase price for inflation. The seller is ordinarily required to deliver the shares to the exchange on the second business day following the trade date. The B3 equities clearing is responsible for the registration, settlement and risk management of trades with shares through the PUMA Trading System.
In order to better control volatility, the B3 has adopted a “circuit breaker” mechanism pursuant to which trading sessions may be suspended for a period of 30 minutes or one hour whenever the index of the stock exchange falls 10% or 15%, respectively, compared to the previous day’s closing index. If the market falls more than 20% compared to the previous day, the B3 may determine the suspension of trading in all markets for a defined period, at its sole discretion, and such decision must be disclosed to the market through the News Agency (ABO – Operações). The “circuit breaker” is not allowed to be started during the last 30 minutes of the trading session.
The B3 is significantly less liquid than the NYSE or other major exchanges in the world. As of December 31, 2024, the aggregate market capitalization of the B3 was R$5.2 trillion and the ten largest companies listed on the B3 represented 38% of the total market capitalization of all listed companies. In contrast, as of December 31, 2024, the aggregate market capitalization of the NYSE was US$30.1 trillion. Although any of the outstanding shares of a listed company may trade on the B3, in most cases fewer than half of the listed shares are actually available for trading by the public, the remainder being held by small groups of controlling persons, by government entities or by one principal shareholder. See “Item 3. Key Information—3D. Risk Factors—Risks Relating to Our Common Shares and the ADSs—The relative volatility and illiquidity of the Brazilian securities markets may substantially limit your ability to sell the common shares underlying the ADSs at the price and time you desire.”
As of December 31, 2024, we accounted for approximately 0.5% of the market capitalization of all listed companies on the B3.
Regulation of the Brazilian Securities Markets
Brazilian securities markets are regulated by the CVM, which has regulatory authority over the stock exchanges and securities markets, as well as by the Central Bank, which has, among other powers, licensing authority over brokerage firms and regulates foreign investment and foreign exchange transactions. The Brazilian securities markets are governed by Law No. 6,385, dated December 7, 1976, as amended and supplemented, or the Brazilian Securities Law, which is the principal law governing the Brazilian securities markets, and by Brazilian Corporate Law and regulations issued by the CVM, the CMN and the Central Bank. These laws and regulations, among others, provide for disclosure requirements applicable to issuers of traded securities, criminal sanctions for insider trading and price manipulation, and protection of minority shareholders. They also provide for licensing and oversight of brokerage firms and governance of Brazilian stock exchanges. However, the Brazilian securities markets are not as highly regulated and supervised as U.S. securities markets.
Under Brazilian Corporate Law, a company is either publicly held (companhia aberta) or privately held (companhia fechada). All listed companies are registered with the CVM and are subject to reporting and regulatory requirements. A company registered with the CVM may trade its securities either on the B3 or in the Brazilian over-the-counter market. Shares of companies listed on the B3 may not simultaneously trade on the Brazilian over-the-counter market. The shares of a listed company may also be traded privately, subject to several limitations. To be listed on the B3, a company must be registered as a publicly held company with the CVM and apply for registration with the B3.
The trading of securities on the B3 may be halted at the request of a company in anticipation of a material announcement. Trading may also be suspended on the initiative of the B3 or the CVM, among other reasons, based on or due to a belief that a company has provided inadequate information regarding a significant event or has provided inadequate responses to inquiries by the CVM or the B3.
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According to the Brazilian Securities Law, a publicly held company must submit to the CVM and the B3 certain periodic information, including annual and quarterly reports prepared by management and independent auditors. This law also requires companies to file with the CVM shareholder agreements, notices of shareholders’ meetings and copies of the related minutes.
Resolution No. 44, sets forth the CVM’s requirements regarding the disclosure and use of information related to material facts and acts of publicly held companies, including the disclosure of trading and acquisition of securities issued by publicly held companies.
Such requirements include provisions that:
| · | establish the concept of a material fact that gives rise to reporting requirements. Material facts include decisions made by controlling shareholders, shareholder and management resolutions or any other facts related to a company’s business (whether occurring within the company or otherwise related thereto) that may influence the price of its publicly traded securities, or the decision of investors to trade such securities or to exercise any of such securities’ underlying rights; |
| · | specify examples of facts that are considered material, which include, among others, the execution of agreements providing for a transfer of control, the entry or withdrawal of shareholders that provide any managing, financial, technological or administrative function to the company and any corporate restructuring undertaken among related companies; |
| · | oblige the investor relations officer, controlling shareholders, other officers, directors, members of the audit committee and other advisory boards to disclose material facts; |
| · | require simultaneous disclosure of material facts to all markets in which the company’s securities are admitted for trading; |
| · | require the acquirer of a controlling stake in a corporation to disclose material facts, including its intentions as to whether or not to de-list the corporation’s shares within one year from the acquisition of its controlling stake; |
| · | establish rules regarding disclosure requirements in the acquisition and disposal of a material ownership interest; and |
| · | forbid trading on the basis of material non-public information. |
Pursuant to CVM Rule No. 80, dated March 29, 2022, the CVM expanded the quantity and improved the quality of information required to be reported by issuers in Brazil. This rule provides the market with greater transparency and requires issuers to file annually a comprehensive reference form (Formulário de Referência) and a governance report (Informe de Governança). The reference form is in line with the shelf registration system recommended by the International Organization of Securities of Commissions (IOSCO) through which information is consolidated and subject to periodic update. In the governance report, we disclose information regarding governance practices set forth in the Brazilian Code of Corporate Governance, by the method of “practice or explain.” Each of our reference form and governance report are available on our investor relations website (www.ri.csn.com.br) or on the CVM’s website (http://www.cvm.gov.br).
The CVM also enacted Rule No. 81, dated March 29, 2022, to regulate two key issues involving general meetings of shareholders in publicly held companies: (i) the extent of information and documents to be provided in support of call notices (subject to prior disclosure to shareholders); and (ii) proxy solicitation for the exercise of voting rights. The rule aims to (x) improve the quality of information disclosed by publicly held companies to shareholders and to the market in general, favoring the use of the Internet; (y) make the exercise of voting rights less costly and foster the participation of shareholders in general meetings, especially for companies with widely dispersed capital; and (z) facilitate shareholder oversight of companies.
9D. Selling Shareholders
Not applicable.
9E. Dilution
Not applicable.
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9F. Expenses of the Issue
Not applicable.
Item 10. Additional Information
10A. Share Capital
Not applicable.
10B. Memorandum and Articles of Association
Registration and Corporate Purpose
Our corporate purpose, as set forth in Article 2 of our bylaws, is to manufacture, transform, market, import and export steel products and steel derived by-products, as well as to explore other activities directly or indirectly related to this purpose, including: mining, cement and carbochemical business activities, the manufacture and assembly of metallic structures, construction, transportation, navigation and port activities; the generation, management and commercialization of energy; and the participation in the capital of other national or international companies.
Directors’ Powers
Pursuant to our bylaws, a director may not vote on a proposal, arrangement or contract in which the director’s interests conflict with our interests. In addition, our shareholders must approve the compensation of our management and, in case an aggregate amount is fixed, our board of directors is responsible for the allocation. There is no mandatory retirement age for our directors. For a detailed description of the general duties and powers of our board of directors, see “Item 6. Directors, Senior Management and Employees—6A. Directors and Senior Management.”
Description of Capital Stock
Set forth below is certain information concerning our capital stock and a brief summary of certain significant provisions of our bylaws and Brazilian Corporate Law applicable to our capital stock. This description does not purport to be complete and is qualified by reference to our bylaws and to Brazilian law. For further information, see our bylaws incorporated in this annual report by reference.
Overview
As of December 31, 2024, our capital stock comprised 1,326,093,947 common shares. Our bylaws authorize our board of directors to increase our capital stock to up to 2,400,000,000 common shares without an amendment to our bylaws. There are currently no classes or series of preferred shares issued or outstanding. We may purchase our own shares for purposes of cancellation or to hold them in treasury subject to certain limits and conditions established by the CVM and Brazilian Corporate Law. See “Item 16. Reserved––16E. Purchases of Equity Securities by the Issuer and Affiliated Purchasers.”
Liability for Further Capital Calls
Pursuant to Brazilian Corporate Law, a shareholder’s liability is generally limited to the issue price of the subscribed or purchased shares. There is no obligation of a shareholder to participate in additional capital calls.
Voting Rights
Each common share entitles its holder to one vote at our shareholders’ meetings. According to CVM regulations, shareholders that represent at least 5% of our common shares may request cumulative voting (voto múltiplo) in an election of our board of directors. Pursuant to Brazilian Corporate Law and according to CVM guidance, as our capital stock comprises only common shares, shareholders holding at least 10% of our common shares in the three consecutive months prior to our shareholder’s meeting have the right to appoint a member of our board of directors (eleição em separado).
Shareholders’ Meetings
Pursuant to Brazilian Corporate Law, the shareholders present at an annual or extraordinary shareholders’ meeting, convened and held in accordance with Brazilian Corporate Law and our bylaws, are empowered to decide all matters relating to our corporate purpose and to pass any resolutions they deem necessary our protection.
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In order to participate in a shareholders’ meeting, a shareholder must be a record owner of the share on the day the meeting is held and may be represented by a proxy.
Shareholders’ meetings are called, convened and presided over by the chairman of our board of directors or, in his absence, by whom he appoints. Brazilian Corporate Law requires that our shareholders’ meeting be convened by publication of a notice in a newspaper of general circulation in Brazil and in the city in which our principal place of business is located, currently the Jornal Folha de São Paulo – Edição Regional, at least 21 days prior to the scheduled meeting date and no fewer than three times. However, CVM rules require that companies whose shares are also represented by ADSs must convene a shareholders’ meeting no later than 30 days in advance. Both notices must contain the agenda for the meeting and, in the case of an amendment to our bylaws, an indication of the subject matter.
In order for a shareholders’ meeting to be held, shareholders representing a quorum of at least one-fourth of the voting capital must be present, except for meetings convened to amend our bylaws, where shareholders representing at least two-thirds of the voting capital must be present. A shareholder may be represented at a shareholders’ meeting by means of a proxy to another shareholder, a company officer, a lawyer or a financial institution, appointed not more than one year before the meeting. If no quorum is present, notice must be given in the manner described above, no fewer than eight days prior to the scheduled meeting date. On second notice, the meeting may be convened without a specific quorum requirement, subject to the minimum quorum and voting requirements for certain matters, as described below. A holder of shares with no voting rights may attend a shareholders’ meeting and take part in the discussion of matters submitted for consideration but will not be allowed to vote.
Except as otherwise provided by law, resolutions passed at a shareholders’ meeting require a simple majority vote, abstentions not considered. Pursuant to Brazilian Corporate Law, the approval of shareholders representing at least one-half of our issued and outstanding voting shares is required for the following actions: (i) to create a new class of preferred shares or disproportionately increase an existing class of preferred shares relative to the other classes of preferred shares, to change a priority, preference, right, privilege or condition of redemption or amortization of any class of preferred shares or to create any class of non-voting preferred shares that has a priority, preference, right, condition or redemption or amortization superior to an existing class of shares (in these cases, a majority of the issued and outstanding shares of the affected class is also required); (ii) to reduce the mandatory dividend; (iii) to change our corporate purpose; (iv) to merge into or consolidate with another company or to spin-off our assets; (v) to dissolve or liquidate our company; (vi) to cancel any liquidation procedure; (vii) to authorize the issuance of founders’ shares; and (viii) to participate in a centralized group of companies as defined under Brazilian Corporate Law.
Pursuant to Brazilian Corporate Law, shareholders voting at a shareholders’ meeting have the power to: (i) amend our bylaws; (ii) elect or dismiss members of our board of directors (and members of the fiscal committee) at any time; (iii) receive and approve the annual management accounts, including the allocation of net profits and payment of the mandatory dividends and allocation to the various reserve accounts; (iv) authorize the issuance of debentures in general; (v) suspend the rights of a shareholder who has violated Brazilian Corporate Law or our bylaws; (vi) accept or reject the valuation of assets contributed by a shareholder in consideration of the subscription of shares in our capital stock; (vii) authorize the issuance of founders’ shares; (viii) pass resolutions authorizing reorganization of our legal form, including a merger, consolidation or split of the company, dissolution and liquidation of the company, election and dismissal of our liquidators and to examine their accounts; and (ix) authorize management to declare the company insolvent and to request a recuperação judicial or recuperação extrajudicial (a procedure involving protection from creditors similar in nature to a reorganization under the U.S. Bankruptcy Code), among others.
Redemption Rights
Our common shares are not redeemable, except that a dissenting and adversely affected shareholder is entitled, under Brazilian Corporate Law, to obtain redemption upon a decision made at a shareholders’ meeting by shareholders representing at least one-half of the issued and outstanding voting shares to: (i) create a new class of preferred shares or to disproportionately increase an existing class of preferred shares relative to the other classes of preferred shares (unless these actions are provided for or authorized by our bylaws); (ii) modify a preference, privilege or condition of redemption or amortization conferred on one or more classes of preferred shares, or to create a new class with greater privileges than an existing class of preferred shares; (iii) reduce the mandatory distribution of dividends; (iv) change our corporate purpose; (v) merge us with another company or consolidate us; (vi) transfer all of our shares to another company in order to make us a wholly owned subsidiary of that company (incorporação de ações); (vii) approve the acquisition of control of another company at a price that exceeds certain limits set forth under Brazilian Corporate Law; (viii) approve our participation in a centralized group of companies as defined under Brazilian Corporate Law; (ix) conduct a spin-off that results in (a) a change of corporate purpose, (b) a reduction of the mandatory dividend or (c) any participation in a group of companies as defined under Brazilian Corporate Law; or (x) in the event that the entity resulting from (a) a merger or consolidation, (b) an incorporação de ações as described above or (c) a spin-off of a listed company fails to become a listed company within 120 days of the shareholders’ meeting at which the decision was taken. The right of redemption lapses 30 days after publication of the minutes of the relevant shareholders’ meeting. We would be entitled to reconsider any action giving rise to redemption rights within ten days following the expiration of those rights if the redemption of shares of dissenting shareholders would jeopardize our financial stability. Law No. 9,457, dated May 5, 1997, which amended Brazilian Corporate Law, contains provisions which, among other things, restrict redemption rights in certain cases and allow companies to redeem their shares at their market value, subject to certain requirements. According to Brazilian Corporate Law, the reimbursement value of the common shares must equal the book value, which is determined by dividing our net assets by the total number of shares issued by us, excluding treasury shares (if any).
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Preemptive Rights
Except as provided for in Brazilian Corporate Law (such as in the case of mergers and public offerings), our bylaws allow each of our shareholders a general preemptive right to subscribe to shares in any capital increase, in proportion to his or her ownership interest. A minimum period of 30 days following the publication of notice of a capital increase is allowed for the exercise of the right and the right is transferable. In the event of a capital increase that would maintain or increase the proportion of capital represented by common shares, holders of ADSs may have preemptive rights to subscribe only to newly issued common shares. In the event of a capital increase that would reduce the proportion of capital represented by common shares, holders of ADSs may have preemptive rights to subscribe for common shares, in proportion to their ownership interest, only to the extent necessary to prevent dilution of their interest in us. Moreover, U.S. holders of ADSs representing our common shares, pursuant to the deposit agreement, are deemed to recognize that all preemptive and similar rights with respect to the ADSs have been validly waived. For more information, see “Item 3. Key Information—3D. Risk Factors—Risks Relating to Our Common Shares and the ADSs—Holders of ADSs may be unable to exercise preemptive rights with respect to our common shares.”
Form and Transfer
As our common shares are in registered form, their transfer is governed by the rules of Article 31, paragraph 3, of Brazilian Corporate Law, which provides that a transfer of shares is effected by a transfer recorded in a company’s share transfer records upon presentation of valid share transfer instructions to the company by a transferor or its representative. When common shares are acquired or sold on a Brazilian stock exchange, the transfer is effected in our records by a representative of a brokerage firm or the stock exchange’s clearing system. Transfers of shares by a non-Brazilian shareholder are made in the same way and are executed by such shareholders’ local agent.
The B3 operates a central clearing system. A holder of our common shares may choose, at its discretion, to participate in this system and, in that case, all shares elected to be put into this system will be deposited in the custody of the B3 (through a Brazilian institution duly authorized to operate by the Central Bank and having a clearing account with the B3). The fact that those common shares are held in the custody of the B3 will be reflected in our register of shareholders. Each participating shareholder will, in turn, be registered in our register of beneficial shareholders maintained by the B3 and will be treated in the same way as registered shareholders.
Limitations on Ownership and Voting Rights by Non-Brazilians Shareholders
There are no restrictions on ownership or voting of our common shares by individuals or legal entities domiciled outside Brazil. However, the right to convert dividend payments and proceeds from the sale of common shares into foreign currency and to remit those amounts outside Brazil is subject to exchange control restrictions and foreign investment legislation which generally require, among other things, obtaining a certificate of registration under CMN Resolution 4,373 or its direct foreign investment regulations. See “—10D. Exchange Controls.”
Share Ownership Disclosure
There are no provisions in our bylaws governing the ownership threshold above which shareholder ownership must be disclosed. CVM regulations require the disclosure of (i) any direct or indirect acquisition or disposition of shares that exceeds 5%, 10%, 15%, and so on, of any class of capital stock of a listed company; (ii) acquisition of control of a listed company; and (iii) ownership of shares of capital stock of a listed company by members of such company’s board of executive officers, board of directors, audit committee, fiscal committee (if any) and any other consulting or technical body (if any) and certain relatives of those persons.
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10C. Material Contracts
We consume significant amounts of oxygen, nitrogen, hydrogen, argon and other gases at the Presidente Vargas Steelworks. These gases are supplied by a third party under a long-term contract from its gas production facilities located on the Presidente Vargas Steelworks site. To secure gas supply (oxygen, nitrogen and argon), we signed a “take-or-pay” agreement with White.
10D. Exchange Controls
According to CMN Resolution 4,373, foreign investors may participate in almost all financial assets and engage in almost all transactions available in the Brazilian market, provided that certain requirements are fulfilled. CMN Resolution 4,373 defines foreign investors as individuals and legal entities, mutual funds and others collective investment entities headquartered or domiciled outside Brazil. In accordance with CMN Resolution 4,373, a foreign investor must:
| · | indicate at least one representative in Brazil, with powers to practice all the actions relating to its investments; |
| · | complete the foreign investor registration form; |
| · | register as a foreign investor before the CVM, and register its foreign investment before the Central Bank; and |
| · | appoint a custodian, duly licensed by the Central Bank, if the Brazilian representative is not a financial institution. |
CMN Resolution 4,373 specifies the manner of custody and the permitted means for trading securities held by foreign investors. The offshore transfer or assignment of securities or other financial assets held by foreign investors pursuant to CMN Resolution 4,373 is prohibited, except for transfers resulting from a corporate reorganization, or occurring upon the death of an investor by operation of law or will.
CMN Resolution 4,373 also provides for the issuance of depositary receipts in foreign markets in respect of shares of Brazilian issuers. It provides that (i) proceeds from the sale of ADSs by holders outside Brazil are not subject to Brazilian foreign investment controls and (ii) holders of ADSs who are not residents of a low-tax jurisdiction (país com tributação favorecida), as defined by Brazilian law, are entitled to favorable tax treatment.
A certificate of registration has been issued in the name of Citibank, N.A., as our ADR depositary, and is maintained by Banco Bradesco S.A., our ADR custodian, on behalf of our ADR depositary. Pursuant to the certificate, our ADR custodian and our ADR depositary are able to convert dividends and other distributions with respect to our common shares represented by the ADSs into foreign currency and remit the proceeds outside Brazil. Pursuant to CMN Resolution 4,373, in order for an investor to surrender ADSs for the purpose of withdrawing the shares represented thereby, the investor is required to appoint a Brazilian financial institution duly authorized by the Central Bank and the CVM to act as its legal representative, who is responsible, among other things, for keeping and updating the investors’ certificates of registrations with the Central Bank, which entitles registered foreign investors to trade the underlying common shares directly on the B3.
A non-Brazilian holder of common shares may experience delays in obtaining a certificate of registration, which may delay remittances abroad. This kind of delay exposes the non-Brazilian holder to exchange rate variation and may adversely affect the amount, in U.S. dollars, received by the non-Brazilian holder.
Under current Brazilian legislation, the Brazilian government may impose temporary restrictions on remittances of foreign capital abroad in the event of a serious imbalance or an anticipated serious imbalance of Brazil’s balance of payments. See “Item 3. Key Information—3D. Risk Factors—Risks Relating to Our Common Shares and the ADSs—If you surrender ADSs and withdraw common shares, you risk forfeiting Brazilian tax advantages and losing the ability to timely remit foreign currency abroad.”
10E. Taxation
The following is a summary of certain Brazilian and U.S. federal income tax consequences of the acquisition, ownership and disposition of our common shares or the ADSs by an investor that holds such common shares or ADSs. This summary does not purport to address all material tax consequences of the acquisition, ownership and disposition of our common shares or the ADSs, does not take into account the specific circumstances of any particular investor and does not address certain investors that may be subject to special tax rules.
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This summary is based on the tax laws of the United States and Brazil, as in effect on the date of this annual report, which are subject to change (or changes in interpretation), possibly with retroactive effect. In addition, this summary is based in part upon the representations of the ADS depositary and the assumption that each obligation in our deposit agreement and any related agreement will be performed in accordance with its terms.
Prospective investors are urged to consult their own tax advisors regarding the Brazilian and U.S. federal, state and local tax consequences of the acquisition, ownership and disposition of our common shares and the ADSs.
Brazilian Tax Considerations
The following discussion summarizes the principal Brazilian tax consequences of the acquisition, ownership and disposition of common shares or ADSs by a holder that is not domiciled in Brazil for purposes of Brazilian taxation (“Non-Resident Holder”). It is based on Brazilian law as currently in effect. Any change in such law may change the consequences described below, possibly with retroactive effect. This discussion does not specifically address all of the Brazilian tax considerations applicable to any particular Non-Resident Holder. Each Non-Resident Holder of common shares or ADSs should consult their own tax advisor concerning the Brazilian tax consequences of an investment in our common shares or the ADSs.
A Non-Resident Holder of ADSs may withdraw them in exchange for our common shares in Brazil. Pursuant to Brazilian law, the Non-Resident Holder may invest in common shares under CMN Resolution 4,373 (a “4,373 Holder”).
Taxation of Dividends and Interest on Shareholders’ Equity
Dividends, including stock dividends and other dividends, paid by us (i) to the ADS depositary in respect of the common shares underlying the ADSs or (ii) to a Non-Resident Holder in respect of the common shares, are currently not subject to Brazilian withholding income tax, as far as such amounts are related to profits generated on or after January 1, 1996. We do not have any profits generated prior to January 1, 1996.
Since 1996, Brazilian companies have been permitted to pay limited amounts of interest on shareholders’ equity to holders of equity securities and to treat those payments as a deductible expense for purposes of their Brazilian income tax and social contribution on net profits tax basis. For tax purposes, this interest is limited to the daily pro rata variation of the TJLP, as determined by the Central Bank from time to time, multiplied by the sum of determined net equity accounts of the Brazilian company, and the amount of the deduction may not exceed the greater of (i) 50% of the net income (before taking into account the amounts attributable to shareholders as interest on shareholders’ equity and the provision of corporate income tax but after the deduction of the provision of the social contribution on net profits) related to the period in respect of which the payment is made; or (ii) 50% of the sum of retained profits and profits reserves as of the date of the beginning of the fiscal year in respect of which the payment is made. Payments of interest on shareholders’ equity are decided by the shareholders on the basis of the recommendations of our board of directors.
Payment of interest on shareholders’ equity to a Non-Resident Holder is subject to withholding income tax at the rate of 15%, or 25% if the Non-Resident Holder is domiciled in a tax haven.
For this purpose, a “tax haven” or “low-tax regime” is a country or location (i) that does not impose income tax; (ii) where the income tax rate is lower than 20%; or (iii) where the local legislation imposes restrictions on disclosing the shareholding composition or ownership of the investment (each, a “Tax Haven Jurisdiction”). Ordinance No. 488, dated November 28, 2014, reduced to 17% the maximum income tax rate that may be imposed by a given jurisdiction for characterization of a Tax Haven Jurisdiction, as long as the jurisdiction complies with international tax transparency standards. Subsequently, tax authorities provided that compliance with such standards requires: (a) signature of or conclusion of negotiation to sign a treaty or agreement allowing the exchange of information related to identification of income beneficiaries, corporate structure, ownership of goods or rights or economic transactions and (b) commitment to the criteria defined in international anti-tax evasion forums of which Brazil is a member. Tax authorities regularly issue a list of jurisdictions which are considered Tax Haven Jurisdictions. This list is currently set forth in Normative Instruction No. 1,037/10, as amended.
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These payments of interest on shareholders’ equity may be included as part of any mandatory dividend. To the extent payment of interest on shareholders’ equity is included, the company may be required to distribute to shareholders an additional amount to ensure that the net amount received by them, after payment of the applicable withholding income tax, plus the amount of declared dividends, is at least equal to the mandatory dividend.
No assurance can be given that our board of directors will not recommend that future distributions of income should be made by means of interest on shareholders’ equity instead of dividends.
Taxation of Gains
Capital gains realized by Non-Resident Holders on the disposition of common shares sold on the Brazilian stock exchange (which includes transactions carried out on the organized over-the-counter market):
| · | are exempt, when realized by a Non-Resident Holder that (i) is a 4,373 Holder and (ii) is not resident or domiciled in a Tax Haven Jurisdiction; |
| · | are subject to income tax at a rate of 15% in case of gains realized by (i) a Non-Resident Holder that (x) is not a 4,373 Holder and (y) is not resident or domiciled in a Tax Haven Jurisdiction; or (ii) a Non-Resident Holder that (x) is a 4,373 Holder and (y) is resident or domiciled in a Tax Haven Jurisdiction; and |
| · | are subject to income tax at a rate of 25% in case of gains realized by a Non-Resident Holder that (i) is not a 4,373 Holder and (ii) is resident or domiciled in a Tax Haven Jurisdiction. |
As a general rule, capital gains realized as a result of a disposition transaction are the positive difference between the amount realized on the disposition of the common shares and the respective acquisition cost.
According to Law No. 10,833/03, the gains recognized on a disposition of assets located in Brazil, such as our common shares, by a Non-Resident Holder, are subject to withholding income tax in Brazil. This rule is applicable regardless of whether the disposition is conducted in Brazil or abroad and/or if the disposition is or is not made to an individual or entity resident or domiciled in Brazil.
Withholding income tax of 0.005% will apply and can be offset against any income tax due on the capital gain. Such withholding does not apply to a 4,373 Holder that is not resident or domiciled in a Tax Haven Jurisdiction.
Any other gains realized on the disposition of common shares that are not carried out on the Brazilian stock exchange:
| · | are subject to income tax at rates varying from 15% to 22.5%, depending on the total amount of gains within two consecutive fiscal years (see table below) when realized by any Non-Resident Holder that is not resident or domiciled in a Tax Haven Jurisdiction, whether or not such holder is a 4,373 Holder; and |
| · | are subject to income tax at a rate of 25% when realized by a Non-Resident Holder that is resident or domiciled in a Tax Haven Jurisdiction, whether or not such holder is a 4,373 Holder. |
The capital gains rates described above, varying from 15% to 22.5%, are determined according to the following table:
|
Capital Gains Tax Rate |
Threshold (total gains on the sale of the same rights within two fiscal years) |
| 15% | Total gains below R$5 million |
| 17.5% | Total gains above R$5 million, but below R$10 million |
| 20% | Total gains above R$10 million, but below R$30 million |
| 22.5% | Total gains above R$30 million |
In the cases described above, if the gains are related to transactions conducted on the Brazilian non-organized over-the-counter market with intermediation, withholding income tax of 0.005% will also apply and can be offset against any income tax due on the capital gain.
The statutory definition of a Tax Haven Jurisdiction for the purpose of income taxation on gains should differ depending on whether or not a holder is a 4,373 Holder. In the case of a 4,373 Holder, the definition of Tax Haven Jurisdiction should not comprise jurisdictions where the local legislation imposes restrictions on disclosing the shareholding composition or ownership of the investment. However, the list provided for in Normative Instruction No. 1,037/10 does not seem to differ from the Tax Haven Jurisdiction definition for the purposes of 4,373 Holders.
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Any exercise of preemptive rights relating to common shares will not be subject to Brazilian withholding income tax. Gains realized by a Non-Resident Holder on the disposition of preemptive rights will be subject to Brazilian income tax according to the same rules applicable to a disposition of common shares.
In the case of a redemption of common shares or a capital reduction, the positive difference between the amount received by the Non-Resident Holder and the acquisition cost of the common shares redeemed in reais is treated as capital gain derived from the sale or exchange of shares not carried out on a Brazilian stock exchange market and is therefore subject to income tax at rates of up to 25%.
Sale of ADSs by U.S. Holders to Other Non-Residents in Brazil
As discussed above, pursuant to Law No. 10,833, the sale of assets located in Brazil involving Non-Resident Holders is subject to Brazilian withholding income tax, regardless if the purchaser is a Brazilian resident or not. We believe that the ADSs do not fall within the definition of assets located in Brazil for the purposes of Law No. 10,833, and, thus, should not be subject to Brazilian withholding tax. However, due to the lack of any administrative or judicial guidance, there is no assurance that this interpretation would prevail. If the ADSs are deemed to be assets located in Brazil, gains recognized by a Non-Brazilian Holder from the sale or other disposition to either a non-resident or a resident in Brazil may be subject to income tax in Brazil according to the rules described in “––Taxation of Gains” above.
Gains on the Exchange of ADSs for Common Shares
The withdrawal of ADSs in exchange for common shares is not subject to Brazilian income tax, assuming compliance with applicable regulation regarding the registration of the investment with the Central Bank.
Gains on the Exchange of Common Shares for ADSs
The deposit of common shares in exchange for ADSs may be subject to Brazilian withholding income tax on capital gains if the amount previously registered with the Central Bank as a foreign investment in common shares or, in the case of other market investors under CMN Resolution 4,373, the acquisition cost of the common shares, as the case may be, is lower than:
| · | the average price per common share on the Brazilian stock exchange on which the greatest number of such common shares were sold on the day of deposit; or |
| · | if no common shares were sold on that day, the average price on the Brazilian stock exchange on which the greatest number of common shares were sold during the 15 preceding trading sessions. |
The difference between the amount previously registered, or the acquisition cost, as the case may be, and the average price of the common shares, calculated as set forth above, is considered a capital gain subject to income tax at rates up to 25%. In some circumstances, there may be arguments that this tax treatment is not applicable in the case of 4,373 Holders that are not located in a Tax Haven Jurisdiction.
Tax on Financial Transactions
The Tax on Financial Transactions (Imposto sobre Operações de Crédito, Câmbio e Seguro ou relativas a Títulos ou Valores Mobiliários), or “IOF,” is imposed on foreign exchange, securities, credit and insurance transactions.
IOF on Foreign Exchange Transactions
Tax on foreign exchange transactions, or “IOF/Exchange,” may be levied on foreign exchange transactions (conversion of foreign currency in reais and conversion of reais into foreign currency), affecting either or both the inflow or outflow of investments. Currently, the general IOF/Exchange rate applicable to foreign exchange transactions is 0.38%.
The Brazilian government may increase the rate of the IOF/Exchange to a maximum rate of 25% of the amount of the foreign exchange transaction at any time, but such an increase will only apply in respect of future foreign exchange transactions. Currently, for most foreign exchange transactions related to investments in common shares, the IOF/Exchange rate is zero.
IOF on Bonds and Securities Transactions
IOF may also be levied on transactions involving bonds and securities, or “IOF/Securities,” including those carried out on Brazilian stock, futures or commodities exchanges. The rate of the IOF/Securities applicable to most transactions involving common shares is currently zero. The Brazilian government may increase the rate of the IOF/Exchange up to 1.5% per day at any time, but such an increase will only apply in respect of future transactions.
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Other Brazilian Taxes
There are no Brazilian inheritance, gift or succession taxes applicable to the ownership, transfer or disposition of common shares or ADSs by a Non-Resident Holder, except for gift and inheritance taxes which are levied by some states of Brazil on gifts made or inheritances bestowed by individuals or entities not resident or domiciled in Brazil to individuals or entities resident or domiciled within that state in Brazil. There are no Brazilian stamp, issue, registration or similar taxes or duties payable by holders of common shares or ADSs.
U.S. Federal Income Tax Considerations
The summary discussion below is applicable to you only if you are a “U.S. Holder” or a “Non-U.S. Holder” (both as defined below) that holds the common shares or ADSs as “capital assets” (generally property held for investment) within the meaning of Section 1221 of the U.S. Internal Revenue Code of 1986, as amended (the “Code”). This summary is based upon the Code, its legislative history, U.S. Treasury Department regulations, administrative pronouncements of the U.S. Internal Revenue Service (the “IRS”) and judicial decisions, all as in effect on the date hereof, and all of which are subject to change (possibly with retroactive effect) and to differing interpretations. This summary does not describe any implications under state, local or non-U.S. tax law, or any aspect of U.S. federal tax law (such as estate tax, gift tax, alternative minimum tax or Medicare tax on net investment income) other than U.S. federal income taxation.
This summary does not purport to address all the material U.S. federal income tax consequences that may be relevant to the holders of our common shares or the ADSs, and does not take into account the specific circumstances of any particular investors, some of which (such as tax-exempt entities, banks or other financial institutions, insurance companies, dealers in securities or currencies, traders in securities that elect to use a mark-to-market method of accounting for their securities holdings, regulated investment companies, real estate investment trusts, partnerships and other pass-through entities, U.S. expatriates, investors that own, have owned or are treated as owning, directly, indirectly or constructively 10% or more of our stock by vote or value, “controlled foreign corporations,” certain investors who file applicable financial statements required to recognize income when the associated revenue is reflected on such financial statements, investors that hold our common shares or the ADSs as part of a straddle, hedge, conversion or constructive sale transaction or other integrated transaction and persons whose functional currency is not the U.S. dollar) may be subject to special tax rules.
For purposes of this discussion, a U.S. Holder is any beneficial owner of common shares or ADSs that is (i) an individual who is a citizen or resident of the United States, (ii) a corporation (or other entity taxable as a corporation for U.S. federal income tax purposes) organized under the laws of the United States, any state thereof or the District of Columbia, (iii) an estate the income of which is subject to U.S. federal income tax without regard to its source, or (iv) a trust if a U.S. court is able to exercise primary supervision over administration of the trust and one or more U.S. persons have authority to control all substantial decisions of the trust or if the trust validly elects under applicable U.S. Treasury Department regulations to be taxed as a U.S. person. A “Non-U.S. Holder” is any beneficial owner of common shares or ADSs that is an individual, corporation, estate or trust who is neither a U.S. Holder nor a partnership for U.S. federal income tax purposes.
If a partnership (or any other entity taxable as a partnership for U.S. federal income tax purposes) holds our common shares or the ADSs, the U.S. federal income tax treatment of a partner will generally depend upon the status of the partner and upon the activities of the partnership. A prospective investor who is a partner of a partnership holding our common shares or the ADSs should consult its own tax advisor.
In general, for U.S. federal income tax purposes, holders of ADRs evidencing ADSs will be treated as the owners of the common shares represented by those ADSs, and exchanges of common shares for ADSs, and ADSs for common shares, will not be subject to U.S. federal income tax.
Taxation of Dividends
U.S. Holders
Under the U.S. federal income tax laws, and subject to the passive foreign investment company (“PFIC”) rules discussed below, U.S. Holders will include in gross income, as dividend income, the gross amount of any distribution paid by us (including (i) payments considered “interest” in respect of shareholders’ equity under Brazilian law, (ii) amounts withheld in respect of Brazilian taxes and (iii) any additional amounts payable in respect of such withholding taxes as described above under “––Brazilian Tax Considerations—Taxation of Dividends and Interest on Shareholders’ Equity”) out of our current or accumulated earnings and profits (as determined for U.S. federal income tax purposes) when the distribution is actually or constructively received by the U.S. Holder, in the case of common shares, or by the ADS depositary, in the case of ADSs. Distributions in excess of current and accumulated earnings and profits, as determined under U.S. federal income tax principles, will be treated as a non-taxable return of capital to the extent of the U.S. Holder’s adjusted tax basis in the common shares or the ADSs and thereafter as capital gain, which will be either long-term or short-term capital gain depending on whether the U.S. Holder held common shares or ADSs for more than one year. We do not intend to maintain calculations of our earnings and profits under U.S. federal income tax principles and, unless and until such calculations are made, U.S. Holders should assume all distributions are made out of earnings and profits and constitute dividend income.
