Usiminas Acelerando Webcast Ingl

Usiminas Speeding up its Investment Program
So Paulo July 24, 2008
Agenda
Steel Outlook Usiminas speeding up its Investment Program Financial Highlights Market trends 2008
Steel outlook
Global Steel Industry

The world is undergoing a new phase with sustainable growth and inflation under control
Economy Global GDP (Growth %)
6.0 5.0 4.0 3.0 6.0
Inflation (%)
4.9 4.4 3.6 2.8 2.2 Average 2.9
5.0
4.9 Average 4.8 3.7
5.0
4.7 4.2 3.5 3.7 3.6 3.7 3.6 3.9 Average 3.7
4.0 3.0 2.0 1.0 0.0
2.0 1.0 0.0

'01 '02 '03 '04 '05 '06 '07 '08(e)
'01
'02
'03
'04
'05
'06
'07
'08(e)
Source: IMF - July 2008 4

With positive effects for the steel industry
Steel Industry
Global Production x China
Million tons
Transfer of Production
Developed x Emerging (Countries)
100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% '70 '80 '90 '00 '10(e)
Consolidation
% of production of the 15 largest
12% 10% 8% 6% 4% 2% 0% '03 '04 '05 '06 '07 '08 (e) '09 '10 (e) (e) '11 (e)
1,800 1,600 1,400 1,200 1,000 800 600 400 200 0
40%
52% 85% 81% 69%
42%
35% 30% 25% 20% 15%
34% 26% 29%
48% 15% 19% 31%
58%
10% 5% 0%
94 '00 '07
Emerging Markets
OECD
Source: IISI
Global Production Global Variation

Source : IISI
Chinese Production
Source: CRU International; World Steel Dynamics Obs: 2005: ~ 50%/ 50%

A recent phenomenon is once again changing the outlook
Raw Materials Price Changes
Coal
350 300 250 200 80 150 100 50 0
'03 '04 '05 '06 '07 '08
Souce: Metal Bulletin
Iron Ore
160
Scrap (Japan)
800
US$/t
300
US$/t
141
700 600 500 400 300
US$/t
734
140 120 100
77 65 38
85
395 269 217 210 287
125
115
98
60 40 20 0
'03 '04 '05 '06 '07 '08
Souce : Tex Report
47
57
32
200 100 0
'03 '04 '05 '06 '07 Jul '08
Souce : Tex Report
Brazilian Steel Industry

The country outlook is similar
Economy Brazilian GDP (Growth %)
6.0 5.0 4.0
Inflation (%) - IPCA

15.0
5.7
14.7
5.4 4.8 3.8 3.2
Average 4.5
10.0
8.5 6.8 6.6 6.9 4.2
3.0 2.0 1.0 0.0

'01
2.7
Average 7.3
4.8 3.6
1.3
1.1
Average 1.7
5.0
0.0
'02 '03 '04 '05 '06 '07 '08(e) '01 '02 '03 '04 '05 '06 '07 '08(e)
Source: IBGE , Bacen 7
Brazilian Steel Industry

The country outlook is similar
Steel Industry Flat Steel Demand (million tons)
14 12 10 8 6 4 2 0
2005 2006 2007 2008(e)
Consolidation
Largest steel producers - 2007
(33.8 million tons. = Brazilian crude steel production)
+10.7% +17.8%
11.7 9.2 9.9 12.9
Others 6% CSN 16% ArcelorMittal 30%
Gerdau 22% Usiminas 26%
Source: IBS - 2008 e Metal Bulletin - 2008
Steel Industry
Steel prices follow raw materials prices
1,250
Prices in US$/ton in the US (spot market) - HRC

1,174
1,000
750
722 606 562
689
500
350 375 336 342

250
402 430
443 342 375 342 358 287 256 259 331
90
91
92
93
94
95
96
97
98
99
00
01
02
03
04
05
06
07
08
Source: CRU Monitor - Steel
Jun 08
Usiminas within this context

In order to face this scenario of transformation, Usiminas sought its integration
Distribuition/ Services Mining

