Transcript Slide 1

Corporate Presentation
April 2010
1
Timeline
CSN – Share Ownership - December 31, 2009
CBS 5%
2008
BNDESPAR
3%
2007
2007
Bovespa
21%
Vicunha
48%
2005
1996/2002
ADR´s
23%
1993/1994
1974/1989
1946
1941
Three
Expansions
in UPV
CSN
privatization
CSN invested
US$4 Billion
in technological
advances
First iron
ore export
shipment
Sale of
40% of
NAMISA
Acquisition
of CFM
Casa de Pedra
and Itaguaí Terminal
expansions begin
Operational start-up
CSN is founded
2
Competitive Advantages
Fully integrated business model: high quality mining operations with
transport infrastructure and self-sufficiency in energy generation
Low cost structure and high profitability
High barriers to entry
Pricing power with large buyers
Diverse product portfolio and product mix
Strong presence in Brazilian market, location in high-growth
markets and presence in mature markets
Strong liquidity with large cash balance
Resilient performance in adverse market conditions
Experienced management team
3
CSN - Key Business Areas
Steel
Mining
Flat Steel
Long Steel (*)
Casa de Pedra
& NAMISA
Net Revenues
% of 2009
72%
16%
Expected Net
Revenues by 2016
55%
30%
Key Business
Highlights
5.6 mt of flat
steel (2009
capacity)
► # 2 flat steel
producer in
Brazil
► Focus on high
margin
products
►
# 6 globally in
iron ore
production (23
Mt in 2009)
► CSN is selfsufficient in iron
ore production
►
Cement
Logistics
MRS Railway &
Transnordestina
Cement Plant
Energy
Itaguaí Logistics
Platform
Thermal &
Hydro Electric
Plants
12%
5%
Operations started
in May 2009
► The by-products
generated by CSN’s
blast furnaces and
CSN’s limestone
reserves will be
utilized to produce
6.4MT of cement.
►
10%
Developed transport infrastructure, from
iron ore mines to steel mills and ports
► MRS Railway connects the Presidente
Vargas steelworks to Casa de Pedra and
terminals at Itaguaí Port, which handles
steel exports
► CSN has concessions to operate two deepsea water terminals (TECON and TECAR)
from which CSN exports its products and
imports coal and coke
►
CSN is selfsufficient in
energy
production
► CSN total
energy
Capacity: 428
MW
►
* Operation expected to start up by 2011
4
CSN, a Fully Integrated Company
Self-sufficiency in practically all relevant raw materials for steel production, in special, captives iron
ore mines and power plants, along with equity participation or operating concessions of outstanding
infrastructure assets, positions CSN not only as a truly low-cost producer but also one of the most
independent and profitable steel producer worldwide
Iron Ore mines
Lime & Dolomite
mine
(Arcos)
260 miles
(Casa de Pedra & NAMISA)
200 miles
MRS railway
(equity of 33%)
FCA
railway
Brasil
CSN mill (UPV)
MG
SP
FCA
ES
MRS
Rio de
Janeiro
RJ
São Paulo
(Brazilian largest
market)
270 miles
Angra Port
Sepetiba Port
Rio de Janeiro
Port
80 miles
60 miles
Iron ore & Coal Terminal and Conteiners
terminal (controled by CSN)
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Steel
6
Brazilian Steel Market Overview
Market Share Long Products 2009
Apparent Steel Use *
Others
24,048
12%
Gerdau
22,060
18,316
7,294
11,022
16,812
6,644
10,168
18,535
8,670
10,118
7,413
11,122
18,541
Arcelor
Mittal
39%
49%
7,809
13,390
Market Share Flat Products 2009**
13,930
10,732
Arcelor
Mittal
19%
2004
2005
2006
Long Products
(*) IABR
2007
2008
2009
45%
Usiminas
36%
Flat Products
CSN
** estimated
7
Steel – Sales Volume and Net Revenues
CSN is Domestically Focused
Net Revenues
Sales Volume
(BRL MM)
(000 Tons)
5,378
4,864
41%
10,566
4,891
4,384
33%
15%
36%
21%
67%
59%
64%
2005
2006
4,110
2007
85%
2008
9,545
8,890
7,766
35%
28%
Domestic Market
7,894
14%
33%
79%
2009
13%
87%
86%
2008
2009
72%
65%
67%
2005
2006
2007
Export
8
Increase of the Steel Capacity
• Production of 500,000 tons/year of long steel, such as CA50 rod bar (400Kt) wire rod (100Kt);
• CSN will benefit from the existing infrastructure and utilities in Volta Redonda steel mill;
• Operations expected to start by the 1st half 2011;
• The total investment in long steel production will be of approximately US$340 million, including expansion
and acquisition of an electric furnace;
• The company plans to build two new long steel plants with annual capacity of 500,000 tons besides a long
steel cold rolling unit aiming the expansion of its product portfolio (CA60 rod bar, lattice and wire) in order to
better meet construction segment demand;
• Flat steel expansion will be executed in 1.5 million tons modules.