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The dividend income will not be eligible for the dividends-received deduction generally allowed to U.S. corporations in respect of dividends received from other U.S. corporations. Subject to certain exceptions for short-term and hedged positions, certain non-corporate U.S. Holders (including individuals) may qualify for a maximum 20% rate of tax in respect of “qualified dividend income” received. Dividend income with respect to the ADSs will be qualified dividend income, provided that, in the year that a non-corporate U.S. Holder receives the dividend, the ADSs are readily tradable on an established securities market in the United States, and we were not in the year prior to the year in which the dividend was paid, and are not in the year in which the dividend is paid, a PFIC. Based on existing IRS guidance, it is not entirely clear whether dividends received with respect to our common shares not held through ADSs will be treated as qualified dividend income, because our common shares are not themselves listed on a U.S. exchange.
The amount of the dividend distribution includible in gross income of a U.S. Holder will be the U.S. dollar value of the real payments made, determined at the spot real/U.S. dollar rate on the date such dividend distribution is includible in the gross income of the U.S. Holder, regardless of whether the payment is in fact converted into U.S. dollars. A U.S. Holder should not recognize any foreign currency gain or loss in respect of such dividend if such reais are converted into U.S. dollars on the date received by the U.S. Holder. If the reais are not converted into U.S. dollars on the date of receipt, however, gain or loss may be recognized upon a subsequent sale or other disposition of the reais. Such foreign currency gain or loss, if any, will be treated as ordinary income or loss from sources within the United States and will not be eligible for the special tax rate applicable to qualified dividend income. U.S. Holders should consult with their own tax advisors regarding the treatment of any foreign currency gain or loss if any reais received as a dividend on our common shares or the ADSs is not converted into U.S. dollars on the date of receipt.
Dividends received by most U.S. Holders will generally constitute foreign source “passive income” for foreign tax credit purposes. For purposes of the U.S. foreign tax credit limitation, foreign source income is separated into different “baskets,” and the credit for foreign taxes on income in any basket is limited to the U.S. federal income tax allocable to such income.
Subject to limitations under U.S. federal income tax law concerning credits or deductions for foreign income taxes and certain exceptions for short-term and hedged positions, any Brazilian income tax withheld from dividends paid by us may be treated as foreign income tax eligible for credit against a U.S. Holder’s U.S. federal income tax liability. Alternatively, the U.S. Holder may deduct such taxes in computing taxable income for U.S. federal income tax purposes provided that the U.S. Holder does not elect to claim a foreign tax credit for any otherwise creditable foreign income taxes paid or accrued for the relevant taxable year. Regulations impose additional requirements that must be met for a foreign tax to be creditable (including requirements that a “covered withholding tax” be imposed on nonresidents in lieu of a generally applicable tax that satisfies the regulatory definition of a “net income tax,” which may be unclear or difficult to determine). However, a recent IRS notice provides temporary relief from certain of these requirements if the notice is applied consistently to all foreign taxes paid during the relevant taxable year until the date that a notice or other guidance withdrawing or modifying the temporary relief is issued (or any later date specified in such notice or other guidance). The rules with respect to foreign tax credits are complex. U.S. Holders are urged to consult their own tax advisors regarding the availability of the foreign tax credit under their particular circumstances.
The U.S. Treasury Department has expressed concern that intermediaries in connection with depositary arrangements may be taking actions that are inconsistent with the claiming of foreign tax credits by U.S. persons who are holders of depositary shares. Accordingly, investors should be aware that the discussion above regarding the availability of foreign tax credits for Brazilian income tax withheld from dividends paid with respect to common shares represented by ADSs could be affected by future action taken by the U.S. Treasury Department.
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Distributions of additional common shares to U.S. Holders with respect to their common shares or ADSs that are made as part of a pro rata distribution to all our shareholders generally will not be subject to U.S. federal income tax.
Non-U.S. Holders
Dividends paid to a Non-U.S. Holder in respect of common shares or ADSs will not be subject to U.S. federal income tax unless those dividends are effectively connected with the conduct of a trade or business within the United States by the Non-U.S. Holder (or are attributable to a permanent establishment maintained in the United States by the Non-U.S. Holder, if an applicable income tax treaty so requires as a condition for the Non-U.S. Holder to be subject to U.S. federal income taxation on a net basis in respect of income from common shares or ADSs), in which case the Non-U.S. Holder generally will be subject to U.S. federal income tax in respect of the dividends in the same manner as a U.S. Holder. Any such effectively connected dividends received by a corporate Non-U.S. Holder may also, under certain circumstances, be subject to an additional “branch profits tax” (at a 30% rate or at a reduced rate as may be specified by an applicable income tax treaty).
Taxation of Capital Gains
U.S. Holders
Subject to the PFIC rules discussed below, upon a sale, redemption or other taxable disposition of common shares or ADSs, a U.S. Holder will recognize gain or loss for U.S. federal income tax purposes in an amount equal to the difference between the U.S. dollar value of the amount realized (before deduction of any Brazilian tax) and the U.S. Holder’s adjusted tax basis (determined in U.S. dollars) in the common shares or ADSs. Generally, a non-corporate U.S. Holder’s gain or loss may be subject to preferential rates where the property is held for more than one year. The deductibility of capital losses is subject to limitations under the Code.
Capital gain or loss, if any, realized by a U.S. Holder on the sale, exchange or other taxable disposition of common shares or ADSs generally will be treated as U.S. source gain or loss for U.S. foreign tax credit purposes. In the case of a gain from the disposition of a share or ADS that is subject to Brazilian income tax (see “—Brazilian Tax Considerations—Taxation of Gains”), the U.S. Holder may not be able to benefit from the foreign tax credit for that Brazilian income tax (i.e., because the gain from the disposition would be U.S. source income). Under recent U.S. regulations mentioned above (see “—U.S. Federal Income Tax Considerations—Taxation of Dividends—U.S. Holders”), Brazilian withholding tax imposed on such U.S. source gain may not constitute a creditable tax. Moreover, even if the tax is a creditable tax, the U.S. Holder may be unable to benefit unless it can apply the credit against U.S. federal income tax payable on other income from foreign sources from the relevant foreign tax basket. Alternatively, the U.S. Holder may be able to take a deduction for the Brazilian income tax if it does not elect to claim a foreign income tax credit for any foreign taxes paid or accrued during the taxable year.
Non-U.S. Holders
A Non-U.S. Holder will not be subject to U.S. federal income tax in respect of gain recognized on a sale, exchange or other taxable disposition of common shares or ADSs unless:
| · | the gain is effectively connected with a trade or business of the Non-U.S. Holder in the United States (or is attributable to a permanent establishment maintained in the United States by that Non-U.S. Holder, if an applicable income tax treaty so requires as a condition for that Non-U.S. Holder to be subject to U.S. federal income taxation on a net basis in respect of gain from the sale or other disposition of the common shares or ADSs); or |
| · | in the case of a Non-U.S. Holder who is an individual, that Non-U.S. Holder is present in the United States for 183 or more days in the taxable year of the sale and certain other conditions apply. |
Effectively connected gains realized by a corporate Non-U.S. Holder may also, under certain circumstances, be subject to an additional branch profits tax (at a 30% rate or at a reduced rate as may be specified by an applicable income tax treaty).
Passive Foreign Investment Companies
Based on current estimates of our gross income, gross assets and the nature of our business, we believe that our common shares and the ADSs should not be treated as stock of a PFIC for U.S. federal income tax purposes. There can be no assurances in this regard (and it is possible the IRS could reach a contrary conclusion), however, because the application of the relevant rules is complex and involves some uncertainty. The PFIC determination is made annually and is based on the portion of our assets and income that is characterized as passive under the PFIC rules. Moreover, our business plans may change, which may affect the PFIC determination in the current or any future years.
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In general, we will be a PFIC with respect to a U.S. Holder if, for any taxable year in which the U.S. Holder held ADSs or common shares, either (i) at least 75% of our gross income for the taxable year is passive income or (ii) at least 50% of the value (determined on the basis of a quarterly average) of our assets is attributable to assets that produce or are held for the production of passive income. For this purpose, passive income generally includes, among other things, dividends, interest, royalties, rents (other than certain rents and royalties derived in the active conduct of a trade or business), annuities and gains from assets that produce passive income. If we own at least 25% by value of the stock of another corporation, we will be treated for purposes of the PFIC tests as owning our proportionate share of the assets of the other corporation, and as receiving directly our proportionate share of the other corporation’s income.
If we are treated as a PFIC, a U.S. Holder that did not make a “mark-to-market election” or “QEF election,” each as described below, would be subject to special rules with respect to (a) any gain realized on the sale or other disposition of common shares or ADSs and (b) any “excess distribution” by us to the U.S. Holder (generally, any distributions to the U.S. Holder in respect of the common shares or ADSs during a single taxable year that are greater than 125% of the average annual distributions received by the U.S. Holder with respect to the common shares or ADSs during the three preceding taxable years or, if shorter, the U.S. Holder’s holding period for the common shares or ADSs). Under these rules:
| · | (i) the gain or excess distribution would be allocated ratably over the U.S. Holder’s holding period for the common shares or ADSs; |
| · | (ii) the amount allocated to the taxable year in which the gain or excess distribution was realized would be taxable as ordinary income; |
| · | (iii) the amount allocated to each prior year, with certain exceptions, would be subject to tax at the highest tax rate in effect for that year; and |
| · | (iv) the interest charge generally applicable to underpayments of tax would be imposed in respect of the tax attributable to each such prior years. |
If we are treated as a PFIC and, at any time, we invest in non-U.S. corporations that are classified as PFICs (each, a “Subsidiary PFIC”), U.S. Holders generally will be deemed to own, and also would be subject to the PFIC rules with respect to, their indirect ownership interest in that Subsidiary PFIC. If we are treated as a PFIC, a U.S. Holder could incur liability for the deferred tax and interest charge described above if either (i) we receive a distribution from, or dispose of all or part of our interest in, the Subsidiary PFIC or (ii) the U.S. Holder disposes of all or part of its common shares or ADSs.
The special PFIC tax rules described above will not apply to a U.S. Holder if the U.S. Holder makes an election (i) to “mark-to-market” with respect to the common shares or ADSs (a “mark-to-market election”) or (ii) to have us treated as a “qualified electing fund” (a “QEF election”). The QEF election is not available to holders unless we agree to comply with certain reporting requirements and provide the required annual information statements. The QEF and mark-to-market elections only apply to taxable years in which the U.S. Holder’s common shares or ADSs are treated as stock of a PFIC. Our ADR depositary has agreed to distribute the necessary information to registered holders of ADSs.
A U.S. Holder may make a mark-to-market election if the common shares or ADSs are “regularly traded” on a “qualified exchange.” Under applicable U.S. Treasury Department regulations, a “qualified exchange” includes a national securities exchange, such as the NYSE, that is registered with the SEC or the national market system established under the Exchange Act. Also, under applicable U.S. Treasury Department Regulations, PFIC securities traded on a qualified exchange are regularly traded on such exchange for any calendar year during which such stock is traded, other than in de minimis quantities, on at least 15 days during each calendar quarter. We cannot assure you that the ADSs will be eligible for a mark-to-market election.
A U.S. Holder that makes a mark-to-market election with respect to its ADSs must include for each taxable year in which the U.S. Holder’s common shares or ADSs are treated as shares of a PFIC, as ordinary income, an amount equal to the excess of the fair market value of the common shares or ADSs at the close of the taxable year over the U.S. Holder’s adjusted tax basis in the common shares or ADSs, and is allowed an ordinary loss for the excess, if any, of the adjusted tax basis over the fair market value of the common shares or ADSs at the close of the taxable year, but only to the extent of the amount of previously included mark-to-market inclusions (not offset by prior mark-to-market losses). These amounts of ordinary income, and any gain recognized on the sale, redemption or other taxable disposition of an ADS with respect to which such an election is in place, will not be eligible for the favorable tax rates applicable to qualified dividend income or long-term capital gains. A U.S. Holder’s tax basis in the common shares or ADSs will be adjusted to reflect any income or loss amounts on its annual inclusions. Although a U.S. Holder may be eligible to make a mark-to-market election with respect to its common shares or ADSs, no such election may be made with respect to the stock of any Subsidiary PFIC that such U.S. Holder is treated as owning, because such Subsidiary PFIC stock is not marketable. Thus, the mark-to-market election will not be effective to avoid all of the adverse tax consequences described above with respect to any Subsidiary PFICs. U.S. Holders should consult their own tax advisors regarding the availability and advisability of making a mark-to-market election with respect to their common shares of ADSs based on their particular circumstances.
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A U.S. Holder that makes a QEF election will be currently taxable on its pro rata share of our ordinary earnings and net capital gain (at ordinary income and long-term capital gain rates, respectively) for each of our taxable years, regardless of whether we distributed the income and gain. The U.S. Holder’s basis in the common shares or ADSs will be increased to reflect taxed but undistributed income. Distributions of income that had previously been taxed will result in a corresponding reduction of tax basis in the common shares or ADSs and will not be taxed again as a distribution to the U.S. Holder.
In addition, notwithstanding any election that a U.S. Holder makes with regard to the common shares or ADSs, dividends that a non-corporate U.S. Holder receives from us will not constitute qualified dividend income if we are a PFIC either in the taxable year of the distribution or in the preceding taxable year.
Special rules apply with respect to the calculation of the amount of the foreign tax credit with respect to excess distributions by a PFIC or, in certain cases, QEF inclusions.
A U.S. Holder who owns common shares or ADSs during any taxable year that we are a PFIC in excess of certain de minimis amounts and fails to qualify for certain other exemptions would be required to file IRS Form 8621. In addition, under certain circumstances, the temporary regulations also require a “United States person” (as such term is defined in the Code) that owns an interest in a PFIC as an indirect shareholder through one or more United States persons to file Form 8621 for any taxable year during which such indirect shareholder is treated as receiving an excess distribution in connection with the ownership or disposition of such interest, or reports income pursuant to a mark-to-market or QEF election, among other circumstances. U.S. holders should consult their own tax advisors regarding the application of the PFIC rules to the common shares or ADSs.
Backup Withholding and Information Reporting
U.S. Holders
Dividends paid on, and proceeds from the sale, redemption or other taxable disposition of common shares or ADSs received by a U.S. Holder generally will be subject to information reporting and backup withholding, unless, in the case of backup withholding, the U.S. Holder provides an accurate taxpayer identification number or in either case otherwise establishes an exemption. Backup withholding is not an additional tax. The amount of any backup withholding collected from a payment to a U.S. Holder will be allowed as a credit against the U.S. Holder’s U.S. federal income tax liability and may entitle the U.S. Holder to a refund, provided that certain required information is timely furnished to the IRS.
Non-U.S. Holders
If common shares are held by a Non-U.S. Holder through the non-U.S. office of a non-U.S. related broker or financial institution, backup withholding and information reporting generally would not be required. Information reporting, and possibly backup withholding, may apply if the common shares are held by a Non-U.S. Holder through a U.S., or U.S.-related, broker or financial institution, or the U.S. office of a non-U.S. broker or financial institution and the Non-U.S. Holder fails to provide appropriate information. Information reporting and backup withholding generally will apply with respect to the ADSs if the Non-U.S. Holder fails to timely provide appropriate information. Non-U.S. Holders should consult their tax advisors regarding the application of these rules.
“Specified Foreign Financial Asset” Reporting
Owners of “specified foreign financial assets” with an aggregate value in excess of US$50,000 (and in some circumstances, a higher threshold) may be required to file IRS Form 8938 with their federal income tax return. “Specified foreign financial assets” generally include any financial accounts maintained by non-U.S. financial institutions as well as any of the following, but only if they are not held in accounts maintained by financial institutions: (i) stocks and securities issued by non-U.S. persons, (ii) financial instruments and contracts held for investment that have non-U.S. issuers or counterparties and (iii) interests in non-U.S. entities.
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Prospective purchasers should consult their own tax advisors regarding the application of the U.S. federal income tax laws to their particular situations as well as any additional tax consequences resulting from purchasing, holding or disposing of our common shares or the ADSs, including the applicability and effect of the tax laws of any state, local or foreign jurisdiction, including estate, gift and inheritance laws.
10F. Dividends and Paying Agents
Not applicable.
10G. Statement by Experts
Not applicable.
10H. Documents on Display
We are subject to the information requirements of the Exchange Act and, accordingly, file reports and other information with the SEC. Reports and other information filed by us with the SEC may be inspected and copied at the public reference facilities maintained by the SEC at 100 F Street, N.E., Washington, D.C. 20549. You can obtain further information about the operation of the Public Reference Room by calling the SEC at +1 (800) SEC-0330. Our SEC filings are also available to the public from the SEC’s website at http://www.sec.gov. You may also inspect our reports and other information at the offices of the NYSE, 11 Wall Street, New York, New York 10005, on which the ADSs are listed. For further information on obtaining copies of our public filings at the NYSE, you should call +1 (212) 656-5060. We also file financial statements and other periodic reports with the CVM.
10I. Subsidiary Information
Not applicable.
10J. Annual Report to Security Holders
Not applicable.
Item 11. Quantitative and Qualitative Disclosures About Market Risk
We are exposed to a number of different market risks arising from our normal business activities. Market risk is the possibility that changes in interest rates, currency exchange rates or commodities prices could adversely affect the value of our financial assets, liabilities, expected future cash flows or earnings. We maintain policies aimed at managing our exposure to these market risks. We may use financial instruments, such as derivatives, in order to achieve the main goals established by our board of directors to minimize our cost of capital and maximize our returns on financial assets, while observing credit and risk parameters, as determined by our board of directors. Derivatives are contracts whose value derives from one or more underlying financial instruments, indexes or prices defined in the contract. We only use well-understood and conventional derivative instruments for these purposes. These include futures and options traded on regulated exchanges and “over-the-counter” swaps, options and forward contracts.
Market Risk Exposures and Market Risk Management
Our treasury department is responsible for managing our market risk exposures. We use internal controls in order to:
| · | understand market risks; |
| · | reduce our probability of financial losses; and |
| · | reduce the volatility of our financial results. |
The principal tools used by our treasury department are:
| · | Sensitivity Analysis. This measures the impact that movements in the price of different market variables, such as interest rates and exchange rates, will have on our earnings and cash flows; and |
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| · | Stress Testing. This measures the worst possible loss from a set of consistent scenarios to which probabilities are not assigned. The scenarios are deliberately chosen to include extreme changes in interest and currency exchange rates. Following is a discussion of the primary market risk exposures that we face together with an analysis of our exposure to each one. |
Interest Rate Risk
We are exposed to interest rate risk on short- and long-term instruments as a result of refinancing of fixed-rate instruments included in our consolidated debt. Consequently, in addition to managing the currency and maturity of our debt, we manage interest costs through a balance between floating rate debt, which has inherently higher risk, and fixed-rate debt. We may use derivatives to achieve the desired ratio between floating-rate debt and fixed-rate debt, which ratio varies according to market conditions.
We are exposed to the following floating interest rates:
| · | U.S. dollar secured overnight financing rate, or SOFR, due to our floating rate U.S. dollar-denominated debt (usually trade finance related) and our cash position held offshore in U.S. dollars, which is invested in short-term instruments; |
| · | TJLP, due to real-denominated debt indexed to this interest rate; |
| · | CDI (benchmark Brazilian real overnight rate), due to our cash held in Brazil (onshore cash) and to our CDI indexed debt; and |
| · | IPCA, Brazil’s official inflation indicator, calculated by IBGE, due to BRL denominated debt issued in the local capital markets. |
|
Maturities | |||||||
|
Notional amount |
2025 |
2026 |
2027 |
2028 |
2029 |
Thereafter | |
| (in millions of R$) | |||||||
| Exposure as of December 31, 2024* (amortization) | |||||||
| U.S. dollar fixed rate | 25,932 | 2,791 | 1,468 | 619 | 8,3560 | – | 12,694 |
| U.S. dollar SOFR | 10,085 | 2,500 | 1,628 | 1,794 | 1,228 | 661 | 2,274 |
| CDI | 19,683 | 3,029 | 2,799 | 4,378 | 2,003 | 966 | 6,508 |
| IPCA | 27 | 8 | 8 | 8 | 3 | – | – |
| TJLP | 795 | 16 | 100 | 104 | 104 | 104 | 364 |
| Others | 1,040 | 558 | 192 | 150 | 19 | 19 | 102 |
Our cash and cash equivalents were as follows as of the dates presented:
|
December 31, 2023 |
December 31, 2024 |
Exposure | |
| Cash in reais | 4,331 | 8,390 | CDI |
| Cash in U.S. dollars | 10,790 | 12,081 | SOFR Index |
The following table sets forth the average interest rate of our borrowings and financing:
|
As of December 31, 2024 | ||
|
Average interest rate(*) |
Total debt | |
| (in millions of R$) | ||
| US$ | 6.63% | 37,052 |
| R$ | 14.17% | 19,712 |
| EUR | 4.13% |
795 |
|
57,559 | ||
_____________
| (*) | In order to determine the average interest rates for our borrowings and financing agreements with floating rates, we used rates as of December 31, 2024. |
We may conduct U.S. dollar futures operations on the B3 or over the counter to ensure the forward purchase or sale of U.S. dollars, which are settled by the difference in contracted R$/US$ buy or sell parity against the R$/US$ sell or buy parity. The main purpose of these operations is to hedge liabilities indexed to the U.S. dollar from Brazilian real fluctuations, which are affected by market, economic, political, regulatory and geopolitical conditions, among others. The gains and losses from these contracts are directly related to U.S. dollar exchange and CDI fluctuations. For more information see notes 14.b section iii, item “a” and 14.c of our audited consolidated financial statements included elsewhere in this annual report.
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Sensitivity Analysis of Changes in Interest Rates
We considered two scenarios to assess the impact of interest rate fluctuations: Scenario 1 forecasts a rising interest rate environment, while Scenario 2 projects a declining interest rate horizon. For the calculation, the closing rates on December 31, 2024, were used as references, based on a dispersion model that considers not only historical interest rate fluctuations but also detailed projections from management. This approach allows a comprehensive and accurate assessment of the potential economic impacts resulting from interest rate fluctuations. For more information on the sensitivity analysis to risks related to interest rates, see note 14.b section ii to our audited consolidated financial statements included elsewhere in this annual report.
Foreign Currency Exchange Rate Risk
Fluctuations in exchange rates can have significant effects on our operating results. They affect the value of our real-denominated assets, the carrying and repayment costs of our real-denominated financial liabilities, our real-denominated production costs, the cost of real-denominated capital items and the prices we receive in the Brazilian market for our finished steel products. We may contract derivatives to manage certain of our net foreign exchange rate exposures, trying to balance our non-real-denominated assets with our non-real-denominated liabilities and using derivative instruments to match them. However, at any given time we may have significant foreign currency exchange rate risk exposure.
Our exposure to the U.S. dollar is due to the following contract categories:
| · | U.S. dollar-denominated debt; |
| · | offshore cash; |
| · | currency derivatives; |
| · | U.S. dollar indexed accounts payable and receivable (usually related to international trade, i.e., imports and exports); and |
| · | offshore investments, which comprise assets purchased offshore and denominated in U.S. dollars on our balance sheet. |
For more information on our exposure to U.S. dollar exchange rate risk, see note 14.b section I to our audited consolidated financial statements included elsewhere in this annual report.
Our exposure to the euro is due to the following contract categories:
| · | euro-denominated debt; |
| · | offshore cash; |
| · | euro indexed accounts payable and receivable (usually related to international trade, i.e., imports and exports); and |
| · | offshore investments: assets that we bought offshore and that are denominated in euros on our balance sheet. |
The following table sets forth our exposure to euro exchange rate risk:
|
As of December 31, | ||
|
2023 |
2024 | |
| (in millions of R$) | ||
| Euro liabilities | ||
| Trade accounts payable | 4 | 65 |
| Loans and financing | – | 124 |
| Others |
– |
– |
| Total liabilities |
4 |
189 |
| Euro assets | ||
| Offshore cash and cash equivalents | 6 | 294 |
| Trade accounts receivable |
2 |
21 |
| Total assets |
8 |
315 |
| Total euro exposure | 4 | 126 |
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Offshore Investments
We have capitalized our offshore subsidiaries domiciled in U.S. dollar-based countries with equity and fixed income investments, and those investments are accounted as U.S. dollar investments. The result is that they are recorded as assets indexed to the U.S. dollar from an earnings perspective. For more information on our active contracts and these records are presented in our financial statement, see note 14.b, section iii, item “c” to our audited consolidated financial statements included elsewhere in this annual report.
Commodity Price Risk
Fluctuations in the price of steel, iron ore and some of the commodities used in producing steel, such as zinc, aluminum, tin, coal, coke and energy, can have an impact on our earnings. We may contract derivatives to hedge our exposure to certain commodity price fluctuations.
For more information on our active contracts and these records are presented in our financial statement, see note 14.b, section iii to our audited consolidated financial statements included elsewhere in this annual report.
Sensitivity Analysis
In the Brazilian macroeconomic environment, exchange rate variation is the most significant market risk we face. The U.S. dollar selling rate had an annual volatility of 16.7% from 2023 to 2024.
Sensitivity Analysis of Derivative Financial Instruments and Foreign Exchange Exposure
We considered two distinct scenarios to assess the impact of exchange rate fluctuations: Scenario 1 forecasts a horizon of increased currency volatility, while Scenario 2 projects a horizon of currency appreciation. The calculation was based on the closing exchange rate on December 31, 2024, using assumptions based on a dispersion calculation that considers both historical variations in exchange rates and projections developed our management.
For more information on the sensitivity analysis and their respective scenarios, see note 14.b, section I to our audited consolidated financial statements included elsewhere in this annual report.
Market Price
Risk of Our Common Shares
We are exposed to the risk of changes in the market price of our common shares due to investments made and investments recorded at fair value through profit or loss. We considered two scenarios to assess the impact of fluctuations in quotations on profit or loss: Scenario 1 (extreme pessimistic) forecasts a horizon of deterioration in the volatility of quotations, while Scenario 2 (extreme optimistic) projects a horizon of appreciation of quotations. The calculation was based on the closing price of the shares as of December 31, 2024, using assumptions based on both the dispersion of historical variations in quotations and projections prepared by our management.
For more information on the sensibility analysis of the market price, see note 14.d, section iv to our audited consolidated financial statements included elsewhere in this annual report.
Item 12. Description of Securities Other Than Equity Securities
American Depositary Shares
Citibank, N.A., with its principal executive office located at 388 Greenwich Street, New York, New York 10013, serves as the depositary for the ADSs. ADR holders are required to pay various fees to the depositary, and the depositary may refuse to provide any service for which a fee is assessed until the applicable fee has been paid.
ADR holders are required to pay the depositary amounts in respect of expenses incurred by the depositary or its agents on behalf of ADR holders, including expenses arising from compliance with applicable law, taxes or other governmental charges, facsimile transmission or conversion of foreign currency into U.S. dollars.
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ADR holders are also required to pay additional fees for certain services provided by the depositary, as set forth in the following table:
|
Depositary service |
Fee payable by ADR holders |
| Issuance and delivery of ADRs, including in connection with share distributions or stock splits | US$2.00 for each 100 ADSs (or portion thereof) |
| Deposit of securities, including in respect of share, rights and other distributions | US$2.00 for each 100 ADSs (or portion thereof) |
| Withdrawal of deposited securities | US$5.00 for each 100 ADSs (or portion thereof) |
Direct and Indirect Payments by the Depositary
The depositary makes certain payments and reimburses us for certain expenses we incur in connection with the ADR program, as agreed between us and the depositary from time to time. These reimbursable expenses currently include legal and accounting fees, listing fees, investor relations expenses and fees payable to service providers for the distribution of material to ADR holders. In 2024, these payments and reimbursements by the depository of the ADR program, Citibank, N.A., were R$27.7 million.
PART II
Item 13. Defaults, Dividend Arrearages and Delinquencies
None.
Item 14. Material Modification to the Rights of Security Holders and Use of Proceeds
None.
Item 15. Controls and Procedures
Disclosure Controls and Procedures
We carried out an evaluation, under the supervision of our chief executive officer and chief financial officer, of the effectiveness of the design and operation of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act. Based on this evaluation, our chief executive officer and chief financial officer have concluded that, as of December 31, 2024, CSN’s disclosure controls and procedures are effective.
Management’s Report on Internal Control over Financial Reporting
Management is responsible for establishing and maintaining adequate internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting.
Our internal control over financial reporting is a process designed under the supervision of our chief executive officer and chief financial officer and our audit committee and effected by our board of directors, management and other personnel to provide reasonable assurance regarding the reliability of financial reporting and the preparation of our consolidated financial statements for external purposes in accordance with IFRS Accounting Standards.
Internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of our assets; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with IFRS Accounting Standards and that our receipts and expenditures are being made only in accordance with the authorization of our management and directors; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on our financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect material misstatements on a timely basis. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Management assessed the effectiveness of our internal control over financial reporting based on the criteria for effective internal control over financial reporting established in “Internal Control – Integrated Framework,” issued by the Committee of Sponsoring Organizations (COSO) of the Treadway Commission (2013). Based on this assessment, we concluded that our internal control over financial reporting is effective as of December 31, 2024.
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Attestation Report of the Independent Registered Public Accounting Firm
Grant Thornton Auditores Independentes Ltda., our independent registered public accounting firm, audited, as of December 31, 2024, our internal control over financial reporting. For Grant Thornton Auditores Independentes Ltda.’s report, dated April 30, 2025, see our audited consolidated financial statements included elsewhere in this annual report.
Changes in Internal Control over Financial Reporting
In the year ended December 31, 2024, there were no changes in our internal control over financial reporting that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
Item 16. [Reserved]
16A. Audit Committee Financial Expert
Our audit committee comprises three members and each of them satisfies the audit committee membership independence requirements set forth by the SEC, the NYSE and Brazilian Corporate Law. After reviewing the qualifications of the members of our audit committee, our board of directors has determined that each member of our audit committee qualifies as an “audit committee financial expert,” as defined by the SEC.
As of the date of this annual report, our audit committee is assisted by an external consultant, that renders financial and consulting services, among others.
16B. Code of Ethics
We adopted our Code of Conduct in 1998, reinforcing our ethical standards and the values that apply to all of our employees, including executive officers and directors. Our Code of Conduct was last updated in 2023, defining basic principles to guide the daily behavioral commitments assumed by our employees, executives, suppliers, customers and service providers, among other stakeholders.
We a confidential and secure whistleblower channel for reporting situations such as moral harassment, sexual harassment, conflict of interest, fraud and other events that are in disagreement with the guidelines of the Code of Conduct and applicable legislation.
In our governance structure, the compliance area is responsible for our integrity program, which aims to ensure compliance with ethical standards of conduct and transparency. This program includes annual training for our employees and employees of our third parties, and monitoring of compliance with laws, regulations, policies, and internal standards.
Our Code of Conduct is in compliance with the SEC requirements for codes of ethics for senior financial officers. A copy of our Code of Conduct is available on our website at https://www.csn.com.br/codigos-de-conduta/.
16C. Principal Accountant Fees and Services
Our interaction with our independent auditors with respect to the contracting of services unrelated to the external audit is based on principles that preserve the independence of the auditors and are otherwise permissible under applicable rules and regulations. For the fiscal years ended December 31, 2023 and 2024, Grant Thornton Auditores Independentes Ltda. acted as our independent auditor.
The following table sets forth the services rendered and the related fees:
|
Year ended December 31, | ||
|
2023 |
2024 | |
| (in thousands of R$) | ||
| Audit fees | 6,908 | 6,853 |
| Audit-related fees |
2,235 |
6,234 |
| Total |
9,143 |
13,087 |
Audit Fees
Audit fees in 2023 and 2024 comprised the aggregate fees billed and billable by our independent auditors in connection with the audit of our consolidated financial statements, reviews of interim financial statements and attestation services that are provided in connection with statutory and regulatory filings or engagements.
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Audit-Related Fees
In 2023 and 2024, audit-related fees in the above table are fees billed and billable by our independent auditors for services that are reasonably related to the performance of the audit or review of our financial statements, and include tax compliance, issuance of comfort letters, due diligence and other assurance services. Services additional to the examination of our financial statements are submitted for prior approval to our audit committee in order to ensure that they do not represent a conflict of interest or affect the auditors’ independence.
16D. Exemptions from the Listing Standards for Audit Committees
Not applicable. For a discussion on our audit committee, see “Item 6. Directors, Senior Management and Employees—6C. Board Practices—Audit Committee.”
16E. Purchases of Equity Securities by the Issuer and Affiliated Purchasers
In December 2021, we announced a share repurchase program for up to 30,000,000 of our outstanding common shares, which program terminated in June 2022. As of December 31, 2024, we did not hold any of our common shares in treasury. The following table sets forth certain information regarding our share repurchases in the last three fiscal years:
|
Program Period |
Shares Approved |
Shares Purchased |
Average Price Paid per Share |
Shares Cancelled |
Shares Sold |
Shares that May Yet Be Purchased |
| December 7, 2021 – June 30, 2022 | 30,000,000 | 14,298,500 | 24.70 | – | – | 15,701,500 |
16F. Change in Registrant’s Certifying Accountant
Not applicable.
16G. Corporate Governance
Significant Differences between our Corporate Governance Practices and NYSE Corporate Governance Standards
We are subject to the NYSE corporate governance listing standards. As a foreign private issuer, the standards applicable to us are considerably different than the standards applicable to U.S. listed companies. Under the NYSE rules, we are required only to: (i) have an audit committee or audit board, pursuant to an applicable exemption available to foreign private issuers, that meets certain requirements, as discussed below; (ii) provide prompt certification by our chief executive officer of any material non-compliance with any corporate governance rules; and (iii) provide a brief description of the significant differences between our corporate governance practices and the NYSE corporate governance practices required to be followed by U.S. listed companies. The discussion of the significant differences between our corporate governance practices and those required of U.S. listed companies follows below.
Majority of Independent Directors
The NYSE rules require that a majority of the board of directors consist of independent directors. Independence is defined by various criteria, including the absence of a material relationship between the director and the listed company. Brazilian law does not have a similar requirement. Under Brazilian law, neither our board of directors nor our management is required to test the independence of directors before their election to the board. However, both Brazilian Corporate Law and the CVM have established rules that require a minimum number of independent directors to certain publicly held companies such as us, as well as rules that require us to meet certain qualification requirements and that address the compensation, duties and responsibilities of, as well as the restrictions applicable to, a company’s executive officers and directors. While our directors meet the qualification requirements of Brazilian Corporate Law and the CVM, we do not believe that a majority of our directors would be considered independent under the NYSE test for director independence. Brazilian Corporate Law requires that our directors be elected by our shareholders at an annual shareholders’ meeting.
Executive Sessions
NYSE rules require that non-management directors meet at regularly scheduled executive sessions without management present. Brazilian Corporate Law does not have a similar provision. According to Brazilian Corporate Law, up to one-third of the members of our board of directors can be elected from management. Mr. Benjamin Steinbruch, our chief executive officer, is also member of our board of directors. There is no requirement that non-management directors meet regularly without management. As a result, the non-management directors on our board of directors do not typically meet in executive sessions without management present, although they may do so and then report to the entire board of directors the topics discussed and their suggestions.
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Nominating and Corporate Governance Committee
NYSE rules require that listed companies have a nominating and corporate governance committee composed entirely of independent directors and governed by a written charter addressing the committee’s required purpose and detailing its required responsibilities, which include, among others, identifying and selecting qualified board member nominees and developing a set of corporate governance principles applicable to the company. We are not required under Brazilian Corporate Law to have, and currently we do not have, a nominating and corporate governance committee.
Compensation Committee
NYSE rules require that listed companies have a compensation committee composed entirely of independent directors and governed by a written charter addressing the committee’s required purpose and detailing its required responsibilities, which include, among others, reviewing corporate goals relevant to the chief executive officer’s compensation, evaluating the chief executive officer’s performance, approving the chief executive officer’s compensation levels and recommending to the board non-chief executive officer compensation, incentive compensation and equity-based plans. We are not required under applicable Brazilian law to have, and currently do not have, a compensation committee. Under Brazilian Corporate Law, the total amount available for compensation of our directors and executive officers and for profit-sharing payments to our executive officers is established by our shareholders at the annual shareholders’ meeting. The board of directors is then responsible for determining the individual compensation and profit-sharing of each executive officer, as well as the compensation of our board and committee members.