Serra Azul Mines Limestone Mine Fasal Dufer Rio Negro Usiparts
Energy
Ipatinga Power Plants Cubato Power Plants
Logistics
MRS Usifast Praia Mole Port Cubato Port Ing Terminal
Steelmaking
Int. Cmara Plant J. Bonifcio Plant Santana do Paraso Source: Usiminas Ternium
10
Capital Goods
UMSA
Usiminas within this context

Today, its HRC production cost is among the 7% most competitive in the world
Productions costs ( w/ COGS) - 160 producers in the world Hot Rolled Coil (US$/ton.)
170 150 130 110 90 70 50 30 10 -10
Source: WSD World Steel Dynamics - May 2008
147
100 72
Average global production cost is 38% above Usiminas
Usiminas
Average (basis = 100)

11
Maximum
Steel Demand
The outlook is for continued growth
Consumption and Demand Global Apparent Steel Consumption
Million Tons
800
Brazilian Demand (Flat Steel)

25
Million Tons
21.5 20.3
USA, Japan & EU-15 China

20
18.2 15.2 16.1 17.1
19.2
600
Rest of world
15
13.0 11.7 10.1 9.9
400
10
8.9 8.4 8.6 8.6
9.2
200
2000
2001
2002
2003
2004
2005
2010E
2015E
00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15
Source: WSD 12
Source: IBS April 2008
Speeding up Usiminas Investment Program
Usiminas Accelerating
Goals
Consolidate its leadership in the domestic flat steel market Create solid basis for future international steps
Value creation for shareholders, customers and community
14
The investment program has strategic focus:
Increase steelmaking and rolling capacity Increase iron ore extraction and processing capacity Technology updating, cost savings and environmental control
15
Investments will target:
New slab plant (Santana do Paraso) Intendente Cmara Plant (Ipatinga) Jos Bonifcio Plant (Cubato) Mining assets Logistics assets
US$ 14.1 billion

16
US$ 14.1 billion

17
New Slab Plant (Santana do Paraso)
Industrial area occupied by Usiminas today = 4.0 km2
Usiminas airport area = 4.2 km2 (flat)
Outstanding location Flat land / Abundant water

18
Synergy with existing structure Labor with a vocation
Production capacity 5 million tons/yr Start of works 1st Half 2009 Start up 2.5 million t/yr in 2011 2.5 million t/yr in 2012 Coke plant 2.0 million t/yr Power plant 250 MW
TOTAL Investments: US$ 5.7 billion *

* Does not include investment in thermoelectric powerplant of approximately US$ 400 million
19

Location in Santana do Paraso proves to be more adequate when compared to the previous plan
Potential for higher return
Lower implementation risks
Opening up of future options
20

Greater steel expansion without significant capex increase Maintenance of existing synergies Cost minimization for elimination of physical interferences with current operations
Potential for higher return
21

Expectation of lower environmental restriction
Lower implementation risks
Lower risk of delay due to reduced interferences with current operations
22

New site supports additional slabs and rolling mills expansions, according to future demand Opening of future options
23

The slabs will be absorbed by Usiminas rolling mills and remainder will be exported
Exports
60%
40% Premium slabs to serve selected, high value-added markets

24
US$ 14.1 billion

25
Intendente Cmara Plant (Ipatinga)

Investments
LINE UNIGAL II (Galvanized) Heavy Plates Hot Rolled Coils
VOLUME thsd tons 550 500 150
START UP FORECAST 1st Half 2011 2nd Half 2010 1st Half 2011
PROJECT AMOUNT US$ 460 million US$ 500 million US$ 130 million
Other
Technology updating, cost savings and environmental control, with highlight for Coke Plant 3 (+750kt/yr) and thermolectric powerplant (60 MW) in 2008 US$ 2.1 billion
US$ 1.0 billion
Total Investments
Investments to serve high value-added markets

26
Galvanized Steel - Unigal II
Usiminas Acelerando
Greater capacity in Brazil to supply sophisticated steel with advanced technology
Quality & Excellence
27
Intendente Cmara Plant (Ipatinga)