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Mining
13
10
Iron Ore – Sales Volume and Net Revenues
Net Revenues (2)
Sales Volume (1)
(BRL MM)
(MM Tons)
22.4
2,085
18.4
10.5
1,814
82%
80%
97%
721
49%
56%
3.2
100%
2006
95%
51%
2007
166
20%
2008
3%
100%
2009
2006
(1) Total sales volume reflects 100% of NAMISA sales.
Domestic Market
44%
18%
2007
2008
5%
2009
(2) Net revenues are consolidated (according to BRGAAP), considering
60% of NAMISA sales since Dec/08, given the NAMISA acquisition of
40% by the Asian Consortium.
Export
11
Iron Ore Project Expansion
Mining and Logistics
Mining
Casa de Pedra Mine
• Current capacity : 21 Mtpy
• CSN Consumption: ~8.5 Mtpy
• Future capacity (by 2016): 70 Mtpy
• Mineral resources of ~8.4 billion ton
• Reserves : 1.6 billion ton
NAMISA (60%)
• Current capacity: 6.8 Mtpy
• Future capacity: 33 Mtpy
CSN/NAMISA Facilities
LOADING TERMINALS
VALE’S MINES
CITIES
STEELWORKS NAMISA
BELO
HORIZONTE
/
SARZEDO
USIMINAS
ACESITA
Sarzedo Multicargo Railway Terminal
NOVA
LIMA
Souza Noschese Railway Terminal
NAMISA / ENGENHO
VITÓRIA
CSN CASA DE PEDRA
Central Line – MRS
JUIZ DE FORA
CSN –PRESIDENTE
VARGAS STEEL WORKS
Steel Railway – MRS
COSIGUA
Logistics
RESENDE
Itaguaí Port
• Current capacity: 30 Mtpy
• Future capacity (by 2016): 130 Mtpy
Railway
• MRS
CST
GERDAU- AÇOMINAS
• Acquisition from third-parties: 6.0 Mtpy
• Future sales (by 2014): 39 Mtpy
NAMISA /
FERNANDINHO
SÃO PAULO
ATLANTIC OCEAN
'
RIO DE JANEIRO
COSIPA
SANTOS
CSN – PORT OF ITAGUAI
Í
0 km
100 km
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Cement
13
13
Cement Production
• CSN started the production and sale of cement in May/09, operating with current capacity of 1
million tonnes;
• 2009 sales totaled 338,000 tonnes;
• Capex (cement/clinker): US$ 410 million (US$ 279 million already invested);
• Takes advantage of the slag generated by CSN´s blast furnaces, own production of clinker and
CSN´s limestone reserves;
• CSN will use its own infrastructure:
- MRS Logística S/A;
- Distribution centers;
• Current grinding capacity of 2.8 million tonnes:
- Capacity expansion of grinding may reach 6.4 million tonnes;
• Current clinker capacity of 800,000 tonnes (Dec/2010):
- Capacity expansion of clinker may reach 4.6 million tonnes.
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Logistics
15
Logistics – Railways and Port
MRS Railway
►
►
MRS Logística is a publicly held company
with a concession to operate Brazil’s
Southeastern railway system until the year
2026
CSN holds directly and indirectly 33.27% of
MRS’ total share capital, sharing control with
Vale and Usiminas (as of December 31, 2009)
►
Net Revenues: R$ 2,276m in 2009
►
EBITDA: R$ 1,230m in 2009
►
EBITDA Margin of 54.0% in 2009
►
Net Income: R$ 606m in 2009
►
Total carloads: 129mt in 2009
►
Concession: November 1996
►
Maturity: October 2026 (30 years)
►
Renewable
Itaguaí Port
►


►


TECAR: exports iron ore and imports coke
and coal
Current capacity: iron ore shipments of 30
Mtpy and coal and coke unloading capacity
of 4 Mtpy;
Future capacity: iron ore shipments of 130
Mtpy by 2016 and coal and coke unloading
capacity of 8.5 Mtpy;
TECON: exports CSN’s steel products and
export third-party containers
Current capacity: general cargo and steel
products (2 Mtpy) and containers (480 K
TEUpy);
Future capacity: general cargo and steel
products (6 Mtpy) and containers (610 K
TEUpy).