Audit Committee
NYSE rules require that listed companies have an audit committee that (i) is composed of a minimum of three independent directors who are all financially literate; (ii) meets the SEC rules regarding audit committees for listed companies; (iii) has at least one member who has accounting or financial management expertise; and (iv) is governed by a written charter addressing the committee’s required purpose and detailing its required responsibilities. However, as a foreign private issuer, we need only to comply with the requirement that the audit committee meet the SEC rules regarding audit committees for listed companies to the extent compatible with Brazilian Corporate Law.
We have established an audit committee, which provides assistance to our board of directors in matters involving our accounting, internal controls, financial reporting and compliance. Our audit committee recommends the appointment of our independent auditors to our board of directors and reviews the compensation of, and coordinates with, our independent auditors. It also reports on our auditing policies and our annual audit plan prepared by our internal auditing team. Our audit committee evaluates the effectiveness of our internal financial and legal compliance controls and comprises up to three independent directors elected by our board of directors for two-year terms.
As of the date of this annual report, our audit committee comprises Mr. Yoshiaki Nakano, Mr. Antonio Bernardo Vieira Maia and Mr. Miguel Ethel Sobrinho and is assisted by an external consultant that renders financial and consulting services, among others. Each of the members of our audit committee satisfies the audit committee membership independence requirements set forth by the SEC and the NYSE. Each of the members of our audit committee has been determined by our board of directors to qualify as an “audit committee financial expert” within the meaning of the rules adopted by the SEC relating to the disclosure of financial experts on audit committees in periodic filings pursuant to the Exchange Act. For further information on our audit committee, see “Item 6. Directors, Senior Management and Employees––6C. Board Practices—Audit Committee.”
Shareholder Approval of Equity Compensation Plans
NYSE rules require that shareholders be given the opportunity to vote on all equity compensation plans and material revisions thereto, with limited exceptions. We currently do not have any such plan and, pursuant to our bylaws, we would require shareholder approval to adopt an equity compensation plan.
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Corporate Governance Guidelines
NYSE rules require that listed companies adopt and disclose corporate governance guidelines. We have adopted the following corporate governance guidelines, either based on Brazilian law or our Code of Conduct, institutional handbook or policies and procedures:
| · | an insider trading policy for securities issued by us; |
| · | a policy for the disclosure of material facts; and |
| · | a sustainability policy. |
16H. Mine Safety Disclosure
Not applicable as none of our mines are located in the United States and as such are not subject to the U.S. Federal Mine Safety and Health Act of 1977 or the U.S. Mine Safety and Health Administration.
16I. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections
Not applicable.
16J. Insider Trading Policies
We
have
16K. Cybersecurity
We apply cybersecurity solutions and procedures to ensure the most appropriate and applicable handling, collection and availability of data and information used in our corporate systems.
In terms of cybersecurity processes and tools, we have a security operations center, an event correlation tool and a virus detection and reaction solution. We also established committees and invest in multiple authentication factor solutions, user awareness and immutable backup solutions.
We conduct quarterly internal vulnerability analysis processes, together with our outsourced service provider, and annual invasion tests, together with external companies. Based on the gaps identified during the invasion tests, we prepare action plans to mitigate these risks. All information security events are monthly recorded, addressed and presented by our security operations center.
In recent years, we had no incidents that resulted in any type of service downtime, damage or data leak.
In December 2024, our Volta Redonda and Porto Real plants received the Trusted Information Security Assessment Exchange, or TISAX certification, which is an assessment and exchange mechanism for the information security of enterprises that allows recognition of assessment results among the participants. The TISAX certification is valid for three years.
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Our cybersecurity policy is also implemented in all our
Brazilian subsidiaries. Our international subsidiaries are responsible for implementing cybersecurity controls in compliance with their
respective local laws and regulations. For more information see “Item 3. Key Information—3D. Risk Factors—Risks Relating
to Us and the Industries in Which
PART III
Item 17. Financial Statements
See “Item 18. Financial Statements.”
Item 18. Financial Statements
See our audited consolidated financial statements, together with the report of Grant Thornton Auditores Independentes Ltda. thereon, beginning on Page F-1 of this annual report.
Item 19. Exhibits
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SIGNATURES
The registrant hereby certifies that it meets all the requirements for filing on Form 20-F and that it has duly caused and authorized the undersigned to sign this annual report on its behalf.
COMPANHIA SIDERÚRGICA NACIONAL
By: /s/ Benjamin Steinbruch
Name: Benjamin Steinbruch
Title: Chief Executive Officer
By: /s/ Antonio
Marco Campos Rabello
Name: Antonio Marco Campos Rabello
Title: Chief Financial Officer and Investor Relations Officer
Dated: April 30, 2025
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Report of Independent Registered Public Accounting Firm
Board of Directors and Shareholders
Companhia Siderúrgica Nacional
Opinion on internal control over financial reporting
We have audited the internal control over financial reporting of Companhia Siderúrgica Nacional and subsidiaries (the “Company”) as of December 31, 2024, based on criteria established in the 2013 Internal Control – Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”). In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2024, based on criteria established in the 2013 Internal Control – Integrated Framework issued by COSO.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”), the consolidated financial statements of the Company as of and for the year ended December 31, 2024, and our report dated April 30, 2025 expressed an unqualified opinion on those financial statements.
Basis for opinion
The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.
| 131 |
Definition and limitations of internal control over financial reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
/s/ Grant Thornton Auditores Independentes Ltda.
São Paulo, Brazil
April 30, 2025
| 132 |
Report of Independent Registered Public Accounting Firm
Board of Directors and Shareholders
Companhia Siderúrgica Nacional
Opinion on the financial statements
We have audited the accompanying consolidated balance sheets of Companhia Siderúrgica Nacional and subsidiaries (the “Company”) as of December 31, 2024 and 2023, the related consolidated statements of income, comprehensive income, changes in shareholders’ equity and cash flows for each of the three years in the period ended December 31, 2024, and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2024 and 2023, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2024, in conformity with IFRS Accounting Standards as issued by the International Accounting Standards Board.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of December 31, 2024, based on criteria established in the 2013 Internal Control – Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”), and our report dated on April 30, 2025 expressed an unqualified opinion.
Basis for opinion
These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audit. We are a public accounting firm registered with the PCAOB and required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
| 133 |
Critical Audit Matter
The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.
Recoverability of deferred tax assets
As further discussed in note 18 to the financial statements, the Company has deferred tax assets on income tax and social contribution of R$7,345 million as of December 31, 2024, relating to accumulated tax losses, negative basis of social contribution and temporary differences arising from temporary provisions recognized. These deferred taxes balances are recognized based on the probability of future taxable income.
The annual evaluation of the deferred tax assets recoverability involves a high degree of judgment to assess the significant assumptions that are reflected in the forecast of future taxable income. In addition, there is a level of uncertainty inherent to the significant assumptions, used in determining estimates of future taxable income, which, if changed, could have a significant impact on the Company’s evaluation of the recoverability of the deferred tax assets. Based on these aspects, we identified the evaluation of recoverability of deferred tax assets as a critical audit matter.
The primary procedures we performed to address this critical audit matter are the following:
· We evaluated the design and tested the operating effectiveness of the relevant controls related to the estimation of future taxable income to support the recoverability of deferred tax assets;
· We evaluated the reasonableness of the inputs and historical data used in the estimation.
· We involved our internal valuation professionals with specialized skills and knowledge, who assisted in:
| (i) | evaluating significant assumptions used in estimation of future taxable income, comparing them with public available market data; and |
| (ii) | performing sensitivity analysis over the significant assumptions used to assess the impact on the Company’s forecast of the future taxable income. |
/s/
We have served as the Company’s auditor since 2017.
April 30, 2025.
Auditor Firm ID -
 |
|
Companhia Siderúrgica Nacional S.A. and Subsidiaries
|
| Consolidated Balance Sheets as of December 31 |
| (Thousands of Brazilian Reais) |
| Consolidated | |||||
| Notes | 12/31/2024 | 12/31/2023 | |||
| ASSETS | |||||
| Current | |||||
| Cash and cash equivalents | 3 | | |||
| Financial investments | 4 | | |||
| Trade receivables | 5 | | |||
| Inventories | 6 | | |||
| Recoverable taxes | 7 | | |||
| Other assets | 8 | | |||
| Total current assets | | ||||
| Non-Current | |||||
| Long-term assets | |||||
| Financial investments | 4 | | |||
| Deferred taxes | 18 | | |||
| Inventories | 6 | | |||
| Recoverable taxes | 7 | | |||
| Other assets | 8 | | |||
| Total long-term assets | | ||||
| Investments | 9 | | |||
| Property, plant and equipment | 10 | | |||
| Intangible assets | 11 | | |||
| Total non-current assets | | ||||
| TOTAL ASSETS | | ||||
The accompanying notes are an integral part of these consolidated financial statements.
| FS-1 |
| |
|
Companhia Siderúrgica Nacional and Subsidiaries
|
| Consolidated Balance Sheets as of December 31 |
| (Thousands of Brazilian Reais) |
| Consolidated | |||||
| Notes | 12/31/2024 | 12/31/2023 | |||
| LIABILITIES AND SHAREHOLDERS' EQUITY | |||||
| Current | |||||
| Borrowings and financing | 13 | |
| ||
| Payroll and related taxes | | ||||
| Trade payables | 16 | |
| ||
| Taxes payables | | ||||
| Provision for tax, social security, labor and civil risks | 20 | | |||
| Dividends and interest on equity payable | 17 | | |||
| Advances from customers | 17 | |
| ||
| Trade payables – Forfaiting | 16.a | |
| ||
| Other payables | 17 | |
| ||
| Total current liabilities | |
| |||
| Non-Current | |||||
| Borrowings and financing | 13 | |
| ||
| Deferred taxes | 18 | | |||
| Provision for tax, social security, labor and civil risks | 20 | |
| ||
| Pension and healthcare plan | 30 | | |||
| Provisions for environmental liabilities and decommissioning | 21 | |
| ||
| Other payables | 17 | |
| ||
| Total non-current liabilities | |
| |||
| Shareholders’ equity | |||||
| Paid-in capital | 23 | |
| ||
| Capital reserves | |
| |||
| Earnings reserves | | ||||
| Legal reserve | |
| |||
| Other comprehensive income | ( |
| |||
| Total shareholders' equity of controlling shareholders | |
| |||
| Non-controlling interests | |
| |||
| Total shareholders' equity | |
| |||
| TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY | | ||||
The accompanying notes are an integral part of these consolidated financial statements.
| FS-2 |
| |
| Companhia Siderúrgica Nacional and Subsidiaries |
| Consolidated Statements of Income for the years ended December 31 |
| (Thousands of Brazilian Reais) |
| Consolidated | |||||||
| Notes | 12/31/2024 | 12/31/2023 | 12/31/2022 | ||||
| Net revenue from sales | 25 | |
|
| |||
| Costs from sale of goods and services rendered | 26 | ( |
( |
( | |||
| Gross profit | |
|
| ||||
| Operating (expenses)/income | ( |
( |
( | ||||
| Selling expenses | 26 | ( |
( |
( | |||
| General and administrative expenses | 26 | ( |
( |
( | |||
| Equity earnings of affiliated companies | 9 | ||||||
| Other operating income | 27 | ||||||
| Other operating expenses | 27 | ( |
( |
( | |||
| Profit before financial income (expenses) | |
|
| ||||
| Financial income | 28 | |
|
( | |||
| Financial expenses | 28 | ( |
( |
( | |||
| Profit/(loss) before income taxes | 18 | ( |
|
| |||
| Income tax and social contribution | |
( |
( | ||||
| Net income/(loss) | ( |
| |||||
| Attributable to: | |||||||
| Earnings/(loss) attributable to the controlling interests | ( |
( |
| ||||
| Earnings attributable to the non-controlling interests | |
||||||
| Earnings/(loss) basic and diluted per share (in R$) | 23.f |
The accompanying notes are an integral part of these consolidated financial statements.
| FS-3 |
| |
| Companhia Siderúrgica Nacional and Subsidiaries |
| Consolidated Statements of Comprehensive Income for the years ended December 31 |
| (Thousands of Brazilian Reais) |
| Consolidated | ||||||
| 12/31/2024 | 12/31/2023 | 12/31/2022 | ||||
| Net income/(loss) | ( |
|
||||
| Other comprehensive income | ||||||
| Items that will not be subsequently reclassified to the statement of income | ||||||
| Actuarial gains on defined benefit plan from investments in subsidiaries | ( |
|||||
| Actuarial gains on defined benefit pension plan | ||||||
| Total Items that will not be subsequently reclassified to the statement of income | ||||||
| Items that could be subsequently reclassified to the statement of income | ||||||
| Cumulative translation adjustments for the year | |
( |
( | |||
| (Loss)/gain cash flow hedge accounting, net of taxes | ( |
|
( | |||
| Cash flow hedge reclassified to income upon realization, net of taxes | ( |
|
||||
| (Loss)/gain cash flow hedge accounting–“Platts”from investments in subsidiaries, net of taxes | ( |
( | ||||
| (Loss)/gain cash flow hedge accounting - reflection of investments in subsidiaries, net of taxes | ||||||
| Total Items that could be subsequently reclassified to the statement of income | ( |
|
| |||
| Comprehensive income/(loss) for the year | ( |
|||||
| Attributable to: | ||||||
| Earnings/(loss) attributable to the controlling interests | ( |
|
||||
| Earnings attributable to the non-controlling interests | |
|
| |||
| Total | ( |
The accompanying notes are an integral part of these consolidated financial statements.
| FS-4 |
| |
|
Companhia Siderúrgica Nacional and Subsidiaries
|
| Consolidated Statements of Cash Flows for the years ended December 31 |
| (Thousands of Brazilian Reais) |
| Consolidated | ||||||||
| Notes | 12/31/2024 | 12/31/2023 | 12/31/2022 | |||||
| Net income/(loss) for the year | ( |
|
| |||||
| Adjustments to reconcile net income (loss) to net cash provided by operations | ||||||||
| Financial charges in borrowing and financing raised | 28 | |
|
| ||||
| Financial charges in borrowing and financing granted | ( |
( |
( | |||||
| Charges on lease liabilities | 15 | |
|
| ||||
| Equity earnings of affiliated companies | 9 | ( |
( |
( | ||||
| Deferred taxes | 18 | ( |
( |
| ||||
| Provision for tax, social security, labor, civil and environmental risks | |
( |
| |||||
| Exchange, Monetary and Cash Flow Hedge | |
|
( | |||||
| Write-off of property, plant and equipment right of use and Intangible assets | 9, 10, 11 e 15 | |
|
( | ||||
| Provision for environmental liabilities and decommissioning of assets | |
|
( | |||||
| Updated shares – Fair value through profit or loss | 28 | |
( |
| ||||
| Depreciation, amortization and depletion | 26 | |
|
| ||||
| Accrued/(reversal) for consumption and services | |
( |
| |||||
| Investment impairment reversal | ( | |||||||
| Receivables by indemnity | ( | |||||||
| Net gain from sale of equity interest | ( |
( |
||||||
| Dividends USIMINAS | ( |
( |
( | |||||
| Other provisions | |
|
( | |||||
| Total Adjustments to reconcile net income/(loss) to net cash provide by operation | |
|
| |||||
| Changes in assets and liabilities | ||||||||
| Trade receivables - third parties | |
|
( | |||||
| Trade receivables - related party | ( |
|
( | |||||
| Inventories | ( |
|
( | |||||
| Dividends and receivables - related parties | ( |
|
| |||||
| Recoverable taxes | |
( |
( | |||||
| Judicial deposits | ( |
|
( | |||||
| Receipt of RFFSA receivables | |
|||||||
| Trade payables | ( |
|
( | |||||
| Trade payables – Forfaiting | ( |
( |
| |||||
| Payroll and related taxes | |
|
| |||||
| Taxes payables | ( |
( |
( | |||||
| Payables to related parties | ( |
( |
| |||||
| Advance of customers of mineral and energy contracts | |
|
( | |||||
| Interest paid | 13.b | ( |
( |
( | ||||
| Compulsory loan received | | |||||||
| Receipts/(Payments) from hedging operations, cash flow and derivatives | ( |
( |
| |||||
| Other | |
( |
| |||||
| Increase (Decrease) in assets and liabilities | |
|
( | |||||
| Net cash generated by operating activities | |
|
|
| FS-5 |
| |
|
Companhia Siderúrgica Nacional and Subsidiaries
|
| Consolidated Statements of Cash Flows for the years ended December 31 |
| (Thousands of Brazilian Reais) |
| Investments / AFAC / Acquisitions of Shares | ( |
( |
( | |||||
| Purchase of property, plant and equipment, intangible assets and investment property | 9, 10 and 11 | ( |
( |
( | ||||
| Intercompany loans granted | ( |
( |
( | |||||
| Intercompany loans received | |
|
||||||
| Financial Investments, net of redemption | |
|
| |||||
| Receipt of sale of equity interest | 9.c | |
|
|||||
| Cash received from Acquisition of investments Metalgráfica | ||||||||
| Acquisition of Topázio Energética, Santa Ana and Brasil Central | ( | |||||||
| Cash received from Acquisition of investments in Topázio Energética and Santa Ana | | |||||||
| Acquisition of CSN Cimentos Brasil | ( | |||||||
| Cash received in the acquisition of CSN Cimentos Brasil | | |||||||
| Price paid in acquisition of CEEE-G | ( | |||||||
| Cash received in the acquisition of CEEE-G | | |||||||
| Price paid in acquisition of Energética Chapecó | ( | |||||||
| Cash received from Acquisition of investments Chapecó | | |||||||
| Price paid in acquisition of concession rights | ( | |||||||
| Net cash (used in) investment activities | ( |
( |
( | |||||
| Borrowings and financing raised | 13.b | |
|
| ||||
| Transactions cost - Borrowings and financing | ( |
( |
( | |||||
| Amortization of borrowings and financing | 13.b | ( |
( |
( | ||||
| Amortization of leases | 15 | ( |
( |
( | ||||
| Dividends and interest on shareholder’s equity | ( |
( |
( | |||||
| Share repurchase | ( |
( | ||||||
| Net cash (used in) generated by financing activities | ( |
|
| |||||
| Exchange rate changes on cash and cash equivalents of foreign subsidiaries | ( |
|
| |||||
| Increase (decrease) in cash and cash equivalents | |
|
( | |||||
| Cash and equivalents at the beginning of the year | |
|
| |||||
| Cash and equivalents at the end of the year | |
|
|
The accompanying notes are an integral part of these consolidated financial statement.
| FS-6 |
| |
|
Companhia Siderúrgica Nacional and Subsidiaries
|
| Consolidated Statement of Changes in Shareholders´ Equity |
| (Thousands of Brazilian Reais) |
| Paid-in capital | Capital Reserve | Earnings Reserve | Retained earnings | Other comprehensive income | Total Shareholders' Equity Parent Company | Non-controlling interest | Total Consolidated Shareholders' Equity | |
| Balances on December 31, 2021 | ( |
|
| |||||
| Net income | |
| ||||||
| Actuarial gains/(losses) over pension plan of subsidiaries, net of taxes | ( |
( |
( |
( | ||||
| Cumulative translation adjustments for the year | ||||||||
| (Loss)/gain cash flow hedge accounting, net of taxes | ||||||||
| (Loss)/gain on the percentage change in investments | ||||||||
| Dividends paid with reserves on 11/21/2022 | ( |
( |
( |
( | ||||
| Others | |
( |
||||||
| Interest on equity | ( |
( |
( |
( | ||||
| Constitution of reserves | ( |
|||||||
| Treasury shares acquired | ( |
( |
( |
( | ||||
| Balances on December 31, 2022 | |
|
| |||||
| Net loss | ( |
( |
||||||
| Actuarial gains/(losses) over pension plan of subsidiaries, net of taxes | ( |
|||||||
| Cumulative translation adjustments for the year | ( |
( |
( | |||||
| (Loss)/gain cash flow hedge accounting, net of taxes | ||||||||
| Cash flow hedge reclassified to income upon realization, net of taxes | ||||||||
| (Loss)/gain cash flow hedge accounting–“Platts”from investments in subsidiaries, net of taxes | |
| ||||||
| (Loss)/gain on the percentage change in investments | ( |
( |
( |
( | ||||
| (Loss) / gain on business combination | ( |
( |
( | |||||
| Additional dividends approved on 04/30/2023 | ( |
( |
( |
( | ||||
| Intermediary dividends approved on 11/13/2023 | ( |
( |
( | |||||
| Interest on equity | ( |
( | ||||||
| Absorption of the loss of the year | ( |
|||||||
| Balances on December 31, 2023 | |
|
|
|
| FS-7 |
| |
|
Companhia Siderúrgica Nacional and Subsidiaries
|
| Consolidated Statement of Changes in Shareholders´ Equity |
| (Thousands of Brazilian Reais) |
| Balances on December 31, 2023 | |
|
|
| ||||
| Net loss | ( |
( |
|
( | ||||
| Actuarial gains/(losses) over pension plan of subsidiaries, net of taxes | ( |
|||||||
| Cumulative translation adjustments for the year | ||||||||
| (Loss)/gain cash flow hedge accounting, net of taxes | ( |
( |
( | |||||
| Cash flow hedge reclassified to income upon realization, net of taxes | ( |
( |
( | |||||
| (Loss)/gain cash flow hedge accounting–“Platts”from investments in subsidiaries, net of taxes | ( |
( |
( |
( | ||||
| (Loss)/gain on the percentage change in investments | ( |
( |
( |
( | ||||
| Intermediary dividends approved on 05/09/2024 | ( |
( |
( |
( | ||||
| Intermediary dividends approved on 09/30/2024 | ( |
( | ||||||
| Intermediary dividends approved on 11/14/2024 | ( |
( |
( | |||||
| Interest on equity approved on 12/27/2024 | ( |
( | ||||||
| Absorption of the loss of the year | ( |
|
||||||
| Gains on the sale of a subsidiary interest, net | |
|
| |||||
| Reflex treasury shares acquired by controlled |
( |
( |
( |
( | ||||
| Treasury shares canceled | ||||||||
| Balances on December 31, 2024 | |
|
( |
|
|
The accompanying notes are an integral part of these consolidated financial statements.
| FS-8 |
| |
(In thousands of reais - R$, unless otherwise stated)
| 1. | DESCRIPTION OF BUSINESS |
Companhia Siderúrgica Nacional (CSN) is a publicly-held corporation, headquartered in the capital of the State of São Paulo. Founded on April 9, 1941 during the Getúlio Vargas government, the Company was privatized in 1993.
CSN (“Company”) together with its subsidiaries, controlled entities, jointly controlled entities and affiliates (referred to as "Group"), operates in five main business segments:
| i) | Steel industry: production and marketing of flat and long steels |
| ii) | Mining: extraction, processing and marketing of iron ore, tin, limestone and dolomite |
| iii) | Cement: production and commercialization of bagged and bulk cement, in addition to aggregates, concrete, and other related products |
| iv) | Energy: generation and sale of energy from almost all renewable sources and |
| v) | Logistics: participations in railways and port terminals. |
CSN is listed on B3 – Brasil, Bolsa, Balcão, under the code CSNA3, where it trades its shares, and on the NYSE - United States stock exchange, under the code SID. Besides that, its subsidiaries CSN Mineração S.A. and Companhia Estadual de Geração de Energia Elétrica are publicly traded companies in Brazil, with CSN Mineração S.A. trading common shares on B3 under the ticker CMIN3.
The CSN Group has a significantly diversified business, being one of Brazil's leading steel producers, the second largest exporter of iron ore and a pioneer in the stacking of tailings to de-characterize dams. It also occupies the position of the second largest player in the cement sector in the country.
| · | Going Concern: |
Management understands that the Company has adequate resources to continue its operations. Accordingly, the Company's financial statements for the year ended December 31, 2024 have been prepared on a going concern basis.
| 2. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES |
| 2.a) | Declaration of conformity |
The consolidated financial statements have been prepared and are being presented in accordance with IFRS Accounting Standards (“IFRS”) issued by the International Accounting Standard Board (IASB) and highlight all the relevant information at the financial statements, and only this information, which correspond to those used by the Company's management in its activities.
| 2.b) | Basis of presentation |
The financial statements have been prepared on a historical cost basis and adjusted to reflect: (i) the fair value measurement of certain financial assets and liabilities (including derivative instruments), as well as pension plan assets and (ii) impairment losses. When IFRS allows the option between acquisition cost or another measurement criterion, the acquisition cost criterion was used.
The preparation of these financial statements requires Management to use certain accounting estimates, judgments, and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, revenues, and expenses as of the balance sheet date, which may differ from actual future results. The assumptions used are based on historical data and other factors considered relevant and are reviewed by the Company's Management.
| FS-9 |
| |
The critical estimates are presented in the following explanatory notes:
Note 12 – Impairment of assets
Note 14 – Financial instruments (derivatives and hedge accounting)
Note 18 – Income tax and social contribution (deferred taxes)
Note 20 – Tax, social security, labor, civil, environmental provisions and judicial deposits
Note 21 – Provision for environmental liabilities and decommissioning
Note 30 – Employee benefits
The consolidated financial statements were approved by Management on April 30, 2025.
| 2.c) | Functional currency and presentation currency |
The accounting records included in the financial statements of each of the Company's subsidiaries are measured using the currency of the main economic environment in which each subsidiary operates ("functional currency"). The consolidated financial statements are presented in R$ (Reais), which is the Company's functional currency and the Group's presentation currency.
Transactions in foreign currencies are translated into
the functional currency using the exchange rates prevailing on the dates of the transactions or valuation, in which the items are remeasured.
The balances of the asset and liability accounts are translated at the exchange rate on the balance sheet date. As of December 31, 2024,
US$
| 2.d) | Accounting policies |
The significant accounting policies applied in the preparation of these financial statements have been included in the respective notes and are consistent for all years presented.
| 2.e) | Adoption of new requirements, standards, amendments and interpretations |
The new requirements, standards, changes, and interpretations that came into effect for fiscal years beginning on January 1, 2024, were:
| · | Amendment to IFRS 16 (R2) – Lease Liability in a Sale and Leaseback |
| · | Amendments to IAS 1 – Classification of liabilities as "Current" or "Non-Current" |
| · | Amendments to IAS 7 and IFRS 7 – Disclosures on forfaiting risk transactions. |
Regarding the aforementioned changes, the Company did not identify significant impacts that would alter its disclosure concerning the adoption and interpretation of standards with the exception of amendments to IAS 7 and IFRS 7, which provides greater detail about reverse factoring operations (also understood as "forfaiting" throughout the report, in note 16.a. Trade payables - Forfaiting).
Regarding the requirements, standards, amendments and interpretations that will come into effect for financial years beginning on January 1, 2025, and the expectation of their respective impacts, we have:
Amendments to IAS 21 – The Effects of Changes in Foreign Exchange Rates: establishes requirements for the measurement and disclosure of foreign currency transactions, conversion of balances, and the impact of fluctuations in exchange rates on financial statements. Adoption is defined for fiscal years beginning on January 1, 2025, with the possibility of early adoption
| FS-10 |
| |
Amendments to IFRS 9 and IFRS 15 – Classification and measurement of Financial Instruments: establishes the requirements for classification and measurement of financial assets and liabilities in addition to clarifying how revenues related to these instruments should be recognized. Adoption is defined for fiscal years beginning on January 1, 2026, with the possibility of early adoption.
IFRS S1 – General Requirements for Disclosure of Sustainability-Related Financial: proposes that companies disclose financial statements, risks, and opportunities in the short and long term related to sustainability, which are useful for general-purpose users in making decisions about resource allocation to the entity. The standard may be voluntarily adopted for fiscal years beginning on January 1, 2024, with mandatory adoption for fiscal years beginning on January 1, 2026.
IFRS S2 – Climate-related disclosure requirements: establishes the requirements for the disclosure of climate-related information, and applies to the aspects in which the entity is exposed, which may be physical risks, transition risks and opportunities available to the organization. The standard may be voluntarily adopted for fiscal years beginning on January 1, 2024, with mandatory adoption for fiscal years beginning on January 1, 2026.
Annual improvements to IFRS – Volume 11. The adoption is defined for fiscal years beginning on January 1, 2026, with the possibility of early adoption:
| i) | IFRS 1 - First-time Adoption of International Financial Reporting Standards The changes aim to clarify issues related to the first application of the standards, ensuring a smoother adoption for companies |
| ii) | IFRS 7 - Financial Instruments: The amendments are intended to improve guidance on financial statement disclosures about financial instruments and to clarify the implementation of certain requirements |
| iii) | IFRS 9 - Financial Instruments: The modifications aim to correct inconsistencies or provide more clarity on the application of certain provisions of this standard, especially related to the measurement and classification of financial instruments. |
| iv) | IFRS 10 - Consolidated Financial Statements: The improvements address minor issues regarding the application of control and the determination of when an entity should consolidate its subsidiaries |
| v) | IAS 7 - Statement of Cash Flows: The changes are made to improve clarity in the guidance on the presentation of cash flows, especially in relation to financing activities and the classification of certain flows. |
IFRS 18 – Presentation and Disclosure in Financial Statements: New standard that defines a new structure for presenting the Income Statement, focusing on disclosing performance measures defined by management as part of the financial statements, and new principles of aggregation and disaggregation of balances to standardize and facilitate comparability and comparison with other statements. Mandatory adoption is defined for fiscal years beginning on January 1, 2027
IFRS 19 – Subsidiaries without Public Accountability: Disclosures: An eligible subsidiary applies the requirements of other IFRS Standards, except for disclosure requirements, applying instead the reduced disclosure requirements of IFRS 19. The reduced disclosure requirements of IFRS 19 balance the information needs of users of the financial statements of eligible subsidiaries with cost savings for preparers. Mandatory adoption is defined for fiscal years beginning January 1, 2027.
The Company has not adopted any standard in advance and understands that, based on the aforementioned, the requirements, standards, changes, and interpretations that will have a significant and material impact on subsequent financial statements will be the adoptions of IFRS S1, IFRS S2, IFRS 18, and IFRS 19. The main expectations regarding the adoption of the mentioned standards are the measurement and recognition of items related to IFRS S1 and S2 on sustainability and climate, the new presentation of the Income Statement, and additional information related to subsidiaries, to comply with IFRS 19.
Brazilian tax reform: Constitutional Amendment 132 introduced profound changes to the national tax system, with a long transition period, comprised between the years 2026 and 2032. The Company recognizes its complexity and is committed to making every effort necessary to ensure its full compliance with the established provisions. In this context, management actively monitors the developments of the tax reform, assessing potential impacts on the Company's operations and financial results. The planning and execution of the adaptation measures will include investments in technology, training of teams and review of processes, with the objective of mitigating risks and ensuring compliance with the new legal requirements. The impacts of the new tax rules will only be fully known when the pending regulatory topics are finalized. Consequently, there is no effect of the Tax Reform on the financial statements as of December 31, 2024.
| FS-11 |
| |
International tax reform: On May 23, 2023,
the International Accounting Standards Board issued International Tax Reform - Pillar Two Model Rules - Amendments to IAS 12, which clarifies
that IAS 12 applies to income taxes arising from tax legislation enacted or substantially enacted to implement the Pillar Two model rules
published by the OECD, including tax legislation implementing Qualified Domestic Top-up Minimum Taxes. The Group adopted these amendments,
considering that consolidated revenue is above the minimum limit of
It is important to note that the Group currently has the support of tax experts to assist it in the application of said legislation and estimate the impact of its application.
| 3. | CASH AND CASH EQUIVALENTS |
| Consolidated | |||
| 12/31/2024 | 12/31/2023 | ||
| Cash and banks | |||
| In Brazil | |
||
| Abroad | |||
| Financial investments | |||
| In Brazil | |||
| Abroad | |||
The financial resources available in the country are basically invested in private and public securities with income linked to the variation of Interbank Deposit Certificates (CDI) and repurchase and resale agreements backed by fixed income securities. The Company applies part of the resources through exclusive investment funds, whose financial statements were consolidated in the Company.
The financial resources available abroad, held in dollars and euros, are invested in private securities, in banks considered by Management as first-rate and are remunerated at pre-fixed rates.
Accounting Policy
Cash and cash equivalents include cash, bank deposits and other short-term investments of immediate liquidity, redeemable within 90 days of the contracting date, readily convertible into an amount known as cash and with insignificant risk of change in their market value.
| FS-12 |
| |
| 4. | FINANCIAL INVESTMENTS |
| Consolidated | ||||||||
| Current | Non-current | |||||||
| 12/31/2024 | 12/31/2023 | 12/31/2024 | 12/31/2023 | |||||
| Investments (1) | |
|
| |||||
| Usiminas shares (2) | |
|
||||||
| Bonds (3) | |
| ||||||
| |
|
|
| |||||
| (1) | Comprised of restricted financial investments with restrict modality and linked to a Bank Deposit Certificate (CDB) to guarantee a letter of guarantee from financial institutions and financial investments in Public Securities (LFT - Letras Financeiras do Tesouro) managed by their exclusive funds. The subsidiary CSN Cimentos Brasil maintains financial investments with restricted availability as guarantee for a liability, with indefinite redemption term, with a balance of R$ 8,497 as of December 31, 2024, (R$ 122,687 as of December 31, 2023) Elizabeth Cimentos and Estanho de Rondônia, controlled by CSN, have investments linked to financing contracts, with maturities in 2030 and 2028, respectively, in the amount of R$ 19,057. |
| (2) | The Usiminas shares held by the Company ceased to be considered as guarantees (fiduciary alienation) as of June 8, 2024. |
| (3) | Bonds with Banco Fibra maturing in February 2028 (see note 22.b). |
Accounting Policy
Financial investments that are not classified as cash equivalents are measured at amortized cost and fair value through profit or loss.
| 5. | TRADE RECEIVABLES |
| Consolidated | ||||
| Ref. | 12/31/2024 | 12/31/2023 | ||
| Trade receivables | ||||
| Third parties | ||||
| In Brazil | ||||
| Abroad | ||||
| Estimated credit losses | ( |
( | ||
| Related parties | 22.a | |||
The composition of the gross balance of receivables from third party customers is shown as follows:
| Consolidated | ||||
| 12/31/2024 | 12/31/2023 | |||
| Current | ||||
| Past-due up to 30 days | |
| ||
| Past-due up to 180 days | |
| ||
| Past-due over 180 days | |
| ||
| FS-13 |
| |
The changes in expected credit losses are as follows:
| Consolidated | ||||
| 12/31/2024 | 12/31/2023 | |||
| Opening balance | ( |
( | ||
| (Loss)/Reversal estimated | |
( | ||
| Recovery and write-offs of receivables | |
| ||
| Closing balance | ( |
( |
The Company carries out credit assignment operations
without co-obligation. After the assignment of the customer's trade bills/securities and receipt of the proceeds from the closing of each
transaction, CSN settles the related receivables and fully discharges the credit risk of the transactions. Financial charges for the credit
assignment operation in the year ended December 31, 2024, were R$
Accounting Policy
Receivables are initially recognized at the transaction price, provided that they do not contain financing components, and subsequently measured at amortized cost. When applicable, it is adjusted to present value including the respective taxes and ancillary expenses, and customer credits in foreign currency are adjusted at the exchange rate on the date of the financial statements.
The Company annually measures the expected credit losses for the instrument, where it considers all possible loss events over the life of its receivables, using a loss rate matrix by maturity range adopted by the Company, from the initial moment (recognition) of the asset. This model considers customers' history, default rate, financial situation and the position of their legal advisors to estimate expected credit losses.