Usiminas will be qualified to supply heavy plates with even more stringent specifications
Europe
AcelorMittal Dillinger Raultaruuki Mannesmann Riva SSAB Thyssen VAI
CIS
Severstal
Asia
Nippon Steel JFE Posco Baosteel China Steel
North America
Oregon Steel
Sole Latin American company to detain accelerated cooling technology, enabling Usiminas to meet new market demands for sophisticated products.
28
US$ 14.1 billion

29
Jos Bonifcio Plant (Cubato)

Investments
VOLUME thsd tons 2,300 / 4,800 3.5 thsd/day => 4.5 thsd/day +350 / ano START UP FORECAST 1st Half 2011 Concluded Concluded
LINE Hot Strip Mill BF1 Revamping Continuous Casting Machine
PROJECT VALUE US$ 1.0 billion US$ 170 million US$ 140 million
Other
Technology updating, cost savings and environmental control
US$ 1.1 billion
Total Investments
US$ 2.4 billion
30
Technical configuration of the plants after the investment program
Usiminas 2013
Intendente Cmara Plant million tons Slabs Hvy Plate Hot Strip Cold Strip EG HDG Current 5.00 1.00 3.60 2.50 0.36 0.48 After 5.00 1.50 3.80 2.50 0.36 1.03
Jos Bonifcio Plant Current 4.50 1.00 2.10 1.20 After 4.80 1.00 4.40 / 6.10 1.20 -
Santana do Paraso New Plant 5.00 -
The second expansion phase in slabs (3 million t/yr) to be executed, with Cubato as 1st option, will depend on market demand
Source: Usiminas
31
US$ 14.1 billion

32
Mining Assets
With the goal of eliminating risks / dependency, Usiminas acquired iron ore assets in February 2008
J.Mendes
Current production capacity
Global
Somisa
Pau de Vinho
Reserves
Future production capacity
5 million tons/yr
29 million tons/yr (2013)*
1.1 to 1.8 billion tons
Downpayment of US$ 925 million. Total disbursement limited to US$ 1.9 billion, depending on reserves and quality under drilling process. Maximum reserves considered : 1.4 billion tons.
33
Mining Assets
Usiminas Acelerando
Iron ore mines highlights: Low level of P (phosphorus 0.05%) Low level of Al203 (alumina 1.0%) Sinter feed generation of 4.5% to 5.0% of SiO2 (silica) Pellet feed generation for pellets for BF and DRI Favorable logistics (close to MRS & FCA railroads) and future Ing Maritime Terminal
34
Mining Assets
Production - million tons
30
27.7
Pellet Feed Sinter Feed
29.2
14.0
20
Lump
10
8.8 5.2 5.8
9.0
10.5
13.0
2.2
2008
2009
2010
2011
2012
2013
2014
Source: Usiminas
35
Mining Assets
Although Ipatinga and Santana do Paraso do not have logistics access to be supplied by its mines on Serra Azul, Usiminas will have the benefit of full hedge against iron ore price fluctuations
J. Bonifcio Plant
10.3 MM t/yr Mining 29.2 MM t/yr

Supply
Dom. Mkt. Sales
Jos Bonfcio Plant 2.0 MM t/yr Hedge Intend. Cmara Plant 8.0 MM t/yr Santana do Paraso 8.0 MM t/yr
2.2 MM t/yr
Exports
16.7 MM t/yr
36
Mining Assets
Aiming to add value to iron ore, Usiminas will build a PELLET PLANT
Capacity 7 million tons Investment US$ 750 million Start up of operations 2013
TOTAL investments in mining: US$ 3.5 billion

37
US$ 14.1 billion

38
Logistics Assets
Usiminas acquired land in Sepetiba Bay where it will build a maritime terminal
Price R$ 72 million Land 850 thousand m Start of operations 2012 Shipping capacity 25 million tons of Iron Ore, in addition to other products
Area will be a benchmark from the environmental point of view Amount estimated for environmental recovery - up to R$ 40 million
39
Logistics Assets
With the new terminal, the iron ore export corridor will be improved for Usiminas mines at competitive costs
(Minas Gerais) Brazil Int. Cmara Plant (Esprito Santo) Iron Ore Mines
Belo Horizonte
Praia Mole Terminal
(So Paulo)
So Paulo
(Rio de