Nova Transnordestina
►
►
►
►
CSN owns 81.6% of the share capital
1,728 km of track will be built creating the
Nova Transnordestina
When completed, the railroad will connect
the northeastern cerrado to Pecém/CE and
Suape/PE Ports
The railroad will transport mainly grains,
fertilizers, ores and fuels
►
Locos: 94 (current) + 56 (2010)
►
Cars: 1,700 (current) + 2,400 (2010)
Legend
Existing Railway
“Nova Transnordestina”
Railway in process of remodeling
SÃO LUÍS
PA
PA
Porto de Pecém
Sobral
FORTALEZA
MA
CRATEÚS
TERESINA
CE
Limoeiro do Norte
PIQUET CARNEIRO
Jucurutú
RN
Uruçuí
Balsas
Eliseu
Martins
C.Grande
Crato
PI
Ribeiro
Gonçalves
NATAL
JOÃO PESSOA
MISSÃO VELHA
ARARIPINA
PB
PARNAMIRIM
SALGUEIRO
PE
Caruarú
RECIFE
Porto de Suape
PETROLINA
AL
BA
Barreiras
MACEIÓ
Propriá
Potential for 85 million
annual tons
SE
(15.4 million ha)
1/4 of the Brazilian Agricultural Frontier
Source: MRS Logística website
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Energy
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Self-sufficiency in Energy
Thermoelectric Power Plant
•
CSN owns a thermoelectric power plant at Presidente Vargas mill, which provides approximately 60% of CSN’s
electric energy needs. The plant processes steam and blown air from CSN’s blast furnaces.
•
Currently CSN is building a Top Recovery Turbine, which will start operating in 2011 and will provide additional
capacity of 17MW. Total CAPEX: US$30 million.
Hydroelectric Power Plants
•
CSN owns indirectly 29.5% of Itá hydroelectric facility, which has an installed capacity of 1,450 MW.
•
Additionally, CSN owns 17.9% of a consortium that operates Igarapava hydroelectric facility with an installed
capacity of 210 MW.
CSN Total Capacity: 428 MW
Thermoeletric
238 MW Power Plant
Average Utilized Capacity
2009
2008
167 MW
Itá Hydroelectric
Power Plant
23 MW Igarapava Hydro
Power Plant
2007
81%
89 %
83 %
Concession
Maturity*
Renewable
Itá
Oct 2000
Oct 2030
X
Igarapava
Dec 1998
Dec 2028
X
* 30 years
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CSN’s Investments
Projects for 2010 to 2016
Total Investments (2010 to 2016)
Mining
Casa de Pedra Expansion up to 50 mtpa (1)
NAMISA expansion up to 39 mtpa (2)
TECAR expansion up to 84 mtpa(1)
34,695.8
11,423.5
Steel
Long Steel expansion
Flat Steel expansion
Other Projects (such as distribution, packaging)
8,806.8
Cement
Conclusion of Volta Redonda plant (2.8 mpta)
Expansion (0.6 mtpa)
3 greenfield plants (3 mtpa)
Others (such as Chalk and Clinker)
1,880.7
Logistics
Transnordestina (2)
TECON
6,229.2
OPERATIONAL EXCELLENCE / CONTINUITY
6,355.6
R$ million
(1) Potential production expansions of Casa de Pedra to 70 mtpa and TECAR to 130 mtpa are in process of development;
(2) Amount equivalent to 100% of the project, regardless of equity interest.
Financials
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Strong Revenue Growth
All Figures in charts are BRGAAP
Net Revenue by Business Segment
Net Revenue by Market
(BRL MM)
(BRL MM)
16.000
16.000
11,441
12.000
10.000
8.000
10%
9,040
12%
86%
6%
14.000
15%
10%
2%
10,978
12.000
16%
10.000
12%
6.000
4.000
14,003
14,003
14.000
84%
8.000
4.000
72%
2.000
-
2007
Steel
2008
Mining
9,040
2009
10,978
26%
29%
77%
72%
74%
71%
2006
Other
23%
28%
6.000
75%
2.000
2006
11,441
2007
Domestic Market
2008
2009
Export
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2009 Performance
EBITDA (R$ MM) and EBITDA Margin (%)
Gross Profit (R$ MM) and Gross Margin (%)
45%
39%
1Q09
EBITDA
4Q09
EBITDA Margin
1Q09
2Q09
Gross Profit
3Q09
1,376
1,177
836
1,204
3Q09
34%
802
728
2Q09
33%
992
29%
683
28%
39%
33%
4Q09
Gross Margin
22
Debt Trends
Debt Trends
(x)
(BRL MM)
35,000
4.0
4.0
3.5
30,000
3.0
25,000
2.5
2.5
20,000
1.8
1.9
1.7
15,000
1.8
1.8
1.7
1.5
1.3
1.0
10,000
1.0
1.0
0.4
5,000
0
2.0
0.5
8,470
8,799
9,425
8,759
11,635
14,363
2004
2005
2006(1)
2007
2008
2009
Total Debt
Total Debt / LTM EBITDA
Note:
0.0
Net Debt / LTM EBITDA
(1) EBITDA adjusted for earnings losses
23
Market Cap Ranking
US$ Billion
In terms of Market Cap, CSN is ranked 8th among the
main steel and mining companies worldwide
208.1
156.3
132.8
70.8
55.7
54.2
41.6
28.9
26.5
25.6
24.6
23.9
23.0
Source: Bloomberg, March 26, 2010
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CSN’s shares performance
Performance: CSN x IBOVESPA
Base 100
900
Over the last 5 years, CSN’s shares appreciated by 411%, more
than double the IBOVESPA 162% appreciation in the same period.
800
700
CSNA3
600
500
400
300
200
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05
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100
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Visit our website:
www.csn.com.br/ir
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