In the Mining segment, receivables are provisionally priced at the date revenue is recognized and a provisional invoice issued. Provisionally priced receivables are subsequently measured at fair value through the income statement. The final selling price for all provisionally priced products is based on the price for the quotational period stipulated in the contract. The change in value of the provisionally priced receivable is based on relevant forward market prices and is included in sales revenue.
| 6. | INVENTORIES |
| Consolidated | |||
| 12/31/2024 | 12/31/2023 | ||
| Finished goods | |||
| Work in progress | |||
| Raw materials | |||
| Storeroom supplies | |||
| Advances to suppliers | |||
| Provision for losses | ( |
( | |
| Classified: | |||
| Current | |||
| Non-current (1) | |||
| (1) | Long-term inventories of iron ore that will be processed when implementing new beneficiation plants, which will generate Pellet Feed as a product. The start of operations is scheduled for the fourth quarter of 2027. |
| FS-14 |
| |
The changes in expected losses on inventories are as follows:
| Consolidated | ||||
| 12/31/2024 | 12/31/2023 | |||
| Opening balance | ( |
( | ||
| Reversal/(Provision for losses) on inventories with low turnover and obsolescence | ( |
( | ||
| Closing balance | ( |
( | ||
Accounting Policy
They are recorded at the lower of cost and net realizable value. Cost is determined using the weighted average cost method in the acquisition of raw materials. The cost of finished products and work in progress comprises raw materials, labor, other direct and indirect costs (based on normal production capacity). The net realizable value is the estimated selling price in the normal course of business, less the estimated costs of completion and the estimated costs necessary to make the sale. Estimated losses in low turnover or obsolete inventories are constituted when considered necessary.
| 7. | RECOVERABLE TAXES |
| Consolidated | |||
| 12/31/2024 | 12/31/2023 | ||
| ICMS (Brazilian State Value-Added Tax) | |||
| Brazilian federal contributions | |||
| Other taxes | |||
| Classified: | |||
| Current | |||
| Non-current | |||
Accounting Policy
Tax credits accumulated essentially derive from ICMS, PIS, and COFINS credits on input purchases and property, plant and equipment used in production, plus IRPJ and CSLL related to Selic rate updates on tax credits awaiting final legal resolution for compensation, classified in non-current assets. The realization of these credits generally occurs through natural offsetting with debits of these taxes, generated by sales operations and other taxed outputs.
The balance of recoverable taxes maintained in the short term is expected to be offset in the next 12 months. Based on budget analyses and projections approved by Management, there is no forecast of risks regarding the non-realization of these tax credits, provided that such budget projections materialize.
| 8. | OTHER CURRENT AND NON-CURRENT ASSETS |
Other current and non-current assets are as follows:
| FS-15 |
| |
| Consolidated | ||||||||
| Current | Non-current | |||||||
| 12/31/2024 | 12/31/2023 | 12/31/2024 | 12/31/2023 | |||||
| Judicial deposits | 20 | |
| |||||
| Derivative financial instruments | 14 | |
|
|||||
| Dividends receivable | 22.b | |
|
|||||
| Prepaid expenses | |
|
|
| ||||
| Prepaid expenses with freight | |
|||||||
| Actuarial asset | 22.b | |
| |||||
| Trading securities | |
|
||||||
| Loans with related parties | |
|
|
| ||||
| Other receivables from related parties | |
|
|
| ||||
| Eletrobrás bonds and compulsory loans | |
| ||||||
| Employee debts | |
|
||||||
| Receivables by indemnity (1) | 14.a | |
|
| ||||
| Other | |
|
|
| ||||
| (1) | In The current balance as of December 31, 2023 was related to a foreign income tax credit that was received in the second quarter of 2024, Non-current assets are composed of net and certain credit, arising from the final and unappealable decision in favor of the Company, mainly due to losses and damages resulting from voltage sinking in the energy supply in the periods from January/1991 to June/2002. In September 2024, the Company carried out the assignment of credit rights for the amounts overpaid for rail freight from April 1994 to March 1996 to the company RFFSA and received R$ 442,246 in the operation, recording a discount of R$ 84,237. The Company has a purchase option, which can be exercised unilaterally according to the price agreed between the parties until December 31, 2025 or up to 5 days after settlement of the balance by the debtor. |
| 9. | BASIS OF CONSOLIDATION AND INVESTMENTS |
The accounting policies have been consistently applied to all consolidated companies. The consolidated financial statements for the years ended December 31, 2024 and 2023 include the following direct and indirect subsidiaries and joint ventures, associates, as well as the exclusive funds, as follows:
| FS-16 |
| |
| Equity interests (%) | ||||||
| Companies | 12/31/2024 | 12/31/2023 | Core business | |||
| Direct interest in subsidiaries: full consolidation | ||||||
| CSN Islands VII Corp. | |
|
||||
| CSN Inova Ventures | |
|
||||
| CSN Islands XII Corp. | |
|
||||
| CSN Steel S.L.U. | |
|
||||
| TdBB S.A (*) | |
|
||||
| Sepetiba Tecon S.A. | |
|
||||
| Minérios Nacional S.A. | |
|
||||
| Companhia Florestal do Brasil | |
|
| |||
| Estanho de Rondônia S.A. | |
|
||||
| Companhia Metalúrgica Prada | |
|
||||
| CSN Mineração S.A. (7) | |
|
| |||
| CSN Energia S.A. | |
|
||||
| FTL - Ferrovia Transnordestina Logística S.A. | |
|
||||
| Nordeste Logística S.A. | |
|
||||
| CSN Inova Ltd. | |
|
||||
| CBSI - Companhia Brasileira de Serviços de Infraestrutura | |
|
||||
| CSN Cimentos Brasil S.A. | |
|
||||
| Berkeley Participações e Empreendimentos S.A. | |
|
||||
| CSN Inova Soluções S.A. | |
|
||||
| CSN Participações I | |
|
||||
| Circula Mais Serviços de Intermediação Comercial S.A. | |
|
||||
| CSN Participações III | |
|
||||
| CSN Participações IV | |
|
||||
| CSN Participações V | |
|
||||
| CSN Incorporação e Participações Ltda. (6) | |
|||||
| Indirect interest in subsidiaries: full consolidation | ||||||
| Lusosider Projectos Siderúrgicos S.A. | |
|
||||
| Lusosider Aços Planos, S. A. | |
|
||||
| CSN Resources S.A. | |
|
||||
| Companhia Brasileira de Latas | |
|
||||
| Companhia de Embalagens Metálicas MMSA | |
|
||||
| Companhia de Embalagens Metálicas - MTM | |
|
||||
| CSN Productos Siderúrgicos S.L. | |
|
||||
| Stalhwerk Thüringen GmbH | |
|
||||
| CSN Steel Sections Polska Sp.Z.o.o | |
|
||||
| CSN Mining Holding, S.L.U. | |
|
||||
| CSN Mining GmbH | |
|
||||
| CSN Mining Asia Limited | |
|
||||
| Lusosider Ibérica S.A. | |
|
||||
| CSN Mining Portugal, Unipessoal Lda. (4) | |
|||||
| Companhia Siderúrgica Nacional, LLC | |
|
||||
| Elizabeth Cimentos S.A. | |
|
||||
| Santa Ana Energética S.A. | |
|
||||
| Topázio Energética S.A. | |
|
||||
| Brasil Central Energia Ltda. | |
|
||||
| Circula Mais Serviços de Intermediação Comercial S.A. | |
|
||||
| Metalgráfica Iguaçu S.A | |
|
||||
| Companhia Energética Chapecó | |
|
||||
| Companhia Estadual de Geração de Energia Elétrica - CEEE-G (3) | |
|
||||
| Ventos de Vera Cruz S.A. | |
|
||||
| Ventos de Curupira S.A | |
|
||||
| Ventos de Povo Novo S.A. | |
|
||||
| MAZET Maschinenbau und Zerspanungstechnik Unterwellwnborn GmbH | |
|
||||
| CSN Mining International GmbH (1) | |
|
||||
| CSN International Steel GmbH (4) | |
- | ||||
| Direct interest in joint operations: proportionate consolidation | ||||||
| Itá Energética S.A. | |
|
| |||
| Direct interest in joint ventures: equity method | ||||||
| MRS Logística S.A. | |
|
| |||
| Aceros Del Orinoco S.A. (*) | |
|
| |||
| Transnordestina Logística S.A. | |
|
| |||
| Equimac S.A | |
|
| |||
| Indirect interest in joint ventures: equity method | ||||||
| MRS Logística S.A. | |
|
| |||
| Direct interest in associates: equity method | ||||||
| Arvedi Metalfer do Brasil S.A. | |
|
| |||
| Panatlântica S.A. (2) | |
| ||||
| Indirect interest in affiliates: equity method | ||||||
| Jaguari Energética S.A. | |
|
| |||
| Chapecoense Geração S.A. (3) | |
|
| |||
| Companhia Energética Rio das Antas - Ceran (3) | |
|
| |||
| Ventos do Sul Energia S.A. (3) | |
| ||||
| Foz Chapecó Energia S.A. (3) | |
|
| |||
| Exclusive funds: full consolidation | ||||||
| Diplic II- Private credit balanced mutual fund | |
|
| |||
| Caixa Vértice - Private credit balanced mutual fund | |
|
| |||
| VR1 - Private credit balanced mutual fund | |
|
| |||
| Consortiuns | ||||||
| Consórcio Itaúba | |
|
| |||
| Consórcio Passo Real | |
|
| |||
| Consórcio da Usina Hidrelétrica de Igarapava | |
|
| |||
| Consórcio Dona Francisca | |
|
| |||
| (*) | Dormant companies. |
| (1) | On December 2023, the company CSN Mining International GmbH, headquartered in Switzerland, began its iron ore trading operations. |
| (2) | On January 15, 2024, Panatlântica began to be evaluated through the equity method due to the acquisition of 18.61% of shares at a total price of R$ 150,000, resulting in the Company now holding 29.92% (11.31% as of December 31, 2023) of Panatlântica's capital. Prior to such acquisition, the Company assessed the investment through fair value through profit or loss. |
| (3) | On February 21, 2024, the Company came to hold 100% of the shares of subsidiary CEEE-G (98.98% as of December 31, 2023), and for this reason, there was a percentage increase in the indirect participation of companies Companhia Energética Rio das Antas – CERAN, Ventos do Sul Energia S.A., Chapecoense Geração S.A., and Foz Chapecó Energia S.A. |
| (4) | On March 7, 2024, the company CSN International Steel GmbH was established by the Company's direct Subsidiary, CSN Steel S.L.U.. |
| (5) | On September 5, 2024, CSN Mining Portugal Unipessoal Ltda was liquidated and extincted. |
| (6) | On November 5, 2024, the Company, together with its subsidiary Companhia Florestal do Brasil, established CSN Incorporação e Participação Ltda., whose main purpose is real estate development. |
| (7) | On November 12, 2024, the Company sold part of its shares held in the subsidiary CSN Mineração to Itochu Corporation (589,304,801 shares), reducing its stake from 79.75% to 69.01%, see note 9.c. |
| FS-17 |
| |
| 9.a) | Changes in investments in controlled companies, jointly controlled companies, joint operations, associates, and other investments |
The positions presented as of December 31, 2024 and 2023 and the changes refer to the interest held by CSN in these companies:
| Consolidated | ||||||||||||||||
| Companies | Ref. | Final balance on 12/31/2023 | Capital increase | Dividends | Equity Income | Comprehensive income | Others | Final balance on 12/31/2024 | ||||||||
| Investments under the equity method | ||||||||||||||||
| Joint-venture, Joint-operation and Affiliate | ||||||||||||||||
| MRS Logistica | ( |
|
||||||||||||||
| Fair Value MRS | |
| ||||||||||||||
| Fair Value MRS amortization | ( |
( |
( | |||||||||||||
| Transnordestina Logística S.A. | ( |
|||||||||||||||
| Fair Value -Transnordestina | |
| ||||||||||||||
| Arvedi Metalfer do Brasil S.A. | ( |
| ||||||||||||||
| Panatlântica S.A. | ( |
|
| |||||||||||||
| Equimac S.A | ( |
|
| |||||||||||||
| Indirect interest in affiliates - CEEE-G | |
( |
|
( |
| |||||||||||
| Fair Value indirect participation CEEE-G | |
| ||||||||||||||
| Fair Value amortization indirect participation CEEE-G | ( |
( |
( | |||||||||||||
| ( |
|
|||||||||||||||
| Fair value investments through profit or loss (1) | 14 | ( |
||||||||||||||
| Others (2) | |
| ||||||||||||||
| |
|
( |
| |||||||||||||
| Total shareholdings | ( |
|
( |
|||||||||||||
| Classification of investments in the balance sheet | ||||||||||||||||
| Equity interests | ||||||||||||||||
| Investment Property | |
| ||||||||||||||
| Total investments in the asset | ||||||||||||||||
| (1) | The reconciliation of the balance refers to the change in the valuation method of the investee Panatlântica due to the aforementioned share acquisitions. As mentioned, the company, which was previously valued at fair value through profit or loss, is now being valued using the equity method. |
| (2) | Strategic investments in startups made by subsidiary CSN Inova Ventures in the following companies: Alinea Health Holdings Ltda. I.Systems Aut. Ind., 2D Materials, H2Pro Ltda, 1S1 Energy, Traive INC., OICO Holdings and Global Dot.com. |
The reconciliation of the equity method results of jointly controlled companies classified as joint ventures and affiliates and the amount presented in the income statement is presented below and derives from the elimination of CSN's transactions with these companies:
| Consolidated | |||
| 12/31/2024 | 12/31/2023 | ||
| Equity in results of affiliated companies | |||
| MRS Logística S.A. | |
| |
| Transnordestina Logística S.A. | ( |
( | |
| Arvedi Metalfer do Brasil S.A. | ( |
( | |
| Equimac S.A | |||
| Indirect interest in affiliates - CEEE-G | |
| |
| Panatlântica S.A. | |
||
| Fair Value Amortization | ( |
( | |
| |
| ||
| Reclassification IAS 28 (1) | ( |
( | |
| Others | ( |
( | |
| Equity in results | |
|
| (1) | The operating margin of intercompany operations with group companies classified as joint ventures, which are not consolidated, are reclassified in the Income Statement of the Investment group to the groups of costs and income tax and social contribution. |
| FS-18 |
| |
| 9.b) | Additional information on direct and indirect subsidiaries |
· ELIZABETH CIMENTOS S.A. (“Elizabeth Cimentos”)
On August 31, 2021, the acquisition of control of Elizabeth Cimentos and Elizabeth Mineração was completed, through its subsidiary CSN Cimentos.
Elizabeth Cimentos, located in Paraíba, is constituted as a corporation, manufactures and sells Portland cement and clinker. Its products are marketed in all states of the North and Northeast regions.
· SEPETIBA TECON S.A. (“Tecon”)
Its objective is the exploration of the Container Terminal of the Organized Port of Itaguaí, located in Itaguaí, in the state of Rio de Janeiro. The terminal is connected to UPV via the Southeast railway network, conceded to MRS Logística S.A. Services include container, steel product, and general cargo handling and storage operations, among other services such as container washing, maintenance, and sanitization.
TECON was the winner of the bidding process and on October 23, 1998 signed the lease for the operation of the port terminal for a period of 25 years, starting in 2001, which can be extended if the granting authority gives a positive statement.
Upon termination of the lease contract, all rights and benefits transferred to Tecon, along with Tecon's property assets and those resulting from investments made in leased assets, will be returned to the Union, declared reversible by the Union as being necessary for the continuity of the leased terminal's operation. The assets declared as reversible will be compensated by the Union for the residual value of their cost, determined by Tecon's accounting records after deducting depreciation.
· ESTANHO DE RONDÔNIA S.A. (“ERSA”)
Headquartered in the state of Rondônia, the subsidiary operates two units, one located in the city of Itapuã do Oeste/RO and the other in Ariquemes/RO. The mining operation is based in Itapuã do Oeste, where cassiterite (tin ore) is extracted, and the smelting is located in Ariquemes, where metallic tin is obtained, which is the raw material used in the UPV for the manufacture of metal sheets.
· COMPANHIA METALÚRGICA PRADA (“Prada”)
Prada operates in two segments: steel metal packaging and flat steel processing and distribution.
Packaging
In the steel metal packaging segment, Prada produces the best and safest products in cans, buckets and aerosols. It serves the chemical and food segments, providing packaging and lithography services for the main market companies.
Distribution
Prada also operates in the area of processing and distribution of flat steels, with a diversified product line. Provides coils, rolls, sheets, strips, blanks, metal sheets, profiles, tubes and tiles, among other products, for the most different industry segments - from automotive to civil construction. It is also specialized in providing steel processing services, meeting the demand of companies throughout the country.
· METALGRÁFICA IGUAÇU S.A. (“Metalgráfica”)
Founded in 1951, Metalgráfica has units in Ponta Grossa (PR) and Goiânia (GO) and produces steel cans for the national and international market of metal packaging for food. Its operation is a strategic asset for CSN's packaging division. The technology used by Metalgráfica is more modern than that used by Prada, improving business competitiveness and strengthening the national chain, especially in relation to substitute packaging.
| FS-19 |
| |
· CSN ENERGIA S.A. (“Energia”)
Its main objective is the commercialization of electric energy to supply the operational needs of its Parent Company and its respective subsidiaries. If there is a surplus of the purchased energy, it is sold to the market through the Electric Energy Trading Chamber (“CCEE”). The registered office of the company is located in Volta Redonda - Rio de Janeiro.
· FTL - FERROVIA TRANSNORDESTINA LOGÍSTICA S.A. (“FTL”)
Company created to incorporate the spun-off portion of Transnordestina Logística S.A. It operates public rail freight transport services in Brazil's northeastern network, on sections between the cities of São Luís and Altos, Altos and Fortaleza, Fortaleza and Sousa, Sousa and Recife/Jorge Lins, Recife/Jorge Lins and Salgueiro, Jorge Lins and Propriá, Paula Cavalcante and Cabedelo (Cabedelo Branch) and Itabaiana and Macau (Macau Branch) ("Network I").
· CSN MINERAÇÃO S.A. (“CSN Mineração”)
Based in Congonhas, in the state of Minas Gerais, CSN
Mineração S.A.'s main objective is the production, purchase and sale of iron ore, and has the foreign market as its main
focus for marketing its products. On November 30, 2015, CSN Mineração S.A. began centralizing CSN's main iron ore mining
operations, including the establishments of the Casa de Pedra mine, the TECAR port, and an 18.74% stake in MRS. CSN's interest in this
subsidiary is
On November 21, 2023, CSN Mining International GmbH was established as a wholly-owned subsidiary of CSN Mining Holding S.L.U., which is itself a wholly-owned subsidiary of CSN Mineração. Located in Zug, Canton of Zug, Switzerland, its purpose is to market raw materials of any type and other goods in its own name and on behalf of third parties, both in Switzerland and abroad, and may perform or intermediate services directly or indirectly related to this objective or associated with it.
· MINÉRIOS NACIONAL S.A. (“Minérios Nacional”)
Headquartered in Congonhas, in the state of Minas Gerais, Minérios Nacional's main objective is the production and sale of iron ore. The subsidiary concentrates the mineral rights assets related to the Fernandinho, Cayman and Pedras Pretas mines, all located in Minas Gerais, transferred to Minérios Nacional S.A. in the business combination operation that occurred in 2015.
· CBSI - COMPANHIA BRASILEIRA DE SERVIÇOS DE INFRAESTRUTURA (“CBSI”)
Based in São Paulo - SP, CBSI's main objective is to provide services to subsidiaries, affiliates, parent company, and other third-party companies, being able to explore activities related to recovery and maintenance of industrial machines and equipment, civil maintenance, industrial cleaning, product logistics preparation, among others.
· COMPANHIA FLORESTAL DO BRASIL (“CFB”)
Companhia Florestal do Brasil, a legal entity governed by private law, was incorporated on May 24, 2013. It is organized as a privately-held corporation and the company's registered office is located in São Paulo.
· STAHLWERK THÜRINGEN GMBH (“SWT”)
SWT was established from the former Maxhütte industrial steel complex, in the city of Unterwellenborn, located in Germany. SWT produces steel profile used for civil construction according to international quality standards. Its main raw material is steel scrap, and its installed production capacity is 1.1 million tons of steel/year. SWT is an indirect subsidiary of CSN Steel S.L.U., a wholly-owned subsidiary of CSN.
| FS-20 |
| |
· COMPANHIA SIDERURGICA NACIONAL – LLC (“CSN LLC”)
Companhia Siderúrgica Nacional, LLC, a wholly-owned subsidiary of CSN Steel S.L.U. which, in turn, is a wholly-owned subsidiary of CSN, is an importer and marketer of steel products and maintains its activities in the United States.
· LUSOSIDER AÇOS PLANOS, S.A. (“Lusosider”)
Incorporated in 1996, in continuity with Siderurgia Nacional – a company privatized by the Portuguese government that year –, Lusosider is the only Portuguese industry in the steel sector to produce cold-rolled flat steels with anticorrosion coating. The Lusosider has an installed capacity of about 550 thousand tons/year to produce four major groups of steel products: galvanized sheet, cold rolled sheet, pickled sheet and oiled sheet. The products manufactured by Lusosider can be applied in the packaging industry, civil construction (tubes and metallic structures) and in household appliance components.
· COMPANHIA ESTADUAL DE GERAÇÃO DE ENERGIA ELÉTRICA – CEEE-G.
On October 21, 2022, Companhia Florestal Brasileira acquired
a
Based in Porto Alegre, Rio Grande do Sul State, CEEE-G's main purpose is to conduct studies, projects, construction, and operation of electric power plants, as well as to execute business acts resulting from these activities, such as electric energy commercialization. CEEE-G exercises shareholding control of the Special Purpose Entities (SPEs) Ventos de Curupira S.A., Ventos de Povo Novo S.A. and Ventos de Vera Cruz S.A., incorporated in February 2014 and members of the consortium responsible for the construction of the Povo Novo Wind Farm Complex. The equity interest in CEEE-G as of December 31, 2024 is 100%.
· COMPANHIA ENERGÉTICA CHAPECÓ – CEC
Companhia Energética Chapecó, headquartered in São Paulo, is an independent power producer whose main activity is harnessing electric power potential on the Chapecó River through a hydroelectric plant located between the municipalities of Ipuaçu and São Domingos in the state of Santa Catarina, called Central Geradora Quebra-Queixo. On December 11, 2000, Companhia Energética Chapecó signed a Concession Agreement for the Use of Public Property for the generation of electricity No. 94/2000 with the National Electric Energy Agency – Aneel. The concession has a term of 35 years counted from the date of contract signature by the granting authority, which may be extended under conditions established by ANEEL, provided that the hydroelectric project exploitation meets the contract conditions and sector legislation.
· CSN CIMENTOS BRASIL S.A (“CSN Cimentos Brasil”)
Acquired on September 6, 2022, CSN Cimentos Brasil is
constituted as a corporation, domiciled in Brazil, with its headquarters located in Santa Cruz, Rio de Janeiro - RJ. This subsidiary of
CSN has industrial plants, warehouses and branches in much of the national territory. Its main activities are: production, industry and
general trade of cement, lime, mortar, minerals and metals in general and complementary products for civil construction, in natura. CSN's
equity interest in CSN Cimentos Brasil as of December 31, 2024 is
| FS-21 |
| |
| i) | Other investments: |
| · | PANATLÂNTICA SA (“Panatlântica”) |
Publicly-held corporation headquartered in Gravataí-RS,
whose purpose is the industrialization, trade, import, export and processing of steel and metals, ferrous or non-ferrous, coated or not,
and began to be evaluated through the equity method due to the acquisition of
| · | ARVEDI METALFER DO BRASIL SA (“Arvedi”) |
Arvedi, headquartered in Salto, State of São Paulo,
is engaged in pipe production. As of December 31, 2024 and 2023, CSN had a
| 9.c) | Main events occurred in subsidiaries in 2024 and 2023 |
· CSN CIMENTOS S.A. (“CSN CIMENTOS”)
The cement segment operations began in the Group in May 2009, through a grinding unit in Volta Redonda/RJ, driven by the synergy between this activity and the slag generation produced by the blast furnaces of Presidente Vargas Plant ("UPV"), a material used as the main raw material for cement production.
In 2011, its own clinker production was started, with the installation of a rotary clinker kiln in Arcos, Minas Gerais, using calcitic limestone extracted from the Bocaina Mine, existing in the same location that also supplies the steel limestone to the UPV. This clinker produced is primarily sent by railway to the cement factory in Volta Redonda/RJ.
In 2015, the Arcos/MG unit started cement production with the installation of two vertical cement mills and in 2016 a second clinker production line was installed, thus achieving self-sufficiency of clinker in cement production.
The main product of Arcos is CP-II type cement, basically composed of clinker, slag, limestone, and gypsum, with the composition varying according to the product. Still in Arcos, there is exploration of calcitic limestone and dolomite, which is destined for the UPV.
On August 31, 2023, the reverse merger of CSN Cimentos by CSN Cimentos Brasil was approved with the transfer of all assets, property (movable and immovable), rights and obligations. The Appraisal Report of CSN Cimentos' shareholders' equity was prepared based on a specific balance sheet with a base date of June 30, 2023.
As a result of the merger, CSN Cimentos Brasil's shareholders'
equity was increased by R$
| FS-22 |
| |
| (R$'000) | Net equity as of June 30, 2023 |
| Cash and cash equivalents | |
| Trade receivables | |
| Inventories | |
| Other assets | |
| Corporate investments | |
| Property, plant and equipment | |
| Intangíible assets | |
| Investment properties | |
| Total Assets | |
| Trade payables | |
| Borrowings and financing | |
| Salaries and social charges | |
| Taxes payable | |
| Lease liabilities | |
| Tax, social security, labor and civil | |
| Provisions for environmental liabilities and asset decommissioning | |
| Other payables | |
| Total Liabilities | |
| Net assets | |
| · | Companhia Estadual de Geração de Energia Elétrica - CEEE-G (“CEEE”) |
Sale of shares – Consórcio Machadinho
The Consórcio Machadinho is responsible for the exploration of HPP Machadinho, located on the Uruguay River, on the border of the states of Santa Catarina and Rio Grande do Sul, with an installed capacity of 1,140 MW and a physical guarantee of 519.8 average MW. CEEE-G's share in the Consortium was 5.53%, which implied the same percentage of costs and charges for the project under its responsibility.
As provided for in item 5.54 of the Privatization Notice of Auction Notice No. 01/2022 and under the terms of the contract establishing the Consórcio Machadinho, the other consortium members exercised their right of preference to acquire the entire stake in CEEE-G. The sale of CEEE-G's stake in Consórcio Machadinho occurred after the parties agreed to all the terms and conditions of the definitive transaction documents and the usual conditions for closing.
Under the terms and conditions of the agreed contract, the completion of the transaction was subject to compliance with the Precedent Condition, with the closure subject to the parties obtaining prior approval from the National Electric Energy Agency – ANEEL to carry out the Transaction, the which was granted in August 2023. The Closing of the transaction was carried out on 09/29/2023, for the amount of R$ 114,763,385.98 (one hundred and fourteen million, seven hundred and sixty-three thousand, three hundred and eighty-five reais and ninety-eight cents).
| FS-23 |
| |
| · | CSN Mineração S.A. (“CSN Mineração”) |
Share buyback program of subsidiary CSN Mineração
CSN Mineração approved, in Board of Directors Meetings, the Share Buyback Programs, for treasury maintenance and subsequent disposal or cancellation, described below:
| Program | Board’s Authorization | Authorized amount | Program period | Average buyback price | Minimum and maximum buyback price | Number bought back | Share cancelation | Balance in treasury shares | ||||||||
| 3º | ||||||||||||||||
| 4 º | R$ |
R$ and R$ | |
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| 4 º | ( |
( | ||||||||||||||
| |
( |
The share buyback program, for treasury maintenance and subsequent disposal or cancellation, approved on June 28, 2024 by the Board of Directors, consists of:
• Buyback of up to 100,000,000 shares
• Program term from June 28, 2024 to December 19, 2025
• Acquisition price may not be higher than the quotation on the Stock Exchange
• Buyback operations intermediated by qualified financial institutions.
On October 17, 2024, CSN Mineração approved in a Board of Directors meeting the cancellation of three treasury shares, without changing the subsidiary's share capital value because of the share cancellation. Consequently, the Company's share capital is now divided into 5,485,338,835 shares.
Distribution of dividends from subsidiary CSN Mineração:
On May 9, 2024, the Board of Directors of CSN Mineração
approved the distribution of interim dividends to the profit reserve account in the amount of R$
At a CSN Mineração Board of Directors meeting
held on September 30, 2024, the following distributions were approved: extraordinary interim dividends from profits recorded in the balance
sheet as of August 31, 2024, totaling R$
On December 27, 2024, CSN Mineração's Board
of Directors approved the payment of interest on equity in the amount of R$
Approval, execution and sale of minority interest in subsidiary CSN Mineração
The Company, in a Board of Directors meeting held on October 17, 2024, approved the Non-Binding Proposal with Itochu Corporation for the sale of a minority stake of up to 11% in its subsidiary CSN Mineração, at a price per share of R$ 7.50.
On November 5, 2024, in a new Board of Directors meeting, the approval of a Share Purchase Agreement was deliberated for the sale of common shares issued by CSN Mineração at a unit price of R$ per share, totaling R$ , which was paid in cash by Itochu Corporation to CSN on the date of the share transfer.
| FS-24 |
| |
| 11/30/2024 | ||
| Number of shares sold | ||
| Share price | R$ | |
| (+) Cash received (a) | | |
| Number of shares sold | ||
| Equity cost of the share | R$ | |
| (-) Write-off of investment (b) | | |
| (=) Gain in operation (a) - (b) | |
After approval of the transaction by the Administrative Council for Economic Defense – CADE, Itochu Corporation became a signatory to the Shareholders' Agreement of CSN Mineração, amended on November 6, 2024, without changing the rights of the parties to such agreement.
From November 12, 2024, due to this operation, CSN now holds common shares issued by CSN Mineração, reducing its direct stake to %, while Itochu Corporation now holds common shares issued by CSN Mineração, reaching a direct stake of % and an indirect stake of % through Japão Brasil Minério de Ferro Participações LTDA. Therefore, the shareholding composition of CSN Mineração became:
| SHAREHOLDER | SHARES | % SHAREHOLDING |
| COMPANHIA SIDÚRGICA NACIONAL | % | |
| ITOCHU CORPORATION | % | |
| Japão Brasil Minério de Ferro Participações LTDA | % | |
| POSCO Holding Inc. | % | |
| CHINA STEEL CORPORATION | % | |
| TREASURY SHARES | % | |
| OTHERS | % | |
| Total SHARES | % |
| 9.d) | Joint ventures and joint operations financial information |
The balance sheet and income statement balances of the companies whose control is shared are shown below and refer to 100% of the companies’ results:
| FS-25 |
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| 12/31/2024 | 12/31/2023 | |||||||||||||||
| Joint-Venture | Joint-Operation | Joint-Venture | Joint-Operation | |||||||||||||
| Equity interest (%) | MRS Logística | Transnordestina Logística | Equimac S.A. | Itá Energética | MRS Logística | Transnordestina Logística | Equimac S.A. | Itá Energética | ||||||||
| 37.49% | 48.03% | 50.00% | 48.75% | 37.27% | 48.03% | 50.00% | 48.75% | |||||||||
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| 01/01/2024 to 12/31/2024 | 01/01/2023 to 12/31/2023 | |||||||||||||||
| Joint-Venture | Joint-Operation | Joint-Venture | Joint-Operation | |||||||||||||
| Equity interest (%) | MRS Logística | Transnordestina Logística | Equimac S.A. | Itá Energética | MRS Logística | Transnordestina Logística | Equimac S.A. | Itá Energética | ||||||||
| 37.49% | 48.03% | 50.00% | 48.75% | 37.27% | 48.03% | 50.00% | 48.75% | |||||||||
| Statements of Income | ||||||||||||||||
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· ITÁ ENERGÉTICA S.A. - (“ITASA”)
ITASA is a corporation established in July 1996, whose objective is to operate, under concession, the Itá Hydroelectric Power Plant - UHE Itá ("UHE Itá"), with 1,450 MW of installed capacity, located on the Uruguay River, at the border of Santa Catarina and Rio Grande do Sul states. The Itá HPP concession is shared with ENGIE Brasil Energia S.A., and CSN's stake in ITASA is 48.75%.
· MRS LOGÍSTICA S.A. (“MRS”)
Located in Rio de Janeiro-RJ, the company aims to explore, through onerous concession, the public cargo railway transportation service in the right-of-way of the Southeast Network, located in the Rio de Janeiro, São Paulo, and Minas Gerais axis, from the defunct Rede Ferroviária Federal S.A. - RFFSA. The original concession term of 30 years counted from December 1, 1996, was extended by the granting authority in July 2022 for an additional 30 years counted from December 1, 2026.
MRS can also explore modal transport services related to rail transport and participate in projects aimed at expanding the granted railway services.
For the provision of services, MRS leased from RFFSA, for the same period of the concession, the assets necessary for the operation and maintenance of rail freight transport activities. At the end of the concession, all leased assets will be transferred to the possession of the railway transport operator designated in that same act.
| FS-26 |
| |
The Company directly holds an
The direct participation of CSN Mineração
in MRS is
· CONSÓRCIO DA USINA HIDRELÉTRICA DE IGARAPAVA
Igarapava Hydroelectric Power Plant is located in Rio Grande, in the city of Conquista - MG, and has an installed capacity of 210 MW, consisting of 5 Bulb-type generating units.
CSN holds
· CONSÓRCIO DA USINA HIDRELÉTRICA DE ITAÚBA
The Itaúba Hydroelectric Power Plant is located on the Jacuí river, in the municipality of Pinhal Grande, state of Rio Grande do Sul, and is composed of 4 Generating Units, with installed power of 500,400.00 KW.
CSN has a direct participation of
· CONSÓRCIO DA USINA HIDRELÉTRICA DE PASSO REAL
The Passo Real Hydroelectric Power Plant is located on the Jacuí river, in the municipality of Salto do Jacuí, state of Rio Grande do Sul, and is composed of 2 Generating Units, with installed power of 158,000.00 KW.
CSN has a direct participation of
| 9.e) | TRANSNORDESTINA LOGÍSTICA S.A. (“TLSA”) |
Its main objective is to explore and develop public cargo railway transportation services in the northeastern Brazil, comprising the sections from Missão Velha - Salgueiro, Salgueiro - Trindade, Trindade - Eliseu Martins, Salgueiro - Suape Port and Missão Velha - Pecém Port ("Malha II"). On December 23, 2022, following extensive negotiations involving ANTT, TCU, and the Ministry of Infrastructure at that time, the first amendment to the Concession Contract was signed. This amendment redefined the scope and completion deadlines for TLSA's railway sections, notably providing for the return of the Salgueiro-Porto de Suape section, resulting in a project with the current 1,206 km of railway network and a completion deadline of December 2029.
Management relies on resources from its shareholders and third parties to complete the project, which it expects to be available based on agreements and recent discussions between the involved parties. The amendment signed in 2024 with FDNE for an operation of R$ 3.6 billion in convertible debentures has made the resources for completing the project practically fully secured. After evaluating this matter, Management concluded as appropriate the going concern basis of accounting of the project in the preparation of its financial statements.
Accounting Policy
Equity method of accounting and consolidation
The equity method of accounting for subsidiaries, joint ventures and associates is applied. Other investments are held at fair value or cost.
| FS-27 |
| |
Subsidiaries: They are entities in which the Company has significant influence over its financial and operating policies and/or potential exercisable or convertible voting rights. Subsidiaries are fully consolidated from the date on which control is transferred to the Company and cease to be consolidated on the date on which control ceases.
Jointly controlled entities: are all entities in which the Company has jointly contractually controlled control with one or more parties and can be classified as follows:
Joint operations: are accounted for in the financial statements to represent the Company's contractual rights and obligations.
Joint ventures: are accounted for under the equity method and are not consolidated.
Associates: Are all entities over which the Company has significant influence but not control, generally through a shareholding of 20% to 50% of the voting rights. Investments in associates are initially recognized at cost and subsequently measured using the equity method.
Exclusive funds: The exclusive funds are private investment funds in which CSN’s resources are allocated according to the Company’s intention. They are managed by BNY Mellon Serviços Financeiros DTVM S.A. and Caixa Econômica Federal (CEF).
Consortiums: Electricity consortia are a form of collective electricity purchasing that allows groups of consumers to join to negotiate better supply conditions. In the Group, the Company and its subsidiaries CEEE-G, CSN Mineração, Cimentos Brasil, Elizabeth Cimentos, and Minérios Nacional participate in the listed consortiums. The profit or loss arising from consortium operations is recognized in the consortium companies according to the participation percentage.
Transactions between subsidiaries, associates, joint ventures and joint operations
Unrealized balances and gains on transactions with subsidiaries, jointly controlled entities and associates are eliminated proportionally to CSN’s interest in the entity in question in the consolidation process. Unrealized losses are eliminated in the same way as unrealized gains, but only to the extent that there is no evidence of impairment. The effects on the results of transactions with jointly controlled entities are also eliminated, where part of the equity in results of jointly controlled entities is reclassified to financial expenses, cost of products sold and income tax and social contribution.
The subsidiaries and jointly controlled entities have the same reporting date and accounting policies as those adopted by the Company.
Foreign currency transactions and balances
The transactions in foreign currencies are translated into the functional currency using the exchange rates in effect at the dates of the transactions or valuations when their values are remeasured. Foreign exchange gains and losses resulting from the settlement of those transactions and from the translation at year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognized in the income statement as financial result, except when they are recognized in shareholders' equity as a result of foreign operation characterized as foreign investment.
Advances made in foreign currencies are recorded at the exchange rate of the date the entity makes the advance payments or receipts, recognizes (transaction date) as a non-monetary asset or non-monetary liability.
| 9.f) | Investment properties |
The balance of investment properties is shown below:
| FS-28 |
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| Consolidated | ||||||||
| Ref. | Land | Buildings | Total | |||||
| Balance at December 31, 2023 | |
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| Cost | |
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| Accumulated depreciation | ( |
( | ||||||
| Balance at December 31, 2023 | |
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| Depreciation | 26 | ( |
( | |||||
| Transfer between groups - fixed assets and investment property | |
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| Write-offs | 27 | ( |
( | |||||
| Balance at December 31, 2024 | |
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| Accumulated depreciation | ( |
( | ||||||
| Balance at December 31, 2024 | |
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The Company Management's estimate of the fair value of
investment properties was carried out for December 31, 2024. The fair value of investment property as of December 31, 2024 is R$
The estimated average useful lives for the exercises are as follows (in years):
| Consolidated | |||
| 12/31/2024 | 12/31/2023 | ||
| Buildings |
Accounting Policy
The Company’s investment properties consist of land and buildings maintained to earn rental income and capital appreciation. The measurement method used is the acquisition or construction cost less accumulated depreciation and reduction to its recoverable value, when applicable. The accumulated depreciation of buildings is calculated using the straight-line method based on the estimated useful life of the properties subject to depreciation. Land is not depreciated since it has an indefinite useful life.
| FS-29 |
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| 10. | PROPERTY, PLANT AND EQUIPMENT |
| Consolidated | ||||||||||||||||||
| Ref. | Land | Buildings and Infrastructure | Machinery, equipment and facilities | Furniture and fixtures | Construction in progress (*) | Right of use (i) | Others (**) | Total | ||||||||||
| Balance at December 31, 2022 | |
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| Accumulated depreciation | ( |
( |
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| Effect of foreign exchange differences | ( |
( |
( |
( |
( |
( |
( |
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| Capitalized interest | 28 | | ||||||||||||||||
| Write-offs | 27 | ( |
( |
( |
( |
( |
( |
( | ||||||||||
| Depreciation | 26 | ( |
( |
( |
( |
( |
( | |||||||||||
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( |
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( |
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| Write-offs | 27 | ( |
( |
( |
( |
( |
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| Depreciation | 26 | ( |
( |
( |
( |
( |
( | |||||||||||
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( |
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| Transfer between groups - intangible assets and investment property | ( |
( |
( |
( | ||||||||||||||
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( |
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| Balance at December 31, 2024 | |
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| (*) | Highlights of project advancements include: (i) business expansion, mainly port expansion in Itaguaí and Casa de Pedra, Itabirito project and tailings recovery (ii) new integrated cement plant projects and (iii) comprehensive overhaul of blast furnace and coke batteries at Presidente Vargas Plant. |
| (**) | Refer substantially to assets classified as vehicles and hardware. |
The estimated average useful lives are as follows (in years):
| Consolidated | |||
| 12/31/2024 | 12/31/2023 | ||
| Buildings and Infrastructure | |||
| Machinery, equipment and facilities | |||
| Furniture and fixtures | |||
| Others |
| FS-30 |
| |
| (i) | Right of use |
Below are the changes in the right of use:
| Consolidated | |||||||||
| Land | Buildings and Infrastructure | Machinery, equipment and facilities | Others | Total | |||||
| Balance at December 31, 2022 | |
|
|||||||
| Cost | |||||||||
| Accumulated depreciation | ( |
( |
( |
( |
( | ||||
| Balance at December 31, 2022 | |
|
|||||||
| Effect of foreign exchange differences | ( |
( |
( |
( | |||||
| Addition | |
|
|||||||
| Remesurement | |
|
|||||||
| Depreciation | ( |
( |
( |
( |
( | ||||
| Transfers to other asset categories | ( |
( |
|||||||
| Balance at December 31, 2023 | | ||||||||
| Cost | |
|
|
||||||
| Accumulated depreciation | ( |
( |
( |
( |
( | ||||
| Balance at December 31, 2023 | | ||||||||
| Effect of foreign exchange differences | | ||||||||
| Addition | | ||||||||
| Remesurement | |
|
| ||||||
| Depreciation | ( |
( |
( |
( |
( | ||||
| Write-offs | ( |
( | |||||||
| Balance at December 31, 2024 | | ||||||||
| Cost | |
|
|
||||||
| Accumulated depreciation | ( |
( |
( |
( |
( | ||||
| Balance at December 31, 2024 | |
Accounting Policy
Property, plant and equipment are recorded at acquisition, formation, or construction cost less depreciation or accumulated depletion and impairment. Depreciation is calculated using the linear method based on the remaining useful life of the assets or the contract term, whichever is shorter. The exhaustion of mines is calculated based on the quantity of ore extracted and lands are not depreciated since they are considered to have an indefinite useful life. Other expenses are posted to the expense account when incurred.
| · | Capitalized interest |
Borrowing costs directly attributable to the acquisition, construction, and/or production of qualifying assets are capitalized as part of the asset cost when it is probable that they will result in future economic benefits and when they are ready to perform their functions according to the Company's intended purpose.
| · | Costs of Development of New Ore Deposits |
Costs for the development of new ore deposits, or for the expansion of the capacity of mines in operation are capitalized and amortized using the produced (extracted) units method based on probable and proven quantities of ore.
| FS-31 |
| |
| · | Expenses with Exploration |
Exploration expenses are recognized as expenses until the viability of the mining activity is established after this period, subsequent costs are capitalized.
| · | Overburden Removal Expenses |
Expenses incurred during the mine development phase, before the production phase, are recorded as part of the depreciable development costs. Subsequently, these costs are amortized during the mine's useful life based on probable and proven reserves.
| · | Overburden Costs |
The overburden costs incurred in the production phase are added to the inventory value, except when a specific extraction campaign is carried out to access deeper deposits of the ore body. In this case, costs are capitalized and classified in non-current assets and are amortized over the life of the mine.
| 11. | INTANGIBLE ASSETS |
| Consolidated | ||||||||||||||||
| Ref. | Goodwill | Customer relationships | Software | Trademarks and patents |
Rights and licenses (*) | Others | Total | |||||||||
| Balance at December 31, 2022 | |
|
|
|
||||||||||||
| Cost | |
|
|
|
|
|||||||||||
| Accumulated amortization | ( |
( |
( |
( |
( |
( | ||||||||||
| Adjustment for accumulated recoverable value | ( |
( | ||||||||||||||
| Balance at December 31, 2022 | |
|
|
|
||||||||||||
| Effect of foreign exchange differences | ( |
( |
( |
( | ||||||||||||
| Acquisitions | |
|||||||||||||||
| Transfer between groups - fixed assets | ( |
|||||||||||||||
| Write-offs | 27 | ( |
( | |||||||||||||
| Amortization | 26 | ( |
( |
( |
( |
( | ||||||||||
| Others | |
|||||||||||||||
| Balance at December 31, 2023 | |
|
|
|
||||||||||||
| Cost | |
|
|
|
|
|||||||||||
| Accumulated amortization | ( |
( |
( |
( |
( |
( | ||||||||||
| Balance at December 31, 2023 | |
|
|
|
||||||||||||
| Effect of foreign exchange differences | |
|||||||||||||||
| Acquisitions | ||||||||||||||||
| Transfer between groups - fixed assets | ||||||||||||||||
| Write-offs | 27 | ( |
( | |||||||||||||
| Amortization | 26 | ( |
( |
( |
( |
( | ||||||||||
| Transfers to other asset categories | ( |
|||||||||||||||
| Others | ||||||||||||||||
| Balance at December 31, 2024 | |
|
|
|
|
|||||||||||
| Cost | |
|
|
|
|
|||||||||||
| Accumulated amortization | ( |
( |
( |
( |
( |
( | ||||||||||
| Balance at December 31, 2024 | |
|
|
|
|
| (*) | Composed mainly of: (i) mining rights amortized by production volume and (ii) Concession contract for hydroelectric resource utilization in acquiring control of Companhia Estadual de Geração de Energia Elétrica, with amortization performed over the contract's term. |
The estimated average useful lives are as follows (in years):
| Consolidated | |||
| 12/31/2024 | 12/31/2023 | ||
| Software | |||
| Customer relationships |
| FS-32 |
| |
| 11.a) | Goodwill impairment test |
Goodwill arising from expected future profitability of acquired companies and intangible assets of brands with indefinite useful lives were allocated to CSN's operating divisions (CGUs), which represent the lowest level of assets or group of assets of the Group.
| Consolidated | ||||||||||||||
| Goodwill | Trademarks | Total | ||||||||||||
| Cash generating unity | Segment | 12/31/2024 | 12/31/2023 | 12/31/2024 | 12/31/2023 | 12/31/2024 | 12/31/2023 | |||||||
| Packaging (1) | Steel | |
|
|||||||||||
| Long steel (2) | Steel | |
|
|
||||||||||
| Mining (3) | Mining | |
||||||||||||
| Other Steel (4) | Steel | |
|
|||||||||||
| Cements (5) | Cement | |
|
|
|
|||||||||
| |
|
|||||||||||||
| (1) | Acquisition of CBL Group in 2011 and Metalgráfica Iguaçu in 2022 by Prada |
| (2) | Acquisition of Stahlwerk Thuringen GmbH (“SWT”) and Gallardo Sections in 2012 by CSN |
| (3) | Acquisition of Namisa in 2015 by CSN Mineração |
| (4) | Acquisition of CBSI in 2019 by CSN |
| (5) | Acquisition of Elizabeth Cimentos S.A. in 2021 and CSN Cimentos Brasil S.A. in 2022 by CSN. |
Accounting Policy
Intangible assets basically comprise assets acquired from third parties, including through a business combination. These assets are recorded at acquisition or formation cost and deducted from amortization calculated using the straight-line method based on the economic useful life of each asset, within the estimated exploration or recovery periods.
Mineral exploration rights are classified as rights and licenses in the intangible group.
Intangible assets with indefinite useful lives are not amortized.
| · | Goodwill |
Goodwill is represented by the positive difference between the amount paid and/or payable for the acquisition of a business and the net amount of the fair value of the assets and liabilities acquired. The goodwill from business combinations is recorded as an intangible asset in the consolidated financial statements. In the individual balance sheet goodwill is included in investments. Gain from advantageous purchase is recorded as gain in profit or loss for the year on the acquisition date. Gains and losses from the disposal of a Cash Generating Unit (“CGU”) include the carrying amount of goodwill related to the CGU sold.
| 12. | IMPAIRMENT |
| a) | Impairment test of goodwill and other assets |
The Company annually tests impairment for assets that had indications that they could be devalued and for goodwill. For the Company's impairment tests, the recoverable amount of each cash-generating unit ("CGU") was evaluated using either Fair Value Less Cost of Disposal ("FVLCD") or Value in Use ("VIU") models, both through discounted cash flow techniques, classified as "level 3" in the fair value hierarchy, considering sales proposals and agreements when applicable.
Cash flows were discounted using a discount rate, in real or nominal terms, after taxes that represents an estimate of the rate that a market participant would apply considering the time value of money and the specific risks of the asset. The Company used the Weighted Average Cost of Capital ("WACC") of its respective business segments as a starting point for determining the discount rates, with adjustments to reflect the risk profile in which the CGUs individually operate.
| FS-33 |
| |
As a matter of practice, the cash flows of the Company's CGUs are prepared for a period of 10 years and are assumed to be perpetual from the 10th year onwards, without considering the actual growth rate, based on the past performance and future expectations for the performance of each of these businesses. For the Mining Segment, 42 years were used, which is the estimated end of the mine's useful life, and for Logistics, the term of 33 years, which is the end of the concession.
These expectations form the basis for using a 10-year or longer period, as in the case of Mining and Logistics CGUs, and take into consideration (i) the operational launch of the Mining business expansion, which is in the detailed engineering phase with equipment acquisition to occur over the next 6 years (ii) Cement, with significant limestone and gypsum deposit reserves and long-term contracts, especially for slag, both with useful life and terms exceeding 10 years, respectively (iii) Logistics, the renewal of the concession contract, (iv) and Steel, new investments over the next 3 years for improved operational efficiency through industrial park modernization.
Goodwill allocated to Packaging operations
| Book value | |
| Cash Flow Period | |
| Gross Margin | |
| Cost updating | |
| Perpetuity growth rate | |
| Discount rate, in real terms | |
| Measurement of recoverable value | |
| Projected price range R$ / t | |
| Sensitivity of key assumptions | |
| Test result | |
|
|
Goodwill allocated to Mining operations
| Book value | |
| Cash Flow Period | |
| Gross Margin | |
| Cost updating | |
| Perpetuity growth rate | |
| Discount rate, in real terms | |
| Measurement of recoverable value | |
| Projected price range R$ / t | |
| Sensitivity of key assumptions | |
| Test result | |
| FS-34 |
| |
Goodwill allocated to Other Steel Operations
| Book value | |
| Cash Flow Period | |
| Gross Margin | |
| Cost updating | |
| Perpetuity growth rate | |
| Discount rate, in real terms | |
| Measurement of recoverable value | |
| Projected price range R$ / t | |
| Sensitivity of key assumptions | |
| Test result |
Goodwill and Brands allocated to Long Steel operations - SWT
| Book value | |
| Cash Flow Period | |
| Gross Margin | |
| Cost updating | |
| Perpetuity growth rate | |
| Discount rate, in real terms | |
| Measurement of recoverable value | |
| Projected price range € / t | |
| Sensitivity of key assumptions | |
| Test result | |
| FS-35 |
| |
Goodwill and Brands with indefinite useful life allocated to Cement Operations
| Book value | |
| Cash Flow Period | |
| Gross Margin | |
| Cost updating | |
| Perpetuity growth rate | |
| Discount rate, in nominal terms | |
| Measurement of recoverable value | |
| Projected price range R$ / t | |
| Sensitivity of key assumptions | |
| Test result |
| a) | Investment Impairment Test |
Recoverable Amount Measurement – TLSA
| Book Value | |
| Cash Flow Period | |
| Gross margin | |
| Cost estimate | |
| Perpetuity growth rate | |
| Discount rate, in real terms | Ranges from |
| Measurement of recoverable value | |
| Range of prices projected for rail transport | |
| Sensitivity of key assumptions | |
| Test result |
| FS-36 |
| |
In addition, CSN, as an investor, tested the recoverability of its investment in TLSA based on TLSA's ability to pay dividends, a methodology known as the Dividend Discount Model (DDM), to recover the capital invested by its shareholders. To perform this test, some factors were considered, such as:
| · | The dividend flow was extracted from TLSA's nominal cash flow |
| · | The dividend flow was calculated considering the annual participation percentages, considering the dilutions of CSN's participation resulting from the amortization of debts |
| · | This dividend flow was then discounted to present value using the cost of own capital (Ke) embedded in the TLSA WACC rate and |
| · | This extracted Ke was the one calculated in the "rolling WACC" of the TLSA. |
Due to the sharing of investor risks and the fact that the asset being tested represents the cash-generating unit itself, which equals the legal entity, the risk determined by CSN's Management is the same applied by TLSA when evaluating the investment of its own assets, with no additional risk factor required for the model.
Accounting Policy
Impairment of Non-Financial Assets
Non-financial assets are analyzed for impairment whenever events or changes in circumstances indicate that the book value may not be recoverable. An impairment loss is recognized for the amount by which the carrying value of the asset exceeds its recoverable amount, the latter being the higher of an asset's fair value less costs of disposal ("FVLCD") and its value in use ("VIU").
The FVLCD is normally measured based on the present value of the estimated cash flows – Discounted Cash Flows (“DCF”) arising from the continued use of the asset from the perspective of a market participant, including any prospects for expansion. The VIU is measured by the DCF that is expected by the continuous use of the asset in its current conditions, without considering future developments. These two premises are different from those used in the fair value calculation, consequently the VIU calculation will probably give a different result from the FVLCD calculation.
Assets with an indefinite useful life, such as goodwill, are not subject to amortization and are tested annually for impairment.
| FS-37 |
| |
For impairment assessment purposes, assets are grouped at the lowest levels for which there are separately identifiable incoming cash flows (Cash Generating Unit – “CGU”). For this test, goodwill is allocated to the CGUs or to the group of CGUs that should benefit from the Business Combination to which the goodwill originated, being identified according to the operating segment.
Non-financial assets, other than goodwill, that have been impaired in prior years are reviewed at the end of each year whenever events or circumstances indicate that the impairment is no longer applicable. In such cases, a reversal of impairment will be recognized.
Fair-value impairment test of Investments
Investments are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognized at the amount at which the carrying amount of the asset exceeds its recoverable amount.
Management's estimates and judgments
(*) The impairment test of goodwill and intangible assets with indefinite useful lives includes the assets of these cash-generating units in addition to the balance of other intangible assets. The test is based on comparing the book balance with the value in use of these units, determined based on past experience in making reliable and accurate forecasts for periods longer than 5 years, using discounted cash flow projections for future years and budgets approved by Management, as well as using assumptions and judgments related to (i) growth rate, (ii) costs and expenses, (iii) discount rate, (iv) future working capital and investment ("Capex"), (v) mineral reserves and resources measured by internal specialists, (vi) useful life of the cash-generating unit (relationship between production and mineral reserves or the concession term), as well as observable macroeconomic assumptions in the market. Additionally, Steel, Cement, Packaging, Energy, Logistics and Minerals are essential inputs, which also justify the use of longer periods for the preparation of their projections.
These assumptions are subject to future risks and uncertainties and could materially change the Company's projections, and the approaches used to perform these analyses may improve over time. Therefore, they may affect the recoverable value of assets.
| 13. | BORROWINGS AND FINANCING |
The balances of borrowings and financing that are recorded at amortized cost are as follows:
| FS-38 |
| |
| Consolidated | |||||||||
| Current Liabilities | Non-current Liabilities | ||||||||
| 12/31/2024 | 12/31/2023 | 12/31/2024 | 12/31/2023 | ||||||
| Foreign Debt | |||||||||
| Floating Rates in USD | |||||||||
| Prepayment | |
|
|||||||
| Fixed Rates in USD | |||||||||
| Bonds (USA), Facility, CCE and ACC | |
|
|
| |||||
| Fixed interest in EUR | |||||||||
| Facility | | ||||||||
| |
|
|
| ||||||
| Debt agreements in BRL | |||||||||
| Floating Rate Securities | |||||||||
| BNDES/FINAME/FINEP, debentures, NCE and CCB | |
|
|
| |||||
| |
|
|
| ||||||
| Total Borrowings and Financing | |
|
|
| |||||
| Transaction Costs and Issue Premiums | ( |
( |
( |
( | |||||
| Total Borrowings and Financing + Transaction cost | |||||||||
| 13.a) | Changes in borrowings and financing |
The following table shows the reconciliation of the book value at the beginning and end of the year:
| Consolidated | ||||||
| Ref. | 12/31/2024 | 12/31/2023 | ||||
| Opening balance | ||||||
| New debts | ||||||
| Repayment | ( |
( | ||||
| Payments of charges | ( |
( | ||||
| Accrued charges | 28 | | ||||
| Others (1) | ( | |||||
| Closing balance |
| (1) | Including unrealized exchange and monetary variations and funding cost. |
| FS-39 |
| |
In 2024, the Company entered into new debt agreements and amortized borrowings and financing as shown below:
| Consolidated | ||||||||
| 12/31/2024 | ||||||||
| Nature | New debts | Maturities | Repayment | Interest payment | ||||
| Pre-Payment | |
( |
( | |||||
| Bonds, ACC, CCE and Facility | |
|
( |
( | ||||
| BNDES/FINAME/FINEP, debentures, NCE, Facility and CCB | |
|
( |
( | ||||
| ( |
( |
| 13.b) | Maturities of debts presented in current and non-current liabilities |
| Consolidated | ||||||
| 12/31/2024 | ||||||
| In foreign currency | In national currency - R$ | Total | ||||
| Average rate | In Dollar 6.63% In Euro 4.13% |
In Real - 14.17% | ||||
| 2025 | |
|
| |||
| 2026 | |
|
| |||
| 2027 | |
|
| |||
| 2028 | |
|
| |||
| 2029 | |
|
| |||
| 2030 to 2032 | |
|
| |||
| After 2032 | |
|
| |||
| |
|
|
· Covenants
The Company's debt contracts provide for compliance with certain non-financial obligations, as well as maintenance of specific performance parameters and indicators, such as the disclosure of audited financial statements according to regulatory deadlines or having early maturity declared if the net debt to EBITDA indicator reaches the levels specified in these contracts.
As of December 31, 2024, the Company is compliant with the financial and non-financial obligations (covenants) of its current contracts.
Accounting Policy
Loans and borrowings are initially recognized at fair value, net of transaction cost and subsequently measured at amortized cost and restated using effective interest methods and charges. Interest, commissions, and any financial charges are recorded on an accrual basis, that is, in accordance with the time elapsed.
| 14. | FINANCIAL INSTRUMENTS |
| 14.a) | Identification and valuation of financial instruments |
The Company may operate with several financial instruments, with emphasis on cash and cash equivalents, including financial investments, marketable securities, accounts receivable from customers, accounts payable to suppliers and borrowings and financing. Additionally, the Company may also operate with derivative financial instruments, such as swap of exchange or interest and commodities derivatives.
Considering the nature of these instruments, their fair values are basically determined by the use of quotations in the capital markets in Brazil and the Mercantile and Futures Exchange. The amounts recorded in current assets and liabilities have immediate liquidity or maturity, mostly in the short term. Considering the terms and characteristics of these instruments, the carrying amounts approximate the fair values.
| FS-40 |
| |
| · | Classification of financial instruments |
| Consolidated | ||||||||||||||||
| 12/31/2024 | 12/31/2023 | |||||||||||||||
| Ref. | Fair value through profit or loss | Measured at amortized cost | Balances | Fair value through other comprehensive income | Fair value through profit or loss | Measured at amortized cost | Balances | |||||||||
| Assets | ||||||||||||||||
| Current | ||||||||||||||||
| Cash and cash equivalents | 3 | |
| |||||||||||||
| Financial investments | 4 | |
|
|
| |||||||||||
| Trade receivables | 5 | |
|
| ||||||||||||
| Dividends and interest on equity | 8 | |
||||||||||||||
| Derivative financial instruments | 8 | |
| |||||||||||||
| Trading securities | 8 | |
|
|
| |||||||||||
| Loans - related parties | 22.a | |
| |||||||||||||
| Total | |
|
|
| ||||||||||||
| Non-current | ||||||||||||||||
| Financial investments | 4 | |
||||||||||||||
| Other trade receivables | |
|
| |||||||||||||
| Eletrobrás compulsory loan | 8 | |
|
| ||||||||||||
| Receivables by indemnity | 8 | | ||||||||||||||
| Loans - related parties | 22.a | |
| |||||||||||||
| Investments | 9 | | ||||||||||||||
| Total | |
| ||||||||||||||
| Total Assets | |
|
|
| ||||||||||||
| Liabilities | ||||||||||||||||
| Current | ||||||||||||||||
| Borrowings and financing | 13 | |
| |||||||||||||
| Lease liabilities | 15 | |
||||||||||||||
| Trade payables | 16 | |
| |||||||||||||
| Trade payables - Forfaiting | 16.a | |
| |||||||||||||
| Dividends and interest on capital | 17 | |
|
| ||||||||||||
| Derivative financial instruments | 17 | |
||||||||||||||
| Total | |
|
| |||||||||||||
| Non-current | ||||||||||||||||
| Borrowings and financing | 13 | |
| |||||||||||||
| Lease liabilities | 15 | |
||||||||||||||
| Trade payables | 16 | |
|
| ||||||||||||
| Derivative financial instruments | 14.c | |
| |||||||||||||
| Concessions to be paid | 17 | |
|
| ||||||||||||
| Total | |
|
| |||||||||||||
| Total Liabilities | |
|
|
| ||||||||||||
| FS-41 |
| |
| · | Fair value measurement |
The following table shows the financial instruments recorded at fair value through profit or loss, classifying them according to the fair value hierarchy:
| Consolidated | 12/31/2024 | 12/31/2023 | ||||||||||
| Level 1 | Level 2 | Balances | Level 1 | Level 2 | Balances | |||||||
| Assets | ||||||||||||
| Current | ||||||||||||
| Financial investments | | |||||||||||
| Trade receivables, net | ||||||||||||
| Derivative financial instruments | ||||||||||||
| Trading securities | ||||||||||||
| Non-current | ||||||||||||
| Investments | ||||||||||||
| Total Assets | |
| ||||||||||
| Liabilities | ||||||||||||
| Current | ||||||||||||
| Derivative financial instruments | ||||||||||||
| Non-current | ||||||||||||
| Derivative financial instruments | ||||||||||||
| Total Liabilities |
Level 1 - Data prices are quoted in an active market for items identical to the assets and liabilities being measured.
Level 2 - Consider inputs observable in the market, such as interest rates, exchange rates, etc., but are not prices negotiated in active markets.
Level 3 - There are no assets and liabilities classified as level 3.
| 14.b) | Financial risk management |
The Company uses risk management strategies with guidance on the risks incurred on the business. The nature and general position of financial risks are regularly monitored and managed to assess results and the financial impact on cash flow. Credit limits and hedge quality of counterparties are also reviewed periodically.
Market risks are hedged when is considered necessary to support the corporate strategy or when it is necessary to maintain the level of financial flexibility.
The Company is exposed to exchange rate, interest rate, market price and liquidity risks.
The Company may manage some of the risks using derivative instruments not associated with any speculative trading or short selling.
| i) | Exchange rate risk |
The exposure arises from the existence of assets and liabilities denominated in Dollar or Euro, since the Company’s functional currency is substantially the Real and is referred to as natural exchange exposure. The net exposure is the result of the offsetting of the natural exchange exposure by the instruments of hedge adopted by CSN.
| FS-42 |
| |
The consolidated net exposure as of December 31, 2024 is shown below:
| 12/31/2024 | 12/31/2023 | |||
| Foreign Exchange Exposure | (Amounts in US$’000) | (Amounts in US$’000) | ||
| Cash and cash equivalents overseas | |
| ||
| Trade receivables | |
|||
| Financial investments | |
| ||
| Borrowings and financing | ( |
( | ||
| Trade payables | ( |
( | ||
| Others | ( |
( | ||
| Natural Gross Foreign Exchange Exposure (assets - liabilities) | ( |
( | ||
| Derivative financial instruments (*) | |
| ||
| Net foreign exchange exposure | |
|||
| (*) | Total notional value of derivative and non-derivative financial instruments used for exchange risk management. |
The Company uses Hedge Accounting as a strategy, as well as derivative financial instruments to protect future cash flows.
Sensitivity Analysis of Derivative Financial Instruments and Consolidated Foreign Exchange Exposure
The Company evaluated two different scenarios for the analysis of the exchange rate impact: Scenario 1 projects a horizon of increased currency volatility, and Scenario 2 predicts a horizon of currency appreciation. The calculation is based on the closing exchange rate on December 31, 2024, using assumptions based on a variance calculation that considers both historical exchange rate fluctuations and management's projections.
The currencies used in the sensitivity analysis and their respective scenarios are shown below:
| 12/31/2024 | ||||||||
| Currency | Exchange rate | Probable scenario | Scenario 1 | Scenario 2 | ||||
| USD | |
|||||||
| EUR | |
|||||||
| USD x EUR | |
The effects on profit or loss, considering scenarios 1 and 2, are shown below:
| 12/31/2024 | ||||||||||
| Instruments | Notional amount | Risk | Probable scenario (*) R$ | Scenario 1 R$ | Scenario 2 R$ | |||||
| Cash and cash equivalents overseas | ( |
( | ||||||||
| Trade receivables | ( |
|
( | |||||||
| Financial investments | ( |
( | ||||||||
| Borrowings and financing | ( |
|
( |
| ||||||
| Trade payables | ( |
|
( |
|||||||
| Others | ( |
|
( |
| ||||||
| Derivative financial instruments | ( |
( | ||||||||
| Impact on profit or loss | ( |
( |
| (*) | The probable scenarios were calculated considering the following variations for the risks: Real x Dollar - appreciation of 6.69% / Real x Euro - appreciation of the real by 5.76% / Euro x Dollar - depreciation of the dollar by 1.00%. Source: Central Bank of Brazil on February 26, 2025. |
| FS-43 |
| |
| ii) | Interest rate risk |
This risk stems from financial investments, loans, and financing and debentures in short and long terms linked to pre-fixed and post-fixed interest rates of CDI, TJLP, SOFR, exposing these financial assets and liabilities to interest rate fluctuations as demonstrated in the sensitivity analysis chart below.
With the modification of the global financial market in debt instruments in recent years and in line with recommendations from international regulatory bodies, the market began transitioning from LIBOR (London Interbank Offered Rate) to SOFR (Secured Overnight Financing Rate) starting in 2022. On September 30, 2023, all contracts were migrated to SOFR, as evidenced in the interest rate sensitivity analysis.
Sensitivity analysis of interest rate changes
Below, we present the sensitivity analysis to risks related to interest rates. The Company considered two different scenarios to assess the impact of variations in these rates: Scenario 1 predicts a horizon of rising interest rates, and Scenario 2 projects a reduction horizon. The closing rates at December 31, 2024 were used as a reference for the calculation, based on a dispersion model that takes into account not only historical interest rate fluctuations but also detailed management projections.
This approach allows a comprehensive and precise assessment of potential economic impacts arising from interest rate fluctuations.
| Consolidated | ||||||
| 12/31/2024 | ||||||
| Interest | Interest rate | Scenario 1 | Scenario 2 | |||
| CDI | ||||||
| TJLP | ||||||
| IPCA | ||||||
| SOFR 6M | ||||||
| SOFR | ||||||
| EURIBOR 3M | ||||||
| EURIBOR 6M |
The effects on profit or loss, considering scenarios 1 and 2, are shown below:
| Impact on balances on 12/31/2024 | ||||||||||||
| Changes in interest rates | % p.a | Assets | Liabilities | Probable scenario (*) | Scenario 1 | Scenario 2 | ||||||
| CDI | ( |
( |
( |
( | ||||||||
| TJLP | ( |
( |
( |
( | ||||||||
| IPCA | ( |
( |
( |
( | ||||||||
| SOFR 6M | ( |
( |
( |
( | ||||||||
| SOFR | ( |
( |
( |
( | ||||||||
| EURIBOR 3M | ( |
( |
( |
( | ||||||||
| EURIBOR 6M | ( |
( |
( |
( | ||||||||
| ( |
( |
( | ||||||||||
| (*) | The sensitivity analysis is based on the premise of maintaining as a probable scenario the market values as of December 31, 2024 recorded in the Company's assets and liabilities. |
| FS-44 |
| |
| iii) | Market price risk |
The Company is also exposed to market risks related to the volatility of commodity and input prices. In line with its risk management policy, risk mitigation strategies involving commodities can be used to reduce cash flow volatility. These mitigation strategies may incorporate derivative instruments, predominantly forward transactions, futures, and options.
Below are the instruments for price risk protection, as shown in the following topics:
a) Cash flow hedge accounting - “Platts” index
The Company had iron ore derivative operations, contracted by the subsidiary CSN Mineração, with the objective of reducing the volatility of its exposure to the commodity. These contracts were settled in June 2024.
To better reflect the accounting effects of the "Platts" hedge strategy on the result, CSN Mineração opted to formally designate the hedge and, consequently, adopted hedge accounting for the iron ore derivative as a hedge accounting instrument for its highly probable future iron ore sales. As a result, the mark-to-market arising from the "Platts" volatility will be temporarily recorded in shareholders' equity and will be taken to the income statement when the sales occur according to the contracted evaluation period. This allows the recognition of "Platts" volatility on iron ore sales to be recognized at the same time.
The Company has periodically reviewed market scenarios to assess its exposure to iron ore price risk to ensure adequate coverage of market price fluctuations. This process involves monitoring fluctuations and trends in global prices, in addition to considering economic and geopolitical factors that may impact the value of this commodity.
The table below shows the profit or loss of the derivative instrument up to December 31, 2024:
| 12/31/2024 | 12/31/2023 | 12/31/2024 | 12/31/2023 | 12/31/2024 | 12/31/2023 | |||||||||
| Other income and expenses (note 27) | Other comprehensive income | Impact on financial income/(expenses) | ||||||||||||
| Maturity | Notional | |||||||||||||
| 11/01/2023 to 11/30/2023 (Settled) | Platts | ( |
( | |||||||||||
| 12/01/2023 to 12/31/2023 (Settled) | Platts | ( |
||||||||||||
| 01/01/2024 to 01/31/2024 (Settled) | Platts | ( |
( |
( |
| |||||||||
| 02/01/2024 to 02/28/2024 (Settled) | Platts | ( |
( |
( |
| |||||||||
| 03/01/2024 to 03/31/2024 (Settled) | Platts | |
( |
|
||||||||||
| 04/01/2024 to 04/30/2024 (Settled) | Platts | |
( |
|
||||||||||
| 05/01/2024 to 05/31/2024 (Settled) | Platts | |
( |
|
||||||||||
| 06/01/2024 to 06/30/2024 (Settled) | Platts | |
( |
| ||||||||||
| |
( |
- | ( |
|
( | |||||||||
The reconciliation of the amounts related to cash flow hedge accounting - "Platts" index recorded in equity as of December 31, 2024 is demonstrated as follows:
| 12/31/2023 | Movement | Realization | 12/31/2024 | ||||
| Cash flow hedge–“Platts” | ( |
( |
|||||
| Income tax and social contribution on cash flow hedge | ( |
|
|||||
| Fair Value of cash flow hedge - Platts, net | ( |
|
( |
The cash flow hedge - "Platts" index was fully effective since the contracting of derivative instruments.
To support the designations, the Company prepared formal documentation indicating how the cash flow hedge accounting designation - "Platts" index aligns with CSN's risk management objective and strategy, identifying the protection instruments used, the hedge object, the nature of the risk to be protected, and demonstrating the expectation of high effectiveness of the designated relationships. Iron ore derivative instruments ("Platts" index) were designated in amounts equivalent to the portion of future sales, comparing the designated amounts with the expected and approved amounts in the budgets of the Management and Board.
| FS-45 |
| |
b) Cash flow hedge accounting
Foreign Exchange Hedge
The Company and its subsidiary CSN Mineração formally designate cash flow hedge relationships to protect highly probable future flows exposed to the dollar related to sales made in dollars.
With the objective of better reflecting the accounting effects of the foreign exchange hedge strategy in the results, CSN and its subsidiary CSN Mineração designated part of their dollar liabilities as a hedge instrument for their future exports. As a result, the exchange rate variation from designated liabilities will be temporarily recorded in shareholders' equity and will be transferred to the income statement when the respective exports occur, thus allowing the recognition of dollar fluctuations on the liability and exports to be recorded at the same time. It is emphasized that the adoption of this hedge accounting does not imply the contracting of any financial instrument.
| FS-46 |
| |
The table below presents the summary of hedging relationships as of December 31, 2024:
| 12/31/2024 | ||||||||||||||||||
| Designation Date | Hedging Instrument | Hedged item | Type of hedged risk | Hedged period | Exchange rate on designation | Designated amounts (US$’000) | Amortizated part (USD'000) | Effect on Result (*) (R$'000) | Impact on Shareholders' equity (R$'000) | |||||||||
| |
|
( |
( | |||||||||||||||
| |
|
( |
( | |||||||||||||||
| |
|
( | ||||||||||||||||
| |
|
( |
( |
( | ||||||||||||||
| |
( |
( | ||||||||||||||||
| |
( | |||||||||||||||||
| |
|
( |
( |
( | ||||||||||||||
| |
|
( | ||||||||||||||||
| |
|
|
|
|
( | |||||||||||||
| |
|
( |
|
|||||||||||||||
| |
( |
( |
( | |||||||||||||||
| |
|
( | ||||||||||||||||
| |
( | |||||||||||||||||
| Total | |
( |
( |
( | ||||||||||||||
| (*) | The realization of cash flow hedge accounting is recognized in Other operating revenues and expenses, in note 27. |
The net balance of amounts designated and already amortized
in US dollars totals US$
In the hedge relationships described above, the values of the debt instruments were fully designated for equivalent portions of iron ore exports.
As of December 31, 2024, the hedge relationships established by the Company were effective, according to the prospective and retrospective tests performed. Thus, no reversal due to ineffectiveness of cash flow hedge accounting was recorded.
c) Net investment hedge in foreign subsidiaries
The information related to the net investment hedge did
not change in relation to that disclosed in the Company's financial statements as of December 31, 2023. The balance recorded as of December
31, 2024 and December 31, 2023 is R$
| FS-47 |
| |
d) Hedge accounting transactions
The reconciliation of values related to cash flow hedge accounting recorded in equity as of December 31, 2024, is demonstrated as follows:
| Consolidated | |||||||
| 12/31/2023 | Movement | Realization | 12/31/2024 | ||||
| Cash flow hedge | ( |
( |
|
( | |||
| Income tax and social contribution on cash flow hedge | |
( |
| ||||
| Fair Value of cash flow accounting, net taxes | ( |
( |
|
( |
| iv) | Credit risk |
The exposure to credit risks of financial institutions observes the parameters established in the financial policy. The Company's practice is the detailed analysis of the equity and financial situation of its customers and suppliers, the establishment of a credit limit and the permanent monitoring of its outstanding balance.
Regarding financial investments, the Company only makes investments in institutions with low credit risk assessed by rating agencies. Since part of the resources is invested in repurchase agreements that are backed by Brazilian government securities, there is also exposure to the credit risk of the Brazilian State.
Regarding credit risk exposure in trade and other receivables, the Company has a credit risk committee where each new customer is individually analyzed for their financial condition before credit limits and payment terms are granted. This is periodically reviewed according to the procedures specific to each business area.
| v) | Liquidity risk |
It is the risk that the Company may not have sufficient net funds to honor its financial commitments as a result of the mismatch of term or volume between expected receipts and payments.
Future receipt and payment premises are established to manage cash liquidity in domestic and foreign currencies, which are monitored on a day-to-day basis by the Treasury Department. The payment schedules for long-term installments of borrowings, financing and debentures are shown in note 13.
The following are the contractual maturities of financial liabilities including interest:
| Consolidated | ||||||||||||
| At December 31, 2024 | Ref. | Less than one year | From one to two years | From two to five years | Over five years | Total | ||||||
| Borrowings and financing | 13.b | |
|
|
|
| ||||||
| Lease liabilities | 15 | |
|
|
|
|||||||
| Derivative financial instruments | 14.c | |
||||||||||
| Trade payables | 16 | |
|
|
| |||||||
| Trade payables - Forfaiting | 16.a | |
| |||||||||
| Dividends and interest on capital | 17 | |
| |||||||||
| Concessions to be paid | 17 | |
|
|
|
| ||||||
| |
|
|
|
|
Fair values of assets and liabilities in relation to the book value
Financial assets and liabilities measured at fair value through profit or loss are recorded in current and non-current assets and liabilities, and any gains and losses are recorded as financial income and expense, respectively.
The amounts are recorded in the financial statements at their book value, which are substantially similar to those that would be obtained if they were traded in the market. The fair values of other long-term assets and liabilities do not differ significantly from their carrying amounts, except for the amounts below.
The estimated fair value for certain consolidated long-term loans and financing were calculated at current market rates, considering the nature, term and risks similar to those of the registered contracts, as follows:
| FS-48 |
| |
| 12/31/2024 | 12/31/2023 | ||||||
| Closing Balance | Fair value | Closing Balance | Fair value | ||||
| Fixed Rate Notes (*) | |
|
|
|
| (*) | Source: Bloomberg |
| 14.c) | Derivative financial instruments portfolio position |
Position of the derivative financial instruments portfolio
Currency swap Dollar x Euro
The subsidiary Lusosider Projectos Siderúrgicos S.A. had a derivative operation to protect its exposure to the dollar, which was settled in November 2024.
Foreign exchange swap CDI x Dollar
Real x dollar foreign exchange swap
The CSN Cimentos Brasil subsidiary, after raising a foreign
currency loan in the amount of US$
On July 2024, CSN Cimentos Brasil, again, after obtaining a foreign currency loan in the amount of US$ 50,000, contracted derivative operations to hedge its exposure to the dollar, maturing in July 2027.
Interest swap CDI x IPCA
CSN Mineração, CSN Cimentos Brasil and CSN issued debentures during the years 2021, 2022 and 2023, respectively, and contracted derivative operations to protect their exposure to IPCA. The CSN Mineração contracts have staggered maturities between 2031 and 2037, the CSN Cimentos contracts mature in 2038, and CSN's between 2030 and 2038.
| FS-49 |
| |
Below is the position of the derivatives:
| Consolidated | ||||||||||||||||
| 12/31/2024 | 12/31/2023 | |||||||||||||||
| Appreciation (R$) | Fair value (market) | Financial income (expenses), net (note 28) | ||||||||||||||
| Instrument | Maturity | Functional Currency | Notional amount | Asset position | Liability position | Amounts receivable / (payable) | ||||||||||
| Exchange rate swap | ||||||||||||||||
| Exchange rate swap Dollar x Euro | |
| ||||||||||||||
| Exchange rate swap CDI x Dollar | |
| ||||||||||||||
| Exchange Dollar x Real swap | |
( |
|
|
( | |||||||||||
| Exchange rate swap Dollar x Real | |
|
( |
|
||||||||||||
| Exchange rate swap CDI x Dollar | |
( |
( |
( |
| |||||||||||
| Total Exchange rate Swap | |
( |
( |
( | ||||||||||||
| Interest rate swap | ||||||||||||||||
| Interest rate (debentures) CDI x IPCA | |
( |
( |
( |
| |||||||||||
| Interest rate (debentures) CDI x IPCA | |
( |
( |
( |
| |||||||||||
| Interest rate (debentures) CDI x IPCA | |
( |
( |
( |
| |||||||||||
| Interest rate (debentures) CDI x IPCA | |
( |
( |
( |
( | |||||||||||
| Interest rate (debentures) CDI x IPCA | |
( |
( |
( |
| |||||||||||
| Interest rate (debentures) CDI x IPCA | |
( |
|
( |
| |||||||||||
| Interest rate (debentures) CDI x IPCA | |
( |
( |
( |
| |||||||||||
| Interest rate (debentures) CDI x IPCA | |
( |
( |
( |
| |||||||||||
| Interest rate (debentures) CDI x IPCA | |
( |
( |
( |
( | |||||||||||
| Interest rate (debentures) CDI x IPCA | |
( |
( |
( |
||||||||||||
| Interest rate (debentures) CDI x IPCA | |
( |
( |
( |
||||||||||||
| Interest rate (debentures) CDI x IPCA | |
|
( |
( |
( |
|||||||||||
| Interest rate (debentures) CDI x IPCA | |
|
( |
( |
( |
|||||||||||
| Interest rate (debentures) CDI x IPCA | |
( |
( |
( |
||||||||||||
| Interest rate (debentures) CDI x IPCA | |
( |
( |
( |
||||||||||||
| Total interest rate (debentures) CDI x IPCA | |
|
( |
( |
( |
| ||||||||||
| |
( |
( |
( |
| ||||||||||||
Classification of derivatives in the balance sheet and income statement
| 12/31/2024 | 12/31/2023 | |||||||||||
| Instruments | Assets | Liabilities | Financial income (expenses), net (note 28) | |||||||||
| Current | Total | Current | Total | |||||||||
| Iron ore derivative | ||||||||||||
| Exchange rate swap Dollar x Euro | | |||||||||||
| Exchange rate swap CDI x Dollar | ( |
|||||||||||
| Exchange rate swap CDI x IPCA (1) | ( |
|||||||||||
| Exchange Dollar x Real swap | |
|
( | |||||||||
| |
|
( |
||||||||||
| (1) | The SWAP CDI x IPCA derivative instruments are fully classified in the borrowings and financing group, since they are linked to debentures with the purpose of protecting against IPCA exposure. |
| 14.d) | Investments in securities measured at fair value through profit or loss |
The Company holds common shares (USIM3), preferred shares (USIM5) of Usiminas Siderúrgica de Minas Gerais S.A. ("Usiminas") and the shares of Panatlântica S.A. (PATI3), which were designated as fair value through profit or loss, are now recognized through the equity method, as there was an increase in participation, as described in explanatory note 9. Investments.
Usiminas shares are classified as current assets in financial investments and at fair value, based on the market price quotation on B3.
According to the Company's policy, gains and losses resulting from changes in stock prices are recorded directly in the income statement under financial income for shares classified as financial investments and under other operating income and expenses for shares classified as investments.
| FS-50 |
| |
| vi) | Stock market price risks |
| Class of shares | 12/31/2024 | 12/31/2023 | 12/31/2024 | 12/31/2023 | ||||||||||||||||
| Quantity | Equity interest (%) | Share price | Closing Balance | Quantity | Equity interest (%) | Share price | Closing Balance | Profit or loss (note 27) | ||||||||||||
| USIM3 | |
% | |
% | |
|
( |
| ||||||||||||
| USIM5 | |
% | |
% | |
|
( |
| ||||||||||||
| ( |
| |||||||||||||||||||
| PATI3 | |
% | ( | |||||||||||||||||
| ( |
| |||||||||||||||||||
The Company is exposed to the risk of changes in the stock price due to the investments measured at fair value through profit or loss that have their quotations based on the market price on the B3.
Sensitivity analysis for stock price risks
We present below the sensitivity analysis for the risks related to the stock price variation. The Company evaluated two distinct scenarios for the impact of price fluctuations: Scenario 1 (extreme pessimistic) considers a horizon of deterioration in price volatility, and Scenario 2 (extreme optimistic) forecasts a horizon of price appreciation. The calculation was based on the closing price of the shares on December 31, 2024, using assumptions based on both the dispersion of historical variations in prices and projections prepared by management.
The effects on the profit or loss, considering the probable scenarios, 1 and 2 are shown below:
| 12/31/2024 | ||||||||||
| Class of shares | Quantity | Share price in 12/31/2024 | Closing Balance | Extreme Optimistic Scenario | Extreme Pessimistic Scenario | |||||
| USIM3 | |
( | ||||||||
| USIM5 | |
|
( | |||||||
| |
( |
| 14.e) | Capital management |
The Company seeks to optimize its capital structure with the purpose of reducing its financial costs and maximizing return to its shareholders. The following chart demonstrates the evolution of the Company's consolidated capital structure, with financing through equity and third-party capital:
| Thousands of reais | 12/31/2024 | 12/31/2023 | ||
| Shareholder's equity (equity) | |
| ||
| Borrowings and Financing (Third-party capital) | |
| ||
| Gross Debit/Shareholder's equity | |
|
Accounting Policy
The Company's financial instruments are classified based on the definition of the Company's business model and, in the case of financial assets, cash flow characteristics.
On initial recognition, financial assets can be classified into three categories: assets measured at amortization cost, fair value through profit or loss and fair value through other comprehensive income.
Financial assets are written off when the rights to receive cash flows have expired or have been transferred in the latter case, provided that the Company has significantly transferred all risks and benefits of ownership.
| FS-51 |
| |
If the company substantially holds all the risks and benefits of the financial asset's ownership, it must continue to recognize the financial asset.
Financial liabilities are classified as amortized cost or fair value through profit or loss. Management determines the classification of its financial liabilities at initial recognition.
Financial liabilities are written off only when they are extinguished, that is, when the obligation specified in the contract is settled, cancelled, or expires. The Company also extinguishes a financial liability when the terms are modified and the cash flows of the modified liability are substantially different, in which case a new financial liability based on the modified terms is recognized at fair value.
Financial assets and liabilities are offset, and the net amount is reported in the balance sheet when there is a legally enforceable right to offset the recognized amounts and there is an intention to settle them on a net basis or when the realization of the asset and settlement of the liability occur simultaneously.
Derivative instruments and hedging activities
Derivatives are initially recognized at fair value on the date a derivative contract is entered into and are subsequently measured at fair value with variations recorded against profit or loss under Financial Income in the income statement.
Hedge accounting: The Company adopts hedge accounting and designates certain financial liabilities as a hedge instrument for exchange rate risk and price risk (Platts index) associated with cash flows from forecast and highly probable exports (cash flow hedge).
At the beginning of the operation, the Company documents the relationships between the hedging instruments and the hedged items (expected exports), as well as the objectives of risk management and the strategy for carrying out various hedging operations.
Furthermore, it documents its assessment, both at the beginning of the hedge and on an ongoing basis, that hedging operations are highly effective in offsetting variations in the cash flows of hedged items.
The effective portion of changes in the fair value of financial liabilities designated and qualified as cash flow hedges is recognized in equity, under the heading "Hedge Accounting". Gains or losses related to the non-effective portion are recognized in other operating expenses/revenues, when applicable.
The gains and losses from Cash Flow Hedge Accounting of debt financial instruments and iron ore derivative financial instruments will not immediately affect the Company's income, but only as exports are realized.
The accumulated amounts in equity are realized in the operating result in the periods when the projected exports affect the result.
When a hedging instrument expires or is settled early, or the hedging relationship no longer meets the criteria for Hedge Accounting, or when Management decides to discontinue Hedge Accounting, any accumulated gain or loss existing in equity at that time remains recorded in shareholders' equity and, from that point forward, exchange variations are recorded in financial income. When the forecasted transaction is carried out, the gain or loss is reclassified to operating income. When a forecasted operation is no longer expected to occur, the cumulative gain or loss that had been presented in equity is immediately transferred to the income statement under the heading "Other Operations".
Investment Hedge: The Company designates for net investment hedge a portion of its financial liabilities as a hedging instrument of its investments abroad with functional currency different from the Group's currency in accordance with IAS 39 and IFRS 9. This relationship occurs because financial liabilities are related to investments in the amounts necessary for the effective relationship.
| FS-52 |
| |
The Company documents, at the inception of the transaction, the relationships between hedging instruments and hedged items, as well as the risk management objectives and strategy for undertaking hedging transactions. The Company also documents its assessment, both at hedge inception and on an ongoing basis, that the hedging transactions are highly effective in offsetting changes in the hedged items.
The effective portion of changes in the fair value of financial liabilities that are designated and qualify as net investment hedges is recognized in equity under Hedge Accounting. The gains or losses related to the ineffective portion are recognized in Other Operations, when applicable. If at any time during the hedge relationship the debt balance is greater than the investment balance, the exchange variation on the excess debt is reclassified to the income statement as other operating income/expenses (hedge ineffectiveness).
The amounts accumulated in the equity will be realized in the income statement by the disposal or partial disposal of the foreign operation.
| 15. | LEASE LIABILITIES |
The lease liabilities are presented below:
| Consolidated | |||
| 12/31/2024 | 12/31/2023 | ||
| Leases | |||
| Adjusted present value - Leases | ( |
( | |
| Leases, Total | |
| |
| Classified: | |||
| Current | |
| |
| Non-current | |
| |
| Leases, Total | |
|
The Company has port terminal
lease contracts in Itaguaí: the Solid Bulk Terminal (TECAR), used for loading and unloading iron ore and other materials, and the
Container Terminal (TECON), with remaining terms of
Additionally, the Company has
leasing contracts for operational equipment, mainly used in mining, cement, and steel operations, and properties used as operational facilities
and administrative and sales offices in various locations where the Company operates, with remaining terms of
The present value of future obligations was measured using the implicit rate observed in the contracts, and for contracts that did not have a rate, the Company applied the incremental rate of loans, both in nominal terms.
The average rates used in measuring new lease liabilities in the consolidated is demonstrated in the table below:
| 12/31/2024 | ||
| Contract term (in years) | Incremental Rate (p.a.) | |
| 1 | ||
| 2 | ||
| 3 | ||
| 5 |
| FS-53 |
| |
The reconciliation of lease liabilities is shown in the table below:
| Consolidated | |||
| 12/31/2024 | 12/31/2023 | ||
| Opening balance | | ||
| New leases | |||
| Contract review | | ||
| Write-off | ( |
||
| Payments | ( |
( | |
| Interest appropriated | |||
| Exchange variation | ( | ||
| Net balance | |
The estimated future minimum payments for the lease agreements include determinable variable payments, which are certain to occur, based on minimum performance and contractually fixed rates.
As of December 31, 2024, the expected minimum payments are the following:
| Consolidated | |||||||
| Less than one year | Between one and five years | Over five years | Total | ||||
| Leases | |
| |||||
| Adjusted present value - Leases | ( |
( |
( |
( | |||
| Total lease liabilities |
| · | Recoverable PIS/COFINS |
Lease liabilities were measured at the amount of consideration with suppliers, that is, without considering the tax credits incurred after payment. The potential right of PIS and COFINS embedded in the lease liability is shown below.
| Consolidated | |||
| 12/31/2024 | 12/31/2023 | ||
| Leases | |
| |
| Adjusted present value - Leases | ( |
( | |
| Potencial PIS and COFINS credit | |||
| Adjusted present value – Potential PIS and COFINS credit | ( |
( |
| · | Lease payments not recognized as a liability: |
The Company chose not to recognize lease liabilities in contracts with a term of less than 12 months and for low value assets. Payments made for these contracts are recognized as expenses when incurred.
The Company has contracts for the right to use ports (TECAR and TECON) and railways (FTL) which, even if they establish minimum performance, it is not possible to determine its cash flow since these payments are fully variable and will only be known when they occur. In such cases, payments will be recognized as expenses when incurred.
The expenses related to payments not included in the measurement of the lease liability during the year are:
| FS-54 |
| |
| Consolidated | |||||
| 12/31/2024 | 12/31/2023 | 12/31/2022 | |||
| Contract less than 12 months | |
| |||
| Lower Assets value | |||||
| Variable lease payments | |
|
| ||
| Total | |
|
| ||
Accounting Policy
When entering into an agreement, the Company assesses whether the agreement is, or contains, a lease. The lease is characterized by a rental or transmission of right of use for a determined time in exchange for monthly payments. The leased asset must be clearly specified.
The Company determines in the initial recognition, the lease term or non-cancellable term, which will be used in the measurement of the right of use and the lease liability. The lease term will be reassessed by the Company when a significant event or significant change in circumstances occurs that are in the control of the lessee and affects the non-cancellable term. The Company adopts an exemption from recognition, as provided for in the standard, for the lessee of contracts with terms of less than 12 (twelve) months, or whose underlying asset object of the contract is of low value.
On the commencement date, the Company recognizes the right-of-use asset and the lease liability at present value. The right-of-use asset must be measured at cost. The cost includes the lease liability, initial costs, prepayments, estimated costs to dismantle, remove, or restore. The lease liability is measured at the start date by the Company at the present value of lease payments made on that date. Payments are discounted at the interest rate implicit in the lease, or if the rate cannot be determined, an incremental rate will be used on the Company's loan.
For contracts that the Company determines the business rate, it is understood that this rate is the rate implied in nominal terms and to which it is applied in discounting the flow of future payments. For contracts without a fixed interest rate, the Company applied the incremental borrowing rate obtained through consultations with the banks with which it has a relationship, adjusted for the forecast inflation for the next few years.
For the subsequent measurement, the cost method for the right-of-use asset is used and the requirements of IAS 16 – Property, plant and equipment are applied in depreciation. However, for the purpose of depreciation, the Company determines the use of the straight-line method based on the remaining useful life of the assets or for the term of the contract, whichever is shorter.
The effects of PIS and COFINS to be recovered generated after the effective payment of the obligations will be recorded as a reduction of the depreciation expenses of the right of use and the financial expenses recognized monthly.
IAS 36 – Impairment of Assets will also be applied in order to determine whether the right-of-use asset has impairment problems and to account for any identified impairment loss.
In accordance with the guidelines of IFRS 16, the Company uses the discounted cash flow technique in the measurement and remeasurement of lease and right-of-use liabilities, without considering the inflation projected in the flows to be discounted.
The Company discloses below the comparative balances of lease liability, right of use, financial expense, and depreciation expenses using real-term rates to discount present value of cash flows also in real terms.
| FS-55 |
| |
16. TRADE PAYABLES
| Consolidated | ||||||
| Ref. | 12/31/2024 | 12/31/2023 | ||||
| Trade payables | | |||||
| (-) Adjusted present value | ( |
( | ||||
| | ||||||
| Classified: | ||||||
| Current | | |||||
| Non-current | 17 | |
| |||
| |
16.a) Trade payables – Forfaiting
| Consolidated | |||
| 12/31/2024 | 12/31/2023 | ||
| In Brazil | |||
| Abroad | |
||
The Company discloses and classifies in a specific group its forfaiting operations with suppliers where the nature of the securities continue to be part of the Company's operating cycle. These transactions are negotiated with financial institutions to enable the Company's suppliers to anticipate receivables arising from sales of goods and, consequently, to extend the payment terms of the Company's own obligations. The term of these operations ranges from 180 days to 360 days.
The table below provides a comparison of invoice payment terms with and without reverse forfaiting operations, dealing only with merchandise acquisitions, for the base date of December 31, 2024:
| Trade payables | Forfaiting | NoForfaiting | |
| Due between 1 and 180 days | |||
| Due between 181 to 360 days | |
| |
| Over 360 days | | ||
| Total |
Impact of variations without effect on cash as of December 31, 2024:
| Exchange variation | |
| Interest Appropriation | |
| Total | |
Accounting Policy
Trade payables
They are initially recognized at fair value, and subsequently measured at amortized cost, using the effective interest rate method, and brought to present value when applicable on the date of the transactions, based on the Company's estimated cost of capital rate.
Forfaiting
The Company classifies financial liabilities arising from financing agreements with suppliers under a specific line item in the balance sheet. This is the case when the financing agreement with suppliers is part of the working capital used in the Company's normal operating cycle and the terms of the liabilities that are part of the supply chain financing agreement are not substantially different from the terms of trade accounts payable that are not part of the agreement.
Cash flows related to liabilities arising from financing agreements with suppliers are presented in operating activities in the statement of cash flows. The financial costs of the operation, when applicable, are shown in note 28.
| FS-56 |
| |
| 17. | OTHER PAYABLES (CURRENT AND NON-CURRENT) |
The other payables classified in current and non-current liabilities are comprised as follows:
| Consolidated | ||||||||||
| Ref. | Current | Non-current | ||||||||
| 12/31/2024 | 12/31/2023 | 12/31/2024 | 12/31/2023 | |||||||
| Related party liabilities | ||||||||||
| Derivative financial instruments | ||||||||||
| Dividends and interest on capital | 14 | |||||||||
| Advances from customers (1) | ||||||||||
| Taxes in installments | 19 | |||||||||
| Profit sharing - employees | ||||||||||
| Taxes payable | ||||||||||
| Provision for consumption and services | ||||||||||
| Third party materials in our possession | ||||||||||
| Trade payables | 16 | |||||||||
| Lease liabilities | 15 | |||||||||
| Concessions to be paid | ||||||||||
| Other payables | ||||||||||
| (1) | Customer Advances: Iron Ore: refers to iron ore supply contracts signed by the Company with important international players. The subsidiary CSN Mineração S.A. received in advance the total amount of US$ 500,000 relating to supply contracts for approximately 13 million tons of iron ore signed with a major international player, to be executed within a period of 4 years, with supply expected to start in 2024. On June 30, 2023, the subsidiary CSN Mineração entered an amendment to the advance contract, signed on January 16, 2023, in the amount of US$ 300,000 for additional supply of 6.3 million tons of iron ore. From this addendum, the Company received on June 30, 2023 the amount of US$ 205,000, the remaining balance of US$ 95,000 was received on July 31, 2023. On June 28, 2024, the indirect subsidiary CSN Mining International GmbH entered an iron ore supply advance agreement in the amount of US$ 255,000, for the supply of 6.5 million tons expected to be realized over the next 4 years. On September 25, 2024, another iron ore advance contract was signed by CSN Mining International GmbH in the amount of US$ 450,000 for the supply of an additional 9.7 million tons of iron ore and on September 27, 2024, another advance iron ore supply contract was signed in the amount of US$ 300,000 for the supply of 7.2 million tons. Both contracts signed in September 2024 provide for the start of implementation in January 2025, with a deadline for completion until December 2028. On December 17, 2024, the indirect subsidiary, CSN Mining International GmbH signed two prepayment contracts that, together, total an amount of US$ 355,000. The achievements of the new contracts are expected to start in January 2025 and will extend until 2029. During this period, the company undertakes to supply iron ore according to the terms agreed in the contracts, guaranteeing the delivery of 8.1 Mt over the next five years. Electricity: On December 31, 2022, the subsidiaries CSN Mineração and CSN Cimentos signed advance electricity trading contracts with national sector operators to be executed for up to 8 years. On June 25, 2024, June 27, 2024, and November 29, 2024, the Company signed electric energy commercialization advance contracts with national sector operators, in the amounts of R$ 156,643, R$ 95,040, and R$ 601,000, respectively, to be executed within 4 years. |
| 18. | INCOME TAX AND SOCIAL CONTRIBUTION |
| 18.a) | Income tax and social contribution recognized in profit or loss: |
The income tax and social contribution recognized in statement of profit and losses for the year are as follows:
| FS-57 |
| |
| Consolidated | |||||
| 12/31/2024 | 12/31/2023 | 12/31/2022 | |||
| Income tax and social contribution income (expense) | |||||
| Current | ( |
( |
( | ||
| Deferred | |
( | |||
| Total | |
( |
( |
The reconciliation of the Company's income tax and social contribution expenses and income and the of the effective tax rate on income before IRPJ and CSLL are shown below:
| Consolidated | |||||
| 12/31/2024 | 12/31/2023 | 12/31/2022 | |||
| Profit/(Loss) before income tax and social contribution | ( |
|
| ||
| Tax rate | |||||
| Income tax and social contribution at combined statutory rate | ( |
( | |||
| Adjustment to reflect the effective rate: | |||||
| Equity in results of affiliated companies | |||||
| Difference Tax Rate in companies abroad | ( |
( |
( | ||
| Transfer Price Adjustment and Profits Abroad | ( |
( |
( | ||
| Income taxes and social contribution on foreign profit | |||||
| Tax incentives | |||||
| Interest on equity | |||||
| Recognition/(reversal) of tax credits | ( |
( |
( | ||
| Other permanent deductios (add-backs) | ( |
||||
| Income tax and social contribution in net income for the year | |
( |
( | ||
| Effective tax rate |
| FS-58 |
| |
| 18.b) | Deferred income tax and social contribution: |
Deferred income tax and social contribution balances are as follows:
| Consolidated | ||||
| 12/31/2024 | 12/31/2023 | |||
| Deferred tax | ||||
| Income tax losses | |
| ||
| Social contribution tax losses | |
| ||
| Temporary differences | |
( | ||
| Tax, social security, labor, civil and environmental provisions | ||||
| Estimated losses on assets | ||||
| Gains/(Losses) on financial assets | ||||
| Actuarial Liabilities (Pension and Health Plan) | ||||
| Provision for consumption and services | |
| ||
| Cash Flow Hedge and Unrealized Exchange Variations | |
|||
| (Gain) on loss of control of Transnordestina | ( |
( | ||
| Fair Value SWT/CBL Acquisition | ( |
( | ||
| Business combination | ( |
( | ||
| Others | ( |
( | ||
| Total | |
| ||
| Total deferred tax assets | |
| ||
| Total deferred tax liabilities | ( |
( | ||
| Total deferred tax | |
|
The Company's corporate structure includes foreign subsidiaries, the income of which is taxed in the countries in which they are incorporated at rates lower than those applicable in Brazil. In the period between 2020 and 2024, these subsidiaries did not generate profits subject to additional taxation in Brazil by income tax and social contribution. The Company, based on the position of its legal advisors, assessed only as possible the probability of loss in case of possible tax challenge and, therefore, no provision was recognized in the Financial Statement.
Furthermore, Management evaluated the precepts of IFRIC 23 - "Uncertainty Over Income Tax Treatments" and recognized in 2021 the credit for the unconstitutionality of IRPJ and CSLL incidence on SELIC interest of mora values received due to tax undue repetition.
A sensitivity analysis of tax credit consumption was conducted considering a variation of macroeconomic assumptions, operational performance, and liquidity events. Thus, considering the results of the study, which indicates that it is probable the existence of taxable income to use the balance of deferred income tax and social contribution.
| Consolidated | ||
| 2025 | ( | |
| 2026 | | |
| 2027 | ||
| 2028 | | |
| 2029 and beyond | | |
| Deferred tax asset | | |
| Deferred tax liabilities - subsidiaries | ( | |
| Net deferred tax asset | |
| FS-59 |
| |
| 18.c) | Changes in deferred income tax and social contribution |
The change in deferred taxes is shown below:
| Consolidated | ||
| Balance at January 1, 2022 | | |
| Recognized in profit and loss | ( | |
| Recognized in equity | ( | |
| Acquisition of companies | | |
| Balance at January 1, 2023 | | |
| Recognized in profit and loss | | |
| Recognized in equity | ( | |
| Use of tax credit in installment program | ( | |
| Reverse incorporation | | |
| Balance at December 31, 2023 | | |
| Recognized in profit and loss | | |
| Recognized in equity | | |
| Use of tax credit in installment program | ( | |
| Balance at December 31, 2024 | |
| 18.d) | Income tax and social contribution recognized in equity: |
The income tax and social contribution recognized directly in equity are shown below:
| Consolidated | |||
| 12/31/2024 | 12/31/2023 | ||
| Income tax and social contribution | |||
| Actuarial gains on defined benefit pension plan | |
||
| Exchange differences on translating foreign operations | ( |
( | |
| Cash flow hedge | | ||
| Gain on sale of shares | ( |
||
Accounting Policy
Current income tax and social contribution are calculated based on the tax laws enacted, on the balance sheet date, including in the countries in which the Group's entities operate and generate taxable profit. Management periodically evaluates tax positions related to income tax calculations, considering situations where applicable tax regulations are subject to interpretation, and establishes provisions, when appropriate, based on estimated payment values to tax authorities. Expenses with income tax and social contribution comprise current and deferred income taxes and are recognized in profit or loss, unless they are related to the business combination, or items directly recognized in shareholders' equity.
Current tax expense is the expected tax payable on taxable income for the year, using enacted or substantively enacted tax rates at the balance sheet date, and any adjustments to tax payable in respect of prior years. Current income tax and social contribution are presented net, by a company that is part of the Company, in liabilities when there are amounts payable, or in assets when the amounts paid in advance exceed the total due on the reporting date.
Deferred tax is recognized in relation to temporary differences between the tax bases of assets and liabilities and their carrying amounts in the financial statements. Deferred tax is not recognized for temporary differences arising from the initial recognition of assets and liabilities in a transaction that is not a business combination and that affects neither accounting profit nor taxable profit or loss, differences related to investments in subsidiaries and controlled entities when they are unlikely to reverse in the foreseeable future, and from the initial recognition of goodwill, in accordance with IAS 12 - Income Taxes. The value of deferred tax determined is based on the expectation of realization or settlement of the temporary difference and uses the nominal rate approved or substantially approved.
Deferred tax assets and liabilities are presented at net value in the balance sheet when there is a legal right and the intention to offset it when calculating current taxes, usually related to the same legal entity and the same tax authority.
Income tax and social contribution deferred tax assets are recognized on recoverable balances of tax loss and negative CSLL base, tax credits and deductible temporary differences. Such assets are reviewed at each year-end closing date and will be reduced to the extent that their realization is no longer probable based on future taxable profits.
| FS-60 |
| |
| 19. | TAXES IN INSTALLMENTS |
The position of REFIS debts and other installment plans, recorded in installment taxes in current and non-current liabilities, as shown in note 17, are demonstrated as follows:
| Consolidated | |||
| 12/31/2024 | 12/31/2023 | ||
| Federal REFIS Law 11.941/09 | |||
| Federal REFIS Law 12.865/13 | |||
| Other taxes in installments | |||
| Classified: | |||
| Current | |
| |
| Non-current | |||
Refers to the balance arising from the adhesion to the REFIS related to the refinancing programs of Law 11,941/09, Law 12,865/13 and the installment that allows the taxpayer to pay the debts registered in overdue debt of the Federal Government with benefits, reduced down payment and extended payment term. The installments are paid in monthly installments, with interest at the SELIC rate.
| FS-61 |
| |
| 20. | PROVISIONS FOR TAX, SOCIAL SECURITY, LABOR, CIVIL AND ENVIRONMENTAL RISKS AND JUDICIAL DEPOSITS |
Claims of different nature are being challenged at the appropriate courts. Details of the accrued amounts and related judicial deposits are as follows:
| Consolidated | ||||||||
| Accrued liabilities | Judicial deposits | |||||||
| 12/31/2024 | 12/31/2023 | 12/31/2024 | 12/31/2023 | |||||
| Tax | ||||||||
| Social security | ||||||||
| Labor | ||||||||
| Civil | ||||||||
| Environmental | ||||||||
| Deposit of a guarantee | ||||||||
| Classified: | ||||||||
| Current | ||||||||
| Non-current | ||||||||
The changes in tax, social security, labor, civil and environmental provisions in the year ended December 31, 2024 can be summarized as follows:
| Consolidated | ||||||||||
| Current + Non-current | ||||||||||
| Nature | 12/31/2023 | Additions | Accrued charges | Net utilization of reversal | 12/31/2024 | |||||
| Tax | |
|
( |
|||||||
| Social security | |
( |
||||||||
| Labor | |
|
( |
|||||||
| Civil | |
|
( |
|||||||
| Environmental | |
|
( |
|||||||
| |
( |
Provisions for taxes, social security, labor, civil and environmental matters have been estimated by management and substantially substantiated by legal counsel, and only those causes that are considered probable of loss are recorded. These provisions also include tax liabilities arising from actions taken at the Company's initiative, plus SELIC (Special System for Settlement and Custody) interest.
Tax Proceedings
The main legal proceedings considered by external legal consultants as having a probable loss probability, in which CSN or its subsidiaries are parties, of a tax nature are: (i) some ISS tax infraction notices (ii) divergences between calculated and collected ICMS (iii) Compensation requests not approved due to lack of credit rights.
Labor lawsuits
The Group appears as a defendant in labor claims. Most of the claims in these lawsuits relate to subsidiary and/or joint liability, equal pay, hazard and danger pay allowances, overtime, health plans, compensation claims for alleged occupational diseases or work accidents, intra-day break periods, and differences in profit sharing for the years 1997 to 1999 and 2000 to 2003.
During the year ended December 31, 2024, there were additions and write-offs of labor proceedings due to definitive closures, in addition to the Company's ongoing review of accounting estimates related to provisions and contingencies. These reviews consider the different types of claims involved, as established in the Company's accounting policies.
| FS-62 |
| |
Civil lawsuits
Among the civil lawsuits in which he appears as a defendant, there are mainly lawsuits with a claim for compensation. Such processes, in general, are resulting from work accidents, occupational diseases, contractual discussions related to the Group's industrial activities, real estate actions, health plans.
Environmental processes
The main environmental proceedings considered by external legal consultants as having probable loss probability, in which CSN or its subsidiaries are parties, are (i) administrative violation notices for alleged environmental infractions (ii) annulment lawsuits and tax foreclosures resulting from environmental fines and (iii) procedural fines for alleged non-compliance with court orders.
Among the environmental administrative/judicial proceedings in which the Company is a defendant are administrative procedures aimed at verifying possible environmental irregularities and regularizing environmental licenses. In the judicial sphere, there are actions to enforce fines imposed due to such alleged irregularities and public civil actions seeking regularization combined with compensation, which consist of environmental restoration in most cases. Such processes are generally derived from discussions of supposed environmental impacts related to the Company's industrial activities.
Administrative and Judicial Proceedings
The Company does not make provisions for legal proceedings whose expectation of the Management, based on the opinion of legal advisors, is of possible loss. The following table shows a summary of the balance of the main matters classified as possible risk compared to the balance as of December 31, 2024 with December 31, 2023.
The Company has other legal proceedings classified by
legal advisors as possible losses, therefore representing present obligations for which an outflow of resources is not probable. As of
December 31, 2024, these totaled R$
| FS-63 |
| |
| Consolidated | ||||
| 12/31/2024 | 12/31/2023 | |||
| Notice of Violation and Imposition of Fine (AIIM) / Tax Foreclosure - RFB - IRPJ/CSLL - Capital Gain for alleged sale of equity interest in subsidiary NAMISA (1) | ||||
| Notice of Violation and Imposition of Fine (AIIM) / Tax Foreclosure - RFB - IRPJ/CSLL - Disallowance of goodwill deductions generated in the reverse incorporation of Big Jump by Namisa (1) | ||||
| Notice of Violation and Imposition of Fine (AIIM) / Tax Enforcement - RFB - IRPJ/CSLL - Disallowance of prepayment interest arising from iron ore supply and port services contracts | ||||
| Notice of Violation and Imposition of Fine (AIIM) / Writ of Mandamus - RFB - IRPJ/CSLL - Profits earned abroad in 2008, 2010, 2011, 2012, 2014, 2015, 2016, 2017 and 2018 | ||||
| Unapproved compensation - RFB - IRPJ/CSLL, PIS/COFINS and IPI | ||||
| ICMS - SEFAZ/RJ - Assessment Notice - questions about sales for incentive area | ||||
| Notice of Violation and Imposition of Fine (AIIM) - RFB - Disallowance of PIS/COFINS Credits for inputs and freight | ||||
| CFEM – difference of understanding between CSN and ANM on the calculation basis | ||||
| Notice of Infraction and Imposition of Fine (AIIM) - RFB - Collection IRRF - Business Combinations CMIN 2015(2) | ||||
| ICMS - SEFAZ/RJ - ICMS Credits for acquisition of Electric Energy Industrialization (3) | ||||
| Notice of Violation and Imposition of Fine (AIIM) - IRPJ/CSLL - Disallowance of deductions of goodwill generated in the acquisition of Cimentos Mauá | ||||
| ICMS - SEFAZ/RJ - Disallowance of the ICMS credits - Transfer of iron ore | ||||
| ICMS - SEFAZ/RJ - Disallowance of credits on purchases of intermediate products | ||||
| Disallowance of tax loss and negative calculation base resulting from adjustments in SAPLI - RFB | ||||
| Infraction and Fine Imposition Notices (AIIM) - RFB - IRPJ/CSLL - Transfer Pricing | ||||
| ICMS - SEFAZ/RJ - Transfer of imported raw material for a value lower than the TECAR import document | ||||
| Notice of Violation and Imposition of Fine (AIIM) / Annulment Action - RFB - IRRF - Capital gain of CFM company sellers located abroad | ||||
| Other tax lawsuits (federal, state, and municipal) | ||||
| Social security lawsuits | ||||
| Action to discuss the balance of the construction contract – Tebas | ||||
| Action related to power supply payment’s charge - Light | ||||
| Action that discusses Negotiation of energy sales - COPEN - CEEE-G | ||||
| Collection of defaulted amounts of contracts for the execution of the Presidente Médici Thermoelectric Power Plant - SACE - CEEE-G (4) | ||||
| Enforcement action applied by Brazilian antitrust authorities (CADE) (5) | ||||
| Other civil lawsuits | ||||
| Labor and social security lawsuits | ||||
| Tax Execution Traffic Ticket Volta Grande IV | ||||
| ACP Landfill Márcia I | ||||
| Notice of IEF Commitment Agreement (6) | ||||
| Other environmental lawsuits | ||||
| (1) | The Company succeeded in the appeals filed in Processes 19515.723039/2012-79 (CSN) and 19515.723053/2012-72 (CSN Mineração) which had as their objects the fines of 150% (Qualified Fine), closing the possible contingency of R$ 4,476,924 and R$ 993,756. The notifications of the decisions occurred on July 5 and 25, 2024, without the filing of appeals by the National Treasury. Thus, the respective write-offs of the processes were carried out on 07/2024. Finally, for the other processes related to the "Big Jump" theme, the prognoses remain the same (possible). |
| (2) | The company was partially successful in Administrative Tax Proceeding 10600.720008/2020-32, in a CARF Ruling published on 09/11/2024, which recognized the unenforceability of WHT on capital gains of a legal entity resident in Japan, based on the rules of the treaty signed with the country. The application of the treaty was not the subject of a special appeal by the PGFN, making the company's partial success definitive. For the other installments of the tax assessment, the prognosis remains the same (possible). |
| (3) | The company succeeded in Process 0000931-14.2011.8.19.0066, which disputed the requirement of ICMS, by the State of Rio de Janeiro, on credits arising from the acquisition of electric energy for industrialization, ending a contingency of R$ 185,116. The decision favorable to the company became final on 10/16/2024. The company also succeeded in Case 0000927-74.2011.8.19.0066, on the same subject, whose closure of the possible contingency of R$ 925,584 will be reflected in the results of the first quarter of 2025. |
| (4) | In 2024, CEEE-G, a subsidiary of the Company, made a judicial agreement with SACE, which reduced the values disclosed as possible contingencies, now registered in other accounts payable, totaling R$ 43,371 as of December 31, 2024 (R$ 205,262 as of December 31, 2023). |
| (5) | In November, CSN joined the "Desprola" program, launched by the Federal Government. The program consisted of paying all the Company's debts (4 concentration acts) to CADE with a 65% discount, where it made the upfront payment of R$ 34,000, ending discussions regarding the Steel Cartel process. |
| (6) | In the 4th quarter of 2024, CSN Mineração was notified by the State Forest Institute of Minas Gerais, regarding the collection of a fine provided for in a Commitment Term signed by the Company with the said Agency in 2004. In said Notification, the aforementioned Agency is charging an amount of around R$ 337,000 for the alleged non-compliance with clauses of the instrument - which refers to compensation for environmental licensing from that time. Considering that CSN Mineração disagrees with the alleged breach of the mentioned Commitment Term and, consequently, with the respective fine collection - in addition to considering it disproportionate, a timely defense was presented in response to this notification, which will be forwarded for consideration by the Chamber for Prevention and Administrative Resolution of Conflicts of the Attorney General's Office of the State of Minas Gerais. |
| FS-64 |
| |
The Company has offered judicial guarantees (Guarantee
Insurance/Letter of Guarantee) in the total amount updated as of December 31, 2024 of R$
In the 1st quarter of 2021, the Company was notified of the initiation of an arbitration proceeding based on an alleged breach of iron ore supply contracts. The counterparty's request at that time was around US$ 1 billion, which the Company, in addition to understanding that the allegations presented are unfounded due to the complete absence of damages, is also unaware of the bases for estimating said amount. The Company informs that it has prepared, together with its legal advisors, the response to the arbitration request and is currently developing its defense. It also clarifies that the discussions involve ongoing arbitration disputes initiated by both parties. It is also estimated that the arbitrations will be completed in 2 years. The relevance of the process for the Company is related to the value attributed to the cause and the possible financial impact.
The evaluations carried out by legal advisors define these administrative and judicial proceedings as a possible risk of loss and are not provisioned in accordance with Management's judgment and accounting practices adopted in Brazil.
Accounting Policy
Provisions are only recorded when classified as probable loss risk, estimated and considered by Management, substantially based on the assessment of its legal advisors, and when resources will be necessary to settle the obligation. This obligation is updated according to the evolution of the lawsuit or financial charges incurred and may be reversed if the estimated loss is no longer considered probable due to changes in circumstances, or written off when the obligation is settled.
| 21. | PROVISION FOR ENVIRONMENTAL LIABILITIES AND ASSET RETIREMENT OBLIGATIONS |
The balance of provisions for environmental liabilities and asset retirement obligation is as follows:
| Consolidated | |||
| 12/31/2024 | 12/31/2023 | ||
| Environmental liabilities | |||
| Asset retirement obligations | |||
Accounting Policy
The Company recognizes a provision for recovery costs when a loss is probable and the amounts of the related costs are reasonably determined. Generally, the provisioning period for the amount to be used for recovery coincides with the completion of a feasibility study or commitment to a formal action plan.
Expenses related to compliance with environmental regulations are charged to income or capitalized, as appropriate. Capitalization is considered appropriate when expenses refer to items that will continue to benefit the Company and that are basically relevant to the acquisition and installation of equipment for pollution control and/or prevention.
Asset retirement obligations (ARO) consist of cost estimates for decommissioning, demobilization, or restoration of areas at the end of mining activities and extraction of mineral resources. The initial measurement is recognized as a liability discounted to present value and, subsequently, carried to expenses over time. The asset decommissioning cost equivalent to the initial liability is capitalized as part of the asset's carrying amount and is depreciated over the asset's useful life.
| FS-65 |
| |
| 22. | RELATED-PARTY BALANCES AND TRANSACTIONS |
| 22.a) | Transactions with holding companies |
Vicunha Aços S.A. is the Company's controlling shareholder, with a 41.66% interest in its voting capital. It is also part of the Company's control, Rio Iaco Participações S.A. with 3.45%.
The corporate structure of Vicunha Aços S.A. is as follows:
| (a) | Vicunha Steel S.A. – holds 100% interest in Vicunha Aços S.A. |
| (b) | Rio Purus Participações S.A. – holds 100% interest in Vicunha Steel S.A. |
| · | Liabilities with holding companies |
On November 14, 2024, the Board of Directors approved
the payment of interim dividends, from the profit reserve account, in the amount of R$
| 22.b)Transactions | with subsidiaries, jointly controlled entities, associates, exclusive funds and other related parties |
| Consolidated | ||||||||||||||||
| 12/31/2024 | 12/31/2023 | |||||||||||||||
| Associates | Joint-ventures and Joint Operation | Other related parties | Total | Associates | Joint-ventures and Joint Operation | Other related parties | Total | |||||||||
| Assets | ||||||||||||||||
| Current Assets | ||||||||||||||||
| Financial investments | |
| ||||||||||||||
| Trade receivables | 5 | |
|
|
|
| ||||||||||
| Dividends receivable | 8 | |
|
|
| |||||||||||
| Borrowings | 8 | |
| |||||||||||||
| Other receivables | 8 | |
| |||||||||||||
| |
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| Non-current Assets | ||||||||||||||||
| Financial investments | 4 | |
|
|
| |||||||||||
| Borrowings | 8 | |
|
|
| |||||||||||
| Actuarial asset | 8 | |
| |||||||||||||
| Other receivables | 8 | |
| |||||||||||||
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| Liabilities | ||||||||||||||||
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| Trade payables | |
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| Accounts payable | 17 | |
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| Provision for consumption | 17 | | ||||||||||||||
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| Non-current Liabilities | ||||||||||||||||
| Accounts payable | 17 | |
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| FS-66 |
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| Consolidated | ||||||||||||||||
| 12/31/2024 | 12/31/2023 | |||||||||||||||
| Associates | Joint-ventures and Joint Operation | Other related parties | Total | Associates | Joint-ventures and Joint Operation | Other related parties | Total | |||||||||
| P & L | ||||||||||||||||
| Sales | |
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| Cost and expenses | ( |
( |
( |
( |
( |
( |
( |
( | ||||||||
| Financial income (expenses) | ||||||||||||||||
| Interest | 28 | |
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| Exchange rate variations andmonetary, net | |
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( |
( | ||||||||||||
| Financial investments | 28 | ( |
( |
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| Dividends receivable | 28 | |
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| ( |
( |
( |
( |
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Consolidated Information:
Financial investments: Refers mainly to investments in Usiminas shares, cash and cash equivalents and Bonds with Banco Fibra and government bonds and CDBs with the exclusive funds.
Receivables: Refers mainly to sales transactions of steel products from the Company to related parties.
Dividends receivable: In the Consolidated, it
refers to dividends from MRS Logística in the amount of R$
Loans (Assets):
Long term: Refers mainly to
loan contracts with Transnordestina Logística R$
Others (Assets): Refers advance for future capital increase with Transnordestina
Logística S.A. of R$
| 22.c) | Other unconsolidated related parties |
| · | CBS Previdência |
The Company is its main sponsor, being a non-profit civil society established in July 1960 and whose main objective is the payment of benefits complementary to those of official social security for participants. As a sponsor, it maintains transactions of contribution payments and recognition of actuarial liability calculated in defined benefit plans.
| · | Banco Fibra |
The Banco Fibra is under the same control structure of Vicunha Aços S.A., direct controller of the Company, and financial transactions with this bank primarily involve current account movements and fixed income financial investments.
| · | Fundação CSN |
The Company develops socially responsible policies concentrated today in the CSN Foundation, of which it is the founder. Transactions between the parties are related to operational and financial support for the Foundation to conduct social projects developed mainly in the locations where it operates.
| · | Igarapava Hydroelectric Power Plant Consortium |
The Company participates in the Igarapava Hydroelectric Power Plant Consortium, located on the Rio Grande do Sul, between the municipalities of Igarapava and Rifaina in São Paulo, Conquista and Sacramento in Minas Gerais.
| FS-67 |
| |
| · | Related Parties under the control of a member of the Company's Management |
These are companies under the control of a member of Management whose transactions with the Company were:
| · | Vicunha Imóveis Ltda |
| · | Vicunha Serviços Ltda |
| · | Ibis Participações e Serviços Ltda |
| · | Party Negócios e Participações Ltda |
| · | Jockey Club de São Paulo. |
| 22.d) | Key management personnel |
The key management personnel with authority and responsibility for planning, directing, and controlling the Company’s activities include members of the Board of Directors and statutory officers. The following is information on the compensation of such personnel and the related balances as of December 31, 2024, 2023 and 2022:
| 12/31/2024 | 12/31/2023 | 12/31/2022 | ||||
| P&L | ||||||
| Short-term benefits for employees and officers | ||||||
| Post-employment benefits | |
|
| |||
| Total compensation of personnel | ||||||
| 22.e) | Guarantees |
The Company is liable for guarantees of its subsidiaries and jointly controlled entities as follows:
| Currency | Maturities | Borrowings | Tax foreclosure | Others | Total | ||||||||||||||
| 12/31/2024 | 12/31/2023 | 12/31/2024 | 12/31/2023 | 12/31/2024 | 12/31/2023 | 12/31/2024 | 12/31/2023 | ||||||||||||
| Transnordestina Logísitca | R$ | |
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| Subsidiaries | R$ | |
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| Total in R$ | |
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| CSN Inova Ventures | US$ | |
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| CSN Resources | US$ | |
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| CSN Cimentos Brasil | US$ | ||||||||||||||||||
| Total in US$ | |
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| Lusosider Aços Planos | EUR | |
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| Total in EUR | |
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| Total in R$ | |
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Accounting Policy
Transactions with related parties were carried out by the Company on terms equivalent to those prevailing in market transactions, observing the price and the usual market conditions. Therefore, these transactions are in conditions that are no less favorable for the Company than those negotiated with third-parties.
Transactions between the related parties are eliminated and adjusted to ensure consistency with the practices adopted by The Company.
The Company’s related parties are subsidiaries, joint ventures, affiliates, shareholders and their related companies and the key personnel of the Company’s management.
| FS-68 |
| |
| 23. | EQUITY |
| 23.a) | Paid-in capital and authorized capital |
The fully subscribed and paid-in share capital as of
December 31, 2024, and December 31, 2023, is R$
The Company's bylaws in force on December 31, 2024, define that the share capital may be increased to up to shares, by decision of the Board of Directors, regardless of statutory reform.
| 23.b) | Capital reserve |
It is constituted by gains on the sale of subsidiaries’ interest and treasury shares, and, reflex treasury shares acquired by controlled.
| 23.c) | Legal reserve |
It is constituted at the rate of % of the net income
calculated in each fiscal year, before any other allocation, pursuant to art. 193 of Law 6,404/86, up to a limit of
| 23.d) | Ownership structure |
As of December 31, 2024 and 2023, the Company’s ownership structure was as follows:
| 12/31/2024 | 12/31/2023 | |||||||||||
| Number of common shares | % of total shares | % of voting capital | Number of common shares | % of total shares | % of voting capital | |||||||
| Vicunha Aços S.A. (*) | % | % | ||||||||||
| Rio Iaco Participações S.A. (*) | % | % | ||||||||||
| CFL Ana Participações S.A. (*) | % | % | ||||||||||
| NYSE (ADRs) | % | % | ||||||||||
| Other shareholders | % | % | % | % | ||||||||
| Outstanding shares | |
% | % | |
% | % |
| (*) | Controlling group companies. |
On March 30, 2023, a Equity Restructuring agreement was executed between Rio Purus Participações S.A., shareholders who directly and indirectly hold the entirety of Vicunha Aços S.A. ("Vicunha Aços") shares and CFL Participações S.A. ("CFL"). Thus, the implementation of such transaction resulted in the ownership of CFL Ana Participações S.A. (“CFL Ana”), a subsidiary of CFL, of common, book-entry shares with no par value issued by CSN, representing on that date 10.25% of the Company's share capital.
On June 20, 2024, CFL informed the Company about the disposal by CFL Ana of common shares issued by CSN. CSN, in turn, informed the market about the sale of a relevant equity interest on that same date, informing that CFL Ana's interest became common shares, representing its 9.99% of the share capital, according to correspondence received.
On December 2, 2024, Vicunha Aços informed the Company about the acquisition of common shares issued by CSN. CSN, in turn, informed the market about the acquisition of a relevant equity interest the following day, informing that Vicunha Aços' interest now represents 41.66% of the share capital, according to correspondence received.
| FS-69 |
| |
| 23.e) | Earnings/(Loss) per share |
The earnings/(loss) per share are shown below:
| 12/31/2024 | 12/31/2023 | 12/31/2022 | |||
| Common Shares | |||||
| Earnings/(Loss) for the year | ( |
( |
|||
| Weighted average number of shares | |||||
| Basic and diluted loss per share | ) | ) | |||
| 23.f)Other | comprehensive income |
These are the accumulated conversion adjustments, acturial
gains over pension plans, and the unrealized results with derivative financial instruments, such as equity valuation adjustments. The
amount represents an accumulated balance of loss on December 31, 2024, of R$
Accounting Policy
Share Capital
Incremental costs directly attributable to the issuance of new shares or options are stated in shareholders' equity as a deduction from the amount raised, net of taxes.
Earnings/(Loss) per share
The basic earnings/loss per share is calculated through the net profit/loss for the year attributable to the Company's controlling shareholders and the weighted average of the common shares outstanding in the respective year. The diluted earnings/loss per share is calculated by means of said average of the outstanding shares, adjusted by the instruments potentially convertible into shares, with dilutive effect, in the years presented. The Company has no potential instruments convertible into shares and, consequently, the diluted profit/loss per share is equal to the basic earnings/loss per share.
Treasury shares
When any company in the group buys shares of the Company's capital (treasury shares), the amount paid, including any directly attributable additional costs (net of income tax), is deducted from the shareholders' equity attributable to the Company's shareholders until the shares are canceled or sold. When these shares are subsequently sold, any amount received, net of any directly attributable transaction costs and respective income tax and social contribution effects, is included in shareholders' equity attributable to the Company's shareholders.
Transactions and non-controlling interests
The Company treats transactions with non-controlling interests as transactions with the Company's asset owners. For purchases of non-controlling interests, the difference between any consideration paid and the acquired portion of the book value of the subsidiary's net assets is recorded in shareholders' equity. Gains or losses on disposals to non-controlling interests are also recorded directly in shareholders' equity.
When the Company ceases to have control, any interest retained in the entity is remeasured to its fair value, and the change in book value is recognized in profit or loss. Fair value is the initial carrying amount for subsequent accounting of the retained interest in an associate, a joint venture, or a financial asset. In addition, any amounts previously recognized in other comprehensive income relating to that entity are accounted for as if the Company had directly disposed of the related assets or liabilities. This means that amounts previously recognized in other comprehensive income are reclassified to profit or loss.
| FS-70 |
| |
| 24. | SHAREHOLDE'S COMPENSATION |
On May 9, 2024 and November 14, 2024, the Board of Directors
approved the proposal to pay interim dividends to the Profit Reserve Account in the amount of R$
As of December 31, 2024, the Company recorded a loss
for the year of (R$
Accounting Policy
The Company adopts a profit distribution policy which, in compliance with the provisions of Law No. 6,404/76 as amended by Law 9,457/97, will imply the allocation of all net income to its shareholders, provided that the following priorities are preserved, regardless of its order: (i) business strategy (ii) compliance with obligations (iii) making the necessary investments and (iv) the maintenance of a good financial situation for the Company.
In accordance with article 33 of the Company’s Bylaws, at least 25% of the net income for the year, adjusted under the terms of article 202 of Law 6,404/76, will be distributed as dividends in each fiscal year, which will be reflected in current liabilities. In addition, the Board of Directors may pay interest on equity by allocating the amount of interest paid or credited to the minimum mandatory dividends mentioned above. If the Company reports a dividend higher than the mandatory minimum in the allocation proposal, this amount is highlighted in a specific account in equity under “Proposed Additional Dividend”.
According to Law no. 6.404/76 as amended by Law no. 11.638/07 and pursuant to the sole paragraph of article 189, the loss for the year will be mandatorily absorbed by retained earnings, profit reserves and legal reserve, in that order.
| 25. | NET REVENUE FROM SALES |
Net sales revenue is comprised as follows:
| Consolidated | ||||||
| 12/31/2024 | 12/31/2023 | 12/31/2022 | ||||
| Gross revenue | ||||||
| In Brazil | ||||||
| Abroad | ||||||
| Deductions | ||||||
| Sales returns, discounts and rebates | ( |
( |
( | |||
| Taxes on sales | ( |
( |
( | |||
| ( |
( |
( | ||||
| Net revenue |
Accounting Policy
The Company's revenue is recognized as soon as all the conditions below are met:
| FS-71 |
| |
| · | Identification of the contract for the sale of goods or provision of services |
| · | Identification of performance obligations |
| · | Determination of the contract value |
| · | Determinations of the amount allocated to each of the performance obligations included in the contract and |
| · | Revenue recognition over time or when performance obligations are completed. |
The Company's operating revenues are generated through the production and sale of steel, mining, and cement products, railway and port logistics services, and energy sales. In the normal course of activities, it is measured by the fair value of the consideration the entity expects to receive in exchange for the delivery of the promised good or service to the customer.
Revenue recognition occurs when or as the entity satisfies a performance obligation by transferring the good or service to the customer, with a performance obligation understood as an executable promise in a contract with a customer to transfer a good/service or a series of goods or services.
If it is probable that discounts will be granted and the amount can be measured reliably, then the discount is recognized as a reduction in operating revenue as sales are recognized.
The Company recognizes iron ore sales revenue when product control is transferred to customers, which in most cases occurs when the product is loaded onto the vessel or vehicle for transport, at the destination port or customer facilities. There may be circumstances where judgment is required based on the control indicators highlighted above. In export sales made under the CFR (Cost and Freight) and CIF (Cost, Insurance and Freight) shipping terms, the customer has a current obligation to pay according to the sales contract terms, typically when the ship is loaded. At this point, the payment obligation covers both the product and freight, and in certain cases, insurance after the date when control of the goods transfers to the customer at the loading port.
The operating revenue from the sale of goods and services in the normal course of activities is measured by the fair value of the consideration that the entity expects to receive in exchange for delivering the promised good or service to the customer. Iron ore sales contracts are provisionally fixed at prices at the time revenues are recognized and a provisional invoice is issued as stipulated in the contract the selling price of these products can be reliably measured each period, as the price is quoted in an active market. Therefore, the fair value of the final sales price adjustment is continuously reassessed and variations in fair value are recognized as sales revenue in the income statement.
| FS-72 |
| |
| 26. | EXPENSES BY NATURE |
| Consolidated | ||||||
| 12/31/2024 | 12/31/2023 | 12/31/2022 | ||||
| Raw materials and inputs | ( |
( |
( | |||
| Outsourcing material | ( |
( |
( | |||
| Labor cost | ( |
( |
( | |||
| Supplies | ( |
( |
( | |||
| Maintenance cost (services and materials) | ( |
( |
( | |||
| Outsourcing services | ( |
( |
( | |||
| Freight | ( |
( |
( | |||
| Depreciation, amortization and depletion | ( |
( |
( | |||
| Others | ( |
( |
( | |||
| ( |
( |
( | ||||
| Classified as: | ||||||
| Cost of sales | ( |
( |
( | |||
| Selling expenses | ( |
( |
( | |||
| General and administrative expenses | ( |
( |
( | |||
| ( |
( |
( |
Depreciation, amortization, and depletion for the year were distributed as follows.
| Consolidated | |||||
| 12/31/2024 | 12/31/2023 | 12/31/2022 | |||
| Production costs (1) | ( |
( |
( | ||
| Selling expenses | ( |
( |
( | ||
| General and administrative expenses | ( |
( |
( | ||
| Total | ( |
( |
( | ||
| Other operational (2) | ( |
( |
( | ||
| Net | ( |
( |
( |
| (1) | The cost of production includes PIS and COFINS credits on lease agreements as of December 31, 2024, in the amount of R$ 5,357 (R$ 7,068 as of December 31, 2023). |
| (2) | These mainly refer to the depreciation of investment properties, idle equipment and amortization of SWT customer portfolio classified under other operating expenses, see note 27. |
| FS-73 |
| |
| 27. | OTHER OPERATING (EXPENSES)/INCOME |
| Schedule of other operating income and expenses | ||||||||
| Consolidated | ||||||||
| Ref. | 12/31/2024 | 12/31/2023 | 12/31/2022 | |||||
| Other operating income | ||||||||
| Receivables by indemnity | | |||||||
| Rentals and leases | | |||||||
| Dividends received | ||||||||
| Contractual fines | ( |
| ||||||
| Updated shares – Fair value through profit or loss | 14.d | ( |
( | |||||
| Tax recovery | ||||||||
| Gain on disposal of investments | ||||||||
| Other revenues | | |||||||
| Total other operating income | | |||||||
| Other operating expenses | ||||||||
| Taxes and fees | ( |
( |
( | |||||
| Expenses/(reversal) with environmental liabilities, net | ( |
( |
( | |||||
| Write-off/(provision) of judicial lawsuits | ( |
( |
( | |||||
| Depreciation and amortization | 26 | ( |
( |
( | ||||
| Reversal/(write-offs) of estimated losses in fixed assets, intangible assets and investment properties, net of reversal | 9.d, 10 and 11 | ( |
( |
| ||||
| Estimated (loss)/reversal in inventories (1) | ( |
( |
( | |||||
| Idleness in stocks and paralyzed equipment (2) | ( |
( |
( | |||||
| Studies and project engineering expenses | ( |
( |
( | |||||
| Reserch and development expenses | ( | |||||||
| Healthcare plan expenses | ( |
( |
( | |||||
| Cash flow hedge accounting realized (3) | 14 | ( |
( | |||||
| Actuarial pension plan | ( |
( |
( | |||||
| Reversal of impairment fair value Transnordestina | | |||||||
| Other expenses | ( |
( |
( | |||||
| Total other operating expenses | ( |
( |
( | |||||
| Other operating income (expenses), net | ( |
( |
( |
| (1) | It refers substantially to losses incurred in the production process at Presidente Vargas Plant ("UPV") and losses in inventories |
| (2) | Operational idleness due to interventions in the sintering process that impacted crude steel production |
| (3) | The realization of Cash Flow Hedge of R$ (241,400) and Platts Hedge in the amount of R$ 452,906, which results in a total of R$ 211,506. |
| FS-74 |
| |
| 28. | FINANCIAL INCOME/(EXPENSE) |
| Consolidated | ||||||||
| Ref. | 12/31/2024 | 12/31/2023 | 12/31/2022 | |||||
| Financial income | ||||||||
| Related parties | 22.a | |
|
| ||||
| Income from financial investments | |
|
| |||||
| Updated shares – Fair value through profit or loss | 14.d | |
||||||
| Dividends received | |
|
| |||||
| Interest and fines | |
|
| |||||
| Other income | |
|
| |||||
| Total financial income | ||||||||
| Financial expenses | ||||||||
| Borrowings and financing - foreign currency | 13 | ( |
( |
( | ||||
| Borrowings and financing - local currency | 13 | ( |
( |
( | ||||
| Capitalized interest | 10 | |
|
| ||||
| Updated shares – Fair value through profit or loss | 14.d | ( |
( | |||||
| Related parties | 22.a | ( |
( |
( | ||||
| Lease liabilities | 15 | ( |
( |
( | ||||
| Interest and fines | ( |
( |
( | |||||
| Interest on forfaiting operations | ( |
( |
( | |||||
| (-) Adjusted present value of trade payables | ( |
( |
( | |||||
| Commission, bank fees and guarantee | ( |
( |
( | |||||
| PIS/COFINS over financial income | ( |
( |
( | |||||
| Other financial expenses | ( |
( |
( | |||||
| Total financial expenses | ( |
( |
( | |||||
| Others financial items, net | ||||||||
| Foreign exchange and monetary variation, net | |
( |
| |||||
| Gains and (losses) on derivatives (*) | ( |
|
( | |||||
| Total others financial items, net | ( |
( |
| |||||
| Financial income (expenses) | ( |
( |
( | |||||
| Financial income (expenses), net | ( |
( |
( | |||||
| (*) Statement of gains and (losses) on derivative transactions (note 14.c) | ||||||||
| Dollar to Real - NDF | | |||||||
| Exchange rate swap Real x Dollar | |
( |
( | |||||
| Exchange rate swap Dollar x Euro | |
|||||||
| Interest rate swap CDI x IPCA | ( |
|
( | |||||
| Exchange rate swap CDI x Dollar | ( |
|
| |||||
| Total | ( |
|
( | |||||
Accounting Policy
Financial income includes interest income on short-term investments and changes in the fair value of financial assets measured at fair value through profit or loss. Interest income is recognized in profit or loss using the effective interest method.
Financial expenses include interest expenses on loans and losses at the fair value of financial instruments measured at fair value through profit or loss. Borrowing costs that are not directly attributable to the acquisition, construction or production of a qualifying asset are measured in profit or loss using the effective interest method. Foreign exchange gains and losses are reported on a net basis.
| FS-75 |
| |
| 29. | SEGMENT INFORMATION |
According to the Group's structure, the businesses are distributed and managed in five operating segments as follows:
| · | Steel operations |
The Steel segment consolidates all operations related to the production, distribution and marketing of flat steel, long steel, metal packaging and galvanized steel, with operations in Brazil, United States, Portugal and Germany. The segment serves the civil construction, steel packaging markets for the country's chemical and food industries, white goods (household appliances), automotive and OEM (engines and compressors). The Company's steel units produce hot-rolled, cold-rolled, galvanized, and pre-painted steel with great durability. It also produces tinplate, a raw material used in the production of packaging.
Abroad, Lusosider, in Portugal, produces cold rolled and galvanized steels. CSN LLC, in the United States, serves the local market through the import and marketing of steel products. Stahlwerk Thüringen (SWT), located in Germany, produces long steel and is specialized in the production of profiles used in civil construction.
In January 2014, CSN started its long steel operation in Brazil, which consolidates the company's position as a source of complete solutions for civil construction, complementing its portfolio of high value-added products in the steel chain.
| · | Mining |
Covers the mining and marketing activities of iron ore and tin.
Iron ore high quality operations are located in the Iron Quadrangle, in Minas Gerais, which, besides producing, also market iron ore purchased from third parties.
At the end of 2015, CSN and the Asian Consortium formalized
a shareholders' agreement to combine assets related to iron ore operations and related logistics, forming a new company that concentrated
the Group's main mining activities starting in December 2015. Based in this context, the new company, currently called CSN Mineração
S.A., came to hold the lease of TECAR, as well as the Casa de Pedra mine and all Namisa shares, which was incorporated on December 31,
2015. CSN still holds
In addition, CSN controls Estanho de Rondônia S.A., a company with tin mining and smelting units in the state of Rondônia.
On October 7, 2022, CSN Mineração and CSN Energia completed the acquisition of the Quebra-Queixo Hydroelectric Plant, which has an installed capacity of 120 MW and is located in the city of Ipuaçu, SC. This acquisition makes CSN Mineração self-sufficient in electricity, strengthening its industrial competitiveness through greater cost predictability and 100% renewable energy generation.
| · | Logistics |
i) Railway
CSN has a stake in three railway companies: MRS Logística S.A., which manages the former RFFSA Southeast Network, Transnordestina Logística S.A. and FTL - Ferrovia Transnordestina Logística S.A., which hold the concession for the former RFFSA Northeast Network in the states of Maranhão, Piauí, Ceará, Rio Grande do Norte, Paraíba, Pernambuco, and Alagoas.
a) MRS
The railway transportation services provided by MRS are fundamental in supplying raw materials and in the outflow of the Company's final products. The totality of iron ore, coal and coke consumed by the President Plant
Vargas is transported by MRS, as well as part of the steel produced by CSN for the domestic market and for export.
| FS-76 |
| |
The southeastern Brazilian railway system, spanning 1,674 km of railway network, serves the industrial triangle of São Paulo - Rio de Janeiro - Minas Gerais in the Southeast region, connecting mines in Minas Gerais to ports in São Paulo and Rio de Janeiro, and to steel mills of CSN (Presidente Vargas Plant), Usiminas, COSIPA, and Gerdau Açominas. Besides serving other customers, the line transports iron ore from the Company's Casa de Pedra mine in Minas Gerais, and coke and coal from Itaguaí Port in Rio de Janeiro, to Volta Redonda/RJ and products destined for export to the Ports of Itaguaí and Rio de Janeiro.
b) TLSA e FTL
TLSA and FTL hold the concession of the former RFFSA Northeast network. The northeastern railway system covers 4,238 km of railway network divided into two sections: i) Network I, which includes the sections of São Luiz - Mucuripe, Arrojado - Recife, Itabaiana - Cabedelo, Paula Cavalcante - Macau - and Propriá - Jorge Lins and ii) Network II, which includes the sections of Missão Velha - Salgueiro, Salgueiro - Trindade, Trindade - Eliseu Martins and Missão Velha - Porto de Pecém.
It also connects to the main ports in the region, thus offering an important competitive advantage through opportunities for combined transport solutions and tailor-made logistics projects.
ii. Port
The Company operates the Solid Bulk Port Terminal ("TECAR"), leased by CSN Mineração S.A. in the mining segment, and the Container Port Terminal ("TECON"), leased by Sepetiba TECON S.A., in the logistics segment. Both port terminals are located at the Organized Port of Itaguaí in the State of Rio de Janeiro, which was built after the port modernization law (Law 8.630/1993) that allowed the transfer of port activities to the private sector. The Organized Port of Itaguaí has complete infrastructure to meet all the needs of exporters, importers, and shipowners. Its installed capacity exceeds that of most Brazilian terminals. It has berths and large storage area, as well as the most modern and appropriate equipment, systems, and intermodal connections.
Still, the Company's port logistics segment includes the project of a private use terminal in the Industrial and Port Complex of Pecém, in the State of Ceará ("TUP"). The TUP project foresees the integration of the port with the railway under implementation by TLSA, so that its installation and operation will enable the flow of the products transported by this rail transport service.
| · | Energy |
CSN is one of the largest industrial consumers of electricity in Brazil. As energy is a fundamental input in its production process, the Company owns electric power generation assets, and with the acquisitions made in 2022, it achieved energy self-sufficiency, starting to operate in the sector as an electric power generation player through the commercialization of its surplus.
The year 2022 marked the growth of this segment through the acquisition of relevant renewable generation assets, tripling its generation capacity, as shown below:
On June 30, 2022, CSN Cimentos and CSN Energia completed the acquisition of PCH Sacre II, located in the municipality of Brasnorte – MT, with an installed capacity of 30 MW and of PCH Santa Ana, located in the municipality of Angelina – SC, with an installed capacity of 6.50 MW.
On October 7, 2022, CSN Mineração and CSN Energia completed the acquisition of the Quebra-Queixo Hydroelectric Power Plant, located in the city of Ipuaçu - SC, with installed capacity of 120 MW.
On October 21, 2022, Companhia Florestal do Brasil ("CFB") completed the acquisition of 66.23% of the shares of Companhia Estadual de Geração de Energia Elétrica – CEEE-G, with plants located in the state of Rio Grande do Sul, increasing the CSN group's installed capacity by 746 MW. On December 22, 2022, Companhia Florestal do Brasil ("CFB") completed the acquisition of Eletrobrás' 32.74% interest in Companhia Estadual de Geração de Energia Elétrica - CEEE-G. This acquisition increased CSN's installed generation capacity by 380 MW.
| FS-77 |
| |
With the acquisitions, the CSN group now holds a portfolio of generation assets with an installed capacity of 2,010 MW, as follows:
| 1. | Itá Hydroelectric Power Plant, located in the state of Santa Catarina, in which CSN holds a 29.50% stake through the SPE ITASA, with installed capacity equivalent to its participation of 428 MW |
| 2. | Igarapava Hydroelectric Power Plant, located in Minas Gerais, in which CSN holds 17.92% participation in the consortium, with installed capacity equivalent to its participation of 38 MW |
| 3. | Thermoelectric Cogeneration Center CTE#1, CTE#2 and TRT – Top Recovery Turbine, operating at Presidente Vargas Plant with installed capacity of 10 MW, 235 MW and 22 MW respectively, using industrial gases recirculated from steel production as fuel |
| 4. | Sacre II Small Hydroelectric Power Plant, located in the state of Mato Grosso, with installed capacity of 30 MW, of which CSN Cimentos holds full control of the asset through indirect control of the Brasil Central Energia SPE |
| 5. | Santa Ana Small Hydroelectric Power Plant, located in the state of Santa Catarina, with installed capacity of 6.5 MW, of which CSN Cimentos holds full control of the asset through direct control of the Santa Ana Energética SPE |
| 6. | Quebra Queixo Hydroelectric Power Plant, located in the state of Santa Catarina, with an installed capacity of 120 MW, of which CSN Mineração holds full control of the asset through direct control of the SPE of CEC – Companhia Energética Chapecó |
| 7. | Cachoeira dos Macacos Small Hydroelectric Power Plant, located in the state of Minas Gerais, with installed capacity of 3.4 MW, of which CSN Cimentos holds full control of the asset, through the acquisition of LafargeHolcim |
| 8. | Companhia Estadual de Geração de Energia Elétrica – CEEE-G, located in Rio Grande do Sul state, with a platform of 13 own Hydroelectric Plants, wind and solar assets, plus minority participation in other ventures, reflecting an installed capacity of 1,119 MW. |
| · | Cement |
The Cement segment, which operates through CSN Cimentos Brasil, consolidates the production, commercialization, and distribution operations of cement, aggregates, and concrete. In the factories located in the Southeast, the slag used is the same produced by the blast furnaces of the Presidente Vargas Plant itself, in Volta Redonda/RJ.
The Company grew in this segment through the acquisition of Elizabeth Cimentos S.A. on August 31, 2021, and LafargeHolcim (Brazil) S.A. on September 6, 2022. With these acquisitions, the cement production capacity was increased by 12.3 million tons per year and the product portfolio came to include, in addition to Cement, also Aggregates and Concrete. With all combined operations, CSN's Cement segment is currently the second largest in Brazil, from the perspective of effective productive capacity, totaling 17 million tons.
The cement plants are located in the states of Minas Gerais (Arcos, Pedro Leopoldo, Barroso, and Montes Claros), Rio de Janeiro (Volta Redonda, Cantagalo, and Rio de Janeiro), Paraíba (Alhandra and Caaporã), Espírito Santo (Vitória), Bahia (Candeias), Goiás (Cocalzinho de Goiás), and São Paulo (Sorocaba). The production process occurs basically through grinding the main raw materials which include clinker, limestone, gypsum, and slag.
The sites are divided into two modalities: integrated factories and milling. The integrated factories have limestone mine and furnace for clinker production, they are Arcos, Barroso, Pedro Leopoldo, Montes Claros, Alhandra, Caaporã and Cantagalo. The grinding mills do not produce their own clinker, they are supplied with their own clinker (transfer between plants) and/or third-party sources, which are: Volta Redonda, Rio de Janeiro, Vitória, Candeias, Cocalzinho and Sorocaba.
| FS-78 |
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The company currently serves the cement market with a broad product portfolio suitable for both the technical segment and the distribution market, according to ABNT NBR 16697. The cement is marketed in both bagged and bulk form.
In addition to the above operations, CSN Cimentos Brasil also holds two electric power generation assets acquired on June 30, 2022: the Santa Ana Small Hydroelectric Power Plant (PCH), located in the municipality of Angelina – SC, with an installed capacity of 6.50 MW, and the Sacre II Small Hydroelectric Power Plant (PCH), located in the municipality of Brasnorte – MT, with an installed capacity of 30 MW.
On August 31, 2023, an Extraordinary General Meeting
approved the merger of CSN Cimentos by CSN Cimentos Brasil, with the consequent transfer of the entire patrimony, assets (movable and
immovable), rights, and obligations, according to the terms of the "Incorporation Protocol and Justification of CSN Cimentos S.A.
by CSN Cimentos Brasil S.A.". Thus, CSN Cimentos was extinguished, all its shares were cancelled, and, in replacement, its shareholders
received shares of CSN Cimentos Brasil. All activities carried out by CSN Cimentos are now carried out by CSN Cimentos Brasil. On June
30, 2023, the Appraisal Report of CSN Cimentos' equity was prepared, serving as the basis for defining a capital increase in CSN Cimentos
Brasil in the amount of R$
| · | Sales by geographic area |
Sales by geographic area are determined based on customers' location. National sales on a consolidated basis are represented by revenues from customers located in Brazil and export sales represent revenues from customers located abroad.
Result by segment
For the purposes of preparing and presenting information by business segment, Management decided to maintain the proportional consolidation of the jointly controlled companies, as historically presented. For the purpose of consolidating the income statement, the values of these companies are eliminated in the column "Corporate expenses/elimination".
| 12/31/2024 | ||||||||||||||||||
| P&L | Ref. | Steel | Mining | Logistics | Energy | Cement | Corporate expenses/elimination | Consolidated | ||||||||||
| Port | Railroads | |||||||||||||||||
| Net revenues | |
|
|
|
|
|
( |
| ||||||||||
| In Brazil | |
|
|
|
|
|
( |
| ||||||||||
| Abroad | |
|
|
| ||||||||||||||
| Cost of sales and services | 26 | ( |
( |
( |
( |
( |
( |
|
( | |||||||||
| Gross profit | |
|
|
|
|
| ||||||||||||
| General and administrative expenses | 26 | ( |
( |
( |
( |
( |
( |
( |
( | |||||||||
| Other operating income/(expenses), net | 27 | ( |
( |
( |
|
( |
( |
( |
( | |||||||||
| Equity in results of affiliated companies | 9 | |||||||||||||||||
| Operating result before Financial Income and Taxes | ( |
|
|
( |
|
( |
| |||||||||||
| Sales by geographic area | ||||||||||||||||||
| Asia | |
|
| |||||||||||||||
| North America | |
| ||||||||||||||||
| Latin America | |
| ||||||||||||||||
| Europe | |
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| |||||||||||||||
| Others | |
| ||||||||||||||||
| Foreign market | |
|
|
| ||||||||||||||
| Domestic market | |
|
|
|
|
|
( |
| ||||||||||
| Total | |
|
|
|
|
|
( |
|
| FS-79 |
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| 12/31/2023 | ||||||||||||||||||
| P&L | Ref. | Steel | Mining | Logistics | Energy | Cement | Corporate expenses/elimination | Consolidated | ||||||||||
| Port | Railroads | |||||||||||||||||
| Net revenues | |
|
|
|
|
|
( |
| ||||||||||
| In Brazil | |
|
|
|
|
|
( |
| ||||||||||
| Abroad | |
|
|
| ||||||||||||||
| Cost of sales and services | 26 | ( |
( |
( |
( |
( |
( |
|
( | |||||||||
| Gross profit | |
|
|
|
|
| ||||||||||||
| General and administrative expenses | 26 | ( |
( |
( |
( |
( |
( |
( |
( | |||||||||
| Other operating income/(expenses), net | 27 | ( |
( |
( |
|
|
( |
( |
( | |||||||||
| Equity in results of affiliated companies | 9 | |||||||||||||||||
| Operating result before Financial Income and Taxes | ( |
|
|
|
|
( |
| |||||||||||
| Sales by geographic area | ||||||||||||||||||
| Asia | |
|
| |||||||||||||||
| North America | |
| ||||||||||||||||
| Latin America | |
|||||||||||||||||
| Europe | |
|
| |||||||||||||||
| Foreign market | |
|
|
| ||||||||||||||
| Domestic market | |
|
|
|
|
|
( |
| ||||||||||
| Total | |
|
|
|
|
|
( |
| ||||||||||
| 12/31/2022 | ||||||||||||||||||
| P&L | Ref. | Steel | Mining | Logistics | Energy | Cement | Corporate expenses/elimination | Consolidated | ||||||||||
| Port | Railroads | |||||||||||||||||
| Net revenues | |
|
|
|
|
|
( |
| ||||||||||
| In Brazil | |
|
|
|
|
|
( |
| ||||||||||
| Abroad | |
|
| |||||||||||||||
| Cost of sales and services | 26 | ( |
( |
( |
( |
( |
( |
|
( | |||||||||
| Gross profit | |
|
|
|
| |||||||||||||
| General and administrative expenses | 26 | ( |
( |
( |
( |
( |
( |
( |
( | |||||||||
| Other operating income/(expenses), net | 27 | ( |
( |
( |
|
( |
( |
( | ||||||||||
| Equity in results of affiliated companies | 9 | |||||||||||||||||
| Operating result before Financial Income and Taxes | |
|
|
|
( |
| ||||||||||||
| Sales by geographic area | ||||||||||||||||||
| Asia | |
| ||||||||||||||||
| North America | |
| ||||||||||||||||
| Latin America | |
|||||||||||||||||
| Europe | |
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| |||||||||||||||
| Others | |
| ||||||||||||||||
| Foreign market | |
|
| |||||||||||||||
| Domestic market | |
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|
|
|
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( |
| ||||||||||
| Total | |
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|
( |
| ||||||||||
Accounting Policy
An operating segment is a component of the Group committed to the business activities, from which it can earn revenue and incur expenses, including income and expenses related to transactions with any other components of the Group. All results of operating segments are regularly reviewed by CSN’s Executive Board to make decisions about the resources to be allocated to the segment and to evaluate its performance, and for which different financial information is available.
| FS-80 |
| |
| 30. | EMPLOYEE BENEFITS |
The pension plans granted cover substantially all employees. The plans are administered by the Caixa Beneficente dos Empregados da CSN ("CBS"), a private and non-profit pension fund, established in July 1960.
Until December 1995, CBS Previdência managed two defined benefit plans based on years of service, salary, and social security benefits. On December 27, 1995, the then Social Security Complementary Secretariat ("SPC") approved the implementation of a new benefit plan, effective from that date, called Mixed Supplementary Benefit Plan ("Mixed Plan"), structured as a variable contribution plan, which has been closed to new enrollments since September 2013. From that date, all new employees must adhere to the CBSPrev Plan, structured in the defined contribution modality, also created in September 2013.
The guarantor resources of CBS are invested mainly in
repurchase agreements (backed by federal government securities), federal government securities indexed to inflation, stocks, loans and
real estate. As of December 31, 2024, CBS held common shares of CSN ( as of December 31, 2023). The total guaranteed
resources of the entity totaled R$
These are considered Guarantor Resources, the available assets and investments of the Benefit Plans, not including the values of contracted debts with sponsors.
For defined benefit plans, called "35% of Salary Average" and "Salary Average Supplementation Plan", the Company maintains a financial guarantee with CBS Previdência, the entity that administers the mentioned plans, with the objective of maintaining financial and actuarial balance in case of any future actuarial loss or actuarial gain.
In accordance with current legislation specific to the pension fund market, for the last 4 fiscal years (2021, 2022, 2023, and 2024), there was no need for CSN to make payments, as the defined benefit plans showed actuarial gains in the fiscal year.
CSN Cimentos Brasil also sponsors the Mauá Prev. This is a variable contribution plan that was offered to employees until the company was acquired by the CSN Group. The following tables summarize the components of net periodic benefit cost recognized in the income statement for Mauá Prev, as well as the capitalization status and amounts that may be recognized in the balance sheet as of December 31, 2024 and 2023.
| 30.a)Description | of pension plans |
35% of average salary plan
This plan, which began on February 1, 1966, is a defined
benefit plan designed to provide life annuities (service, special, disability or retirement) equal to
Average salary supplementation plan
This plan began on November 1, 1977 and is a defined
benefit plan. Its objective is to complement the difference between the adjusted average of the participant's last
Mixed Supplemental Benefit Plan
Started on December 27, 1995, it is a variable contribution plan. In addition to the scheduled retirement benefit, risk benefits are provided (active pension, disability, and sick leave/accident aid). In this plan, the retirement benefit is calculated based on what was accumulated through monthly contributions from participants and sponsors, as well as each participant's choice for receiving the benefit, which can be lifelong (with or without continuity of death pension) or based on a percentage applied to the balance of the benefit-generating fund (indefinite term loss). After retirement is granted, the plan has the characteristic of a defined benefit plan, if the participant has chosen to receive their benefit in the form of a lifetime monthly income. This plan was deactivated on September 16, 2013, when the CBSPrev plan went into effect.
| FS-81 |
| |
CBS Prev Plan
On September 16, 2013, the new CBSPrev pension plan began, which is a defined contribution plan. In this plan, the retirement benefit is determined based on what has been accumulated through monthly contributions from participants and sponsors. Each participant's option for receiving the benefit can be: (a) receive a portion upfront (up to 25%) and the remaining balance through monthly income as a percentage applied to the benefit-generating fund, not applicable to death pension benefits, (b) receive only through monthly income as a percentage applied to the benefit-generating fund.
With the creation of the CBSPrev plan, the Mixed Supplementary Benefit Plan was deactivated for the entry of new participants starting September 16, 2013.
Mauá Prev Plan
The Mauá Prev plan is offered by CSN Cimentos Brasil S.A. (previously named LafargeHolcim Brasil S.A.) acquired in 2022, and sponsors the Mauá Prev Retirement Plan to its employees. This is the plan that the company made available to all its employees in Brazil as of December 1, 2016. Until 2009, its predecessor, Lafarge Brasil S/A, sponsored two plans, a defined contribution plan and a defined benefit plan. On July 1, 2009, the plans were merged, resulting in only one variable contribution plan, safeguarding the acquired rights of those who had already completed the eligibility requirements of the defined benefit rules. Furthermore, the Company has registered in a collective agreement part of its plants commitments related to the bonus, due on the occasion of the dismissal of the retired employee by Social Security. The following tables present the commitments related to this bonus, as well as the capitalization status and the amounts that can be recognized in the balance sheet.
ACT Plan
CSN Cimentos Brasil (CIBR) has post-employment benefits linked to Collective Bargaining Agreements (ACT), which provides for the payment of multiple salaries, as well as compensation from the FGTS (Guarantee Fund for Length of Service) if the employee leaves the company due to retirement.
| 30.b) | Investment policy |
The investment policy establishes principles and guidelines governing the investment of resources entrusted to the entity, aiming to promote the necessary security, liquidity, and profitability to ensure balance between plan assets and liabilities. This policy is based on the Asset Liability Management (ALM) study, which takes into account the benefits of participants and beneficiaries of each plan.
| 30.c) | Benefits granted and to be granted |
The actuarial calculations are updated at the end of each fiscal year by external actuaries and presented in the financial statements in accordance with IAS 19 - Employee Benefits.
| Consolidated | |||||||
| 12/31/2024 | 12/31/2023 | 12/31/2024 | 12/31/2023 | ||||
| Actuarial asset | Actuarial liabilities | ||||||
| Benefits of pension plans | ( |
( |
|
| |||
| Post-employment healthcare benefits | |
| |||||
| ( |
( |
|
| ||||
| FS-82 |
| |
The reconciliation of assets and liabilities of employee benefits is presented below:
| Consolidated | |||||
| 12/31/2024 | 12/31/2023 | 12/31/2022 | |||
| Present value of defined benefit obligation | |||||
| Fair value of plan assets | ( |
( |
( | ||
| Deficit(Surplus) | ( |
( |
( | ||
| Restriction to actuarial assets due to recovery limitation | |
|
| ||
| Liabilities (Assets), net | ( |
( |
( |
The change in the present value of the defined benefit obligation is shown below:
| Consolidated | |||||
| 12/31/2024 | 12/31/2023 | 12/31/2022 | |||
| Present value of obligations at the beginning of the year | |||||
| Consolidation of CSN Cimentos Brazil | |||||
| Cost of service | |
| |||
| Interest cost | |
|
|||
| Participant contributions made in the year | |
| |||
| Benefits paid | ( |
( |
( | ||
| Actuarial loss/(gain) | ( |
|
( | ||
| Present value of obligations at the end of the year | |
The change in the fair value of the plan’s assets is shown below:
| Consolidated | |||||
| 12/31/2024 | 12/31/2023 | 12/31/2022 | |||
| Fair value of plan assets at the beginning of the year | ( |
( |
( | ||
| Consolidation of CSN Cimentos Brazil | ( | ||||
| Interest income | ( |
( |
( | ||
| Benefits Paid | |
|
| ||
| Participant contributions made in the year | ( |
( |
( | ||
| Employer contributions made in the year | ( |
( |
( | ||
| Return on plan assets (less interest income) | |
( |
| ||
| Fair value of plan assets at the end of the year | ( |
( |
( |
The composition of the amounts recognized in the income statement is shown below:
| Consolidated | |||||
| 12/31/2024 | 12/31/2023 | 12/31/2022 | |||
| Cost of current service | |||||
| Interest cost | |
|
|||
| Expected return on plan assets | ( |
( |
( | ||
| Interest on the asset ceiling effect | |
||||
| Total costs / (income), net | ( |
( |
( |
The (cost)/income is recognized in the income statement in other operating expenses.
| FS-83 |
| |
The change in actuarial gains and losses is shown below:
| Consolidated | |||||
| 12/31/2024 | 12/31/2023 | 12/31/2022 | |||
| Actuarial losses and (gains) | ( |
|
( | ||
| Return on plan assets (less interest income) | ( |
| |||
| Change in the asset’s limit (excluding interest income) | |
( |
| ||
| Total cost of actuarial losses and (gains) | ( |
|
( |
The breakdown of actuarial gains and losses is shown below:
| Consolidated | |||||
| 12/31/2024 | 12/31/2023 | 12/31/2022 | |||
| Loss due to change in financial assumptions | ( |
|
( | ||
| Loss due to experience adjustments | ( |
| |||
| Loss due to changes in assumptions | ( |
||||
| Return on plan assets (less interest income) | ( |
| |||
| Change in the asset’s limit (excluding interest income) | |
( |
| ||
| Actuarial losses and (gains) | ( |
|
( |
The main actuarial assumptions used were as follows:
| 12/31/2024 | 12/31/2023 | ||
| Actuarial financing method | |||
| Functional currency | |||
| Recognition of plan assets | |||
| Real discount rate | |||
| Inflation rate | |||
| Nominal salary increase rate | |||
| Nominal benefit increase rate | |||
| Rate of return on investments | |||
| General mortality table | |||
| Disability table | |||
| Disability mortality table | |||
| Turnover table | |||
| Retirement age | |||
| Household of active participants |
| FS-84 |
| |
The assumptions regarding the mortality table are based on published statistics and mortality tables. These tables translate into an average life expectancy in years for employees aged 65 and 40:
| Plan covering 35% of the average salary | Average salary supplementation plan | Mixed supplementary benefit plan (Milênio Plan) | Plan ACT | Mauá Prev | ||||||||||
| Longevity at age of 65 for current participants | 12/31/2024 | 12/31/2023 | 12/31/2024 | 12/31/2023 | 12/31/2024 | 12/31/2023 | 12/31/2024 | 12/31/2023 | 12/31/2024 | 12/31/2023 | ||||
| Male | |
|
|
|
|
|
|
|
|
| ||||
| Female | |
|
|
|
|
|
|
|
|
| ||||
| Longevity at age of 40 for current participants | ||||||||||||||
| Male | |
|
|
|
|
|
|
|
|
| ||||
| Female | |
|
|
|
|
|
|
|
|
| ||||
Allocation of plan assets:
| 12/31/2024 | 12/31/2023 | 12/31/2022 | ||||||||
| Variable income | |
|
|
|||||||
| Fixed income | |
|||||||||
| Real estate | |
|
|
|||||||
| Others | |
|
|
|||||||
| Total | |
Assets invested in variable income are mainly invested in CSN shares.
Fixed income assets are mainly composed of bonds and National Treasury Notes (“NTN-B”).
Real estate refers to buildings valued by a specialized asset valuation company. There are no assets in use by CSN and its subsidiaries.
| 30.d) | Expected contributions for the following year and expense for the year |
For the mixed supplementary benefit plan, the expense
in 2024 was R$
In 2025 for the mixed supplementary benefit plan, expected
contributions for the defined contribution portion are in the amount of R$
| FS-85 |
| |
| 30.e) | Sensitivity analysis |
The quantitative sensitivity analysis regarding the significant assumptions, for the pension plans as of December 31, 2024 is shown below:
| 12/31/2024 | |||
| Consolidated Effect of Plans | |||
| Assumption: Discount rate | |||
| Sensitivity level | - | ||
| Effect on current service cost and on interest on actuarial obligations | ( |
||
| Effect on present value of obligations | ( |
| |
| Assumption: Salary growth | |||
| Sensitivity level | - | ||
| Effect on current service cost and on interest on actuarial obligations | |
( | |
| Effect on present value of obligations | ( | ||
| Assumption: Mortality table | |||
| Sensitivity level | - | ||
| Effect on current service cost and on interest on actuarial obligations | ( | ||
| Effect on present value of obligations | ( | ||
| Assumption: Benefit adjustment | |||
| Sensitivity level | |||
| Effect on current service cost and on interest on actuarial obligations | ( | ||
| Effect on present value of obligations | ( | ||
Following are the expected benefits for future years for defined benefit plans:
| Forecast payments | 2024 | 2023 | |
| Year 1 | | ||
| Year 2 | | ||
| Year 3 | | ||
| Year 4 | | ||
| Year 5 | | ||
| Next 5 years | |
||
| Total forecast payments | |
| 30.f) | Post-Employment Health Plan |
It refers to the health plan created on December 1, 1996, exclusively to cover former retired employees, pensioners, amnesties, ex-combatants, widows of labor accident victims and retirees until March 20, 1997 and their respective legal dependents. Since then, the health plan has not allowed the inclusion of new beneficiaries. The Plan is sponsored by CSN.
| FS-86 |
| |
The amounts recognized in the balance sheet were determined as follows:
| 12/31/2024 | 12/31/2023 | 12/31/2022 | ||
| Present value of obligations | |
|
| |
| Liabilities | |
|
|
The reconciliation of health benefit liabilities is as follows:
| 12/31/2024 | 12/31/2023 | 12/31/2022 | ||
| Actuarial liability at the beginning of the year | |
|
| |
| Expenses recognized in income for the year | ||||
| Sponsor’s contributions transferred in prior year | ( |
( |
( | |
| Recognition of actuarial loss/(gain) | ( |
( |
( | |
| Actuarial liability at the end of the year | |
|
| |
The actuarial gains and losses recognized in equity are as follows:
| 12/31/2024 | 12/31/2023 | 12/31/2022 | ||
| Actuarial gain (loss) on obligation | ( |
( |
( | |
| Gain/(loss) recognized in shareholders' equity | ( |
( |
( |
The following is the weighted average life expectancy based on the mortality table used to determine actuarial obligations:
| 12/31/2024 | 12/31/2023 | 12/31/2022 | |||
| Longevity at age of 65 for current participants | |||||
| Male | |||||
| Female | |||||
| Longevity at age of 40 for current participants | |||||
| Male | |||||
| Female |
Below is the weighted average life expectancy based on the mortality table used to determined actuarial obligations:
| 12/31/2024 | 12/31/2023 | 12/31/2022 | |||
| Biometric and Demographic | |||||
| General mortality table | |||||
| Financial | |||||
| Actuarial nominal discount rate | |||||
| Inflation | |||||
| Real increase in medical costs based on age (Aging Factor) | |||||
| Nominal increase medical costs growth rate | |||||
| Average medical cost (Claim cost) | |
|
|
| FS-87 |
| |
| 30.g) | Sensitivity analysis |
The quantitative sensitivity analysis for significant assumptions for the post-employment health plans as of December 31, 2024, is as follows:
| 12/31/2024 | |||
| Healthcare Plan | |||
| Assumption: Discount rate | |||
| Sensitivity level | - | ||
| Effect on current service cost and on interest on actuarial obligations | ( |
||
| Effect on present value of obligations | ( |
||
| Assumption: Medical Inflation | |||
| Sensitivity level | - | ||
| Effect on current service cost and on interest on actuarial obligations | ( | ||
| Effect on present value of obligations | ( | ||
| Assumption: Benefit adjustment | |||
| Sensitivity level | |||
| Effect on current service cost and on interest on actuarial obligations | ( |
||
| Effect on present value of obligations | ( |
||
Following are the expected benefits for future years of the post-employment health plans:
| Forecast benefit payments | 12/31/2024 | 12/31/2023 | ||
| Year 1 | | |||
| Year 2 | | |||
| Year 3 | | |||
| Year 4 | | |||
| Year 5 | | |||
| Next 5 years | |
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| Total forecast payments | |
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Accounting Policy
Long-term employee benefits
A defined contribution plan is a post-employment benefit plan in which the Company pays contributions to CBS. Obligations for contributions to defined contribution pension plans are recognized as employee benefit expenses in the income statement during the periods in which services are provided by employees. In this modality, the Company will have no legal or constructive obligation to pay additional amounts, as the risks fall on the employees.
For the defined benefit plan, the obligations are valued annually by independent actuaries using the unit credit method, with assumptions including biometric, demographic, financial and economic hypotheses. The discount rate is applied to set the present value of benefit obligations defined, the fair value of the assets is also determined. The amount recognized in the Company's balance sheet is the net of obligations after the discount rate less the fair value of assets.
When the calculation results in a benefit for the Company, the asset to be recognized is limited to the total of any unrecognized past service costs and the present value of economic benefits available in the form of future plan refunds or reduction in future plan contributions. Actuarial gains and losses resulting from defined benefit plans immediately in other comprehensive income. In the event of termination of the plan, the accumulated actuarial gains and losses are recorded in the income statement.
Short-term employee benefits
Payments of benefits such as salary or vacation, as well as the respective labor charges levied on these benefits are recognized monthly in the income statement, respecting the accrual basis.
Employee profit sharing and executive variable compensation are linked to the achievement of operational and financial targets. The Company recognizes a liability and an expense substantially when these targets are achieved, allocating them to the production cost or operational expenses.
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| 31. | COMMITMENTS |
| 31.a) | Take-or-pay contracts |
As of December 31, 2024 and 2023, the Company was a party to take-or-pay contracts as shown in the following table:
| Payments in the period | ||||||||||||
| Type of service | 2023 | 2024 | 2025 | 2026 | After 2026 | Total | ||||||
| Transportation of iron ore, coal, coke, steel products, cement and mining products. | ||||||||||||
| Supply of power, natural gas, oxygen, nitrogen, argon and iron ore pellets. | ||||||||||||
| Processing of slag generated during pig iron and steel production. | ||||||||||||
| Oil Storage and Handling | ||||||||||||
| Labor and consultancy services | ||||||||||||
31.b) Projects and other commitments
The Transnordestina Project, which corresponds to Network II of the Northeast Railway Network, includes 1,753 km of state-of-the-art, large-caliber railway network. The project has an evolution of 64.13% and was expected to be completed in 2017.
On December 23, 2022, following extensive negotiations involving ANTT, TCU, and the Ministry of Infrastructure, the first amendment to the concession contract was signed, redefining the scope and completion deadlines for TLSA's railway sections. Notably, it provided for the return of the SPS section, resulting in a project with the current 1,206 km of railway network and a completion deadline of August 2029. With this act, it also ended the discussion of the administrative procedure for recommendation of forfeiture, which was being processed by the National Land Transportation Agency ("ANTT").
The Company expects that the investments will allow TLSA, the concession holder of the Transnordestina Project, to transport various products, such as soybeans, corn, iron ore, limestone, cotton, sugarcane, fertilizers, oil and fuels. The concession period ends in 2057, and may be terminated before that period if the concession holder reaches the minimum return agreed with the Government. TLSA obtained the required environmental authorizations for the sections under construction, and implementation is advancing. Currently in Ceará, infrastructure works are ongoing in lots 04 to 07 and mobilization is in progress for lot 11, all related to the section connecting Missão Velha to Pecém Port (MVP). In parallel, maintenance services are being performed on tracks 1 and 2 of the railway project, specifically – from lot 03 (14km) to lot 07 of the Eliseu Martins (PI)/Trindade (PE) section, Salgueiro (PE)/Trindade (PE section, Salgueiro (PE)/Missão Velha (CE) section, and MVP lots 01 to 03 of the Missão Velha (CE)/Pecém (CE) section.
It is scheduled to occur still in 2025, the start of the commissioned Operation that will take place between the Municipalities of Bela Vista do Piauí (PI) and Iguatu (CE).
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· FTL – Ferrovia Transnordestina Logística S.A. (Operational network)
Regarding Malha I, operated by FTL – Ferrovia Transnordestina Logística S.A. ("FTL"), the Company filed a request in July 2022 for Early Extension of the concession contract for an additional 30 years, based on meeting legal requirements and performance targets established by ANTT regarding production volume and safety. Thus, despite an ANTT administrative procedure in 2013 that resulted in a recommendation for the concession contract to lapse, a decision was issued on December 13, 2022, by the Court of Accounts (TCU), Judgment No. 2769/2022, which determined that ANTT and the Ministry of Infrastructure (at the time), within their respective jurisdictions, should adopt measures toward a definitive solution for the concession contract of the network granted to FTL. In September 2023, based on the final report of the working group, the Ministry of Transportation issued OFFICIAL LETTER No. 448/2023/SE to ANTT informing the closure of the recommendation for termination issued in ANTT Deliberation No. 947/2019, of October 22, 2019. Therefore, given the positive negotiation environment for the concession contract and FTL's growth, with record production and EBITDA achievements, the company considers the Early Extension of the concession contract imminent to definitively resolve the mentioned contractual pending issues.
| 32. | INSURANCE |
In order to adequately mitigate risks and in view of the nature of its operations, the Company contracts several types of insurance policy. The policies are contracted in line with the Risk Management policy and are similar to insurance contracted by other companies in the same industry as CSN and its subsidiaries. The coverages of these policies include National Transport, International Transport, Life and Personal Accident Insurance, Health, Vehicle Fleet, D&O (Directors and Officers Liability Insurance), General Liability, Engineering Risks, Export Credit, Guarantee Insurance, and Port Operator Liability.
The Company's insurance is contracted together with the insurance of its subsidiaries, however, there is no joint and several liability between the Company and companies of its economic group with CSN Mineração.
In 2024, after negotiation with insurers and reinsurers
in Brazil and abroad, it was renewed from October 1, 2024 to September 30, 2025. Under the terms of said policy, the Maximum Indemnity
Limit is US$
The risk assumptions adopted, given their nature, are not part of the scope of the audit of the financial statements, consequently they have not been examined by our independent auditors.
| 33. | ADDITIONAL CASH FLOW INFORMATION |
The following table provides additional information about transactions related to the statement of cash flows:
| Consolidated | ||||||||
| Ref. | 12/31/2024 | 12/31/2023 | 12/31/2022 | |||||
| Income tax and social contribution paid | |
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| Addition to PP&E with interest capitalization | 10 and 28 | |
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| Remeasurement and addition – Right of use | 10.(i) | |
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| Addition to PP&E without adding cash | |
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| Capitalization in associate without cash effect | |
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| Net additional cash | |
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| 34. | SUBSEQUENT EVENTS |
Maintenance stops of Blast Furnace #2 at the Presidente Vargas Plant, in Volta Redonda
On January 19, 2025, the Company conducted a scheduled maintenance stop for Blast Furnace #2 at Presidente Vargas Plant in Volta Redonda, aiming to reform and extend the asset's useful life by 8 years, without the need for additional costs or investments beyond the official projections previously anticipated by the Company. The mini-reform is part of its maintenance program and was properly planned in order not to generate impact on the results of the steel segment and its customers.
2nd Issue of debentures
On January 23, 2025, COMPANHIA ESTADUAL DE GERAÇÃO
DE ENERGIA ELÉTRICA – CEEE-G, an indirect subsidiary of CSN, approved its 2nd simple Debenture issuance, non-convertible
into shares, of the unsecured type, with additional surety guarantee, in a single series, with a total value of R$
The 2nd Issuance is the subject of a public offering, under the automatic registration procedure, pursuant to Law No. 6.385 of December 7, 1976, and other applicable legal and regulatory provisions, under the firm placement guarantee regime, and is intended for professional investors.
For all legal purposes and effects, the issue date of the debentures is December 15, 2024. The debentures, in accordance with the provisions in the Issuance Deed, will have a maturity period of 82 (eighty-two) days, counted from the Issuance Date, therefore maturing on March 7, 2025. The general conditions of the 2nd Issue are indicated in the minutes of the Company's Board of Directors' Meeting, which is available on the Company's investor relations page and on the CVM's website.
3rd Issue of debentures
On January 23, 2025, the same indirect subsidiary, CEEE-G,
approved its 3rd issuance of simple debentures, not convertible into shares, of the type with real guarantee, in up to two series, in
the total amount of R$
The 3rd Issuance is the subject of a public offering, under the automatic registration procedure, pursuant to Law No. 6.385 of December 7, 1976, and other applicable legal and regulatory provisions, under the firm placement guarantee regime, and is intended for the general investor public. The debentures will meet the requirements of article 2 of Law No. 12.431, of June 24, 2011, so that their holders may be entitled to tax benefits in accordance with the law.
The First Series debentures will have a maturity of 6,208 days from the date of issue and mature on December 14, 2041, and the Second Series debentures will have a maturity of 6,209 days from the date of issue, maturing on December 15, 2041. The general conditions of the 3rd Issue are indicated in the minutes of the Company's Board of Directors' Meeting, which is available on the Company's investor relations page and on the CVM's website.
Payment event for 1st Issue debentures
CEEE-G held on February 4, 2025, the Debenture Payment Event related to the 1st Issue. The debt settlement was made with a combination of the Issuer's own resources from its activities and/or other financing contracted through financial and/or capital markets (local), among others.
Execution of NCE, PPE and ACC contracts in the amount of US$ 275,000
In January and February 2025, the
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Execution of "Obligation Assumption Agreement", between CSN Parent Company and CSN Mineração
On January 20, 2025, the CSN Controlling Company entered into an Obligation Assumption Agreement with its subsidiary, CSN Mineração, which consists of the transfer of export margins by CMIN to CSN, enabling CSN to use them in amortizing Export Pre-Payment Contracts, Foreign Exchange Advance Contracts, or similar CSN contracts. The Obligation to Do Assumption Agreement provides for governance between the financial areas of CMIN and CSN to ensure that only excess ballast that would not be used by CMIN is assigned to CSN, also meeting CMIN's cash internalization needs.
The Contract of Assumption of Obligation to Do has an
indefinite term. The estimated value for the year 2025 is USD
Acquisition of 90% of the shares issued by Gramperfil S.A. (“Gramperfil”)
On December 19, 2024, CSN Steel S.L.U. entered into a share purchase agreement with Gramperfil shareholders to acquire 90% (ninety percent) of Gramperfil's share capital. Gramperfil is a company headquartered in Pombal, Portugal, whose main activity is the production, marketing and transformation of metal profiles and accessories, import and export of profiles for metal and civil construction.
On February 12, 2025, the Portuguese competition authority approved the completion of the operation. The closing of this transaction still depends on the fulfillment of other conditions provided for in the share purchase agreement. The shares issued by Gramperfil that were not the object of the transaction are held in treasury.
1st Issue of Commercial Note
COMPANHIA ESTADUAL DE GERAÇÃO DE ENERGIA ELÉTRICA – CEEE-G, an indirect subsidiary of CSN, signed, on January 31, 2025, the Written Commercial Note Issuance Term, as the ISSUER, with COMPANHIA SIDERÚRGICA NACIONAL – CSN, as the CREDITOR.
The Issuance constitutes the 1st (first) issuance of Written Commercial Notes of the ISSUER, in the total amount of R$ 500,000, in a single series, and will have a maturity period of 1 year from the Issue Date, maturing, therefore, on January 31, 2026. The Commercial Notes' term may be renewed, at the ISSUER's sole discretion, for successive 1-year periods until January 31, 2042, by executing an amendment to this Issuance Term, at least 90 days prior to each Maturity Date.
New rating for CSN by Moody's Global Ratings agency
On February 12, 2025, the Moody's Global Ratings agency classified CSN with a "Ba3" rating with stable perspective.
Acquisition of 70% (seventy percent) of the shares issued by Estrela Comércio e Participações S.A. ("Estrela")
On April 1st, the acquisiton of 70% (seventy percent)
of the shares issued by Estrela Comércio e Participações S.A. ("Estrela") has been consummated by CSN,
as per the terms of the share purchase agreement executed between CSN and the sellers. On teh same date, CSN has paid the first installment
of the purchase price, amounting to R$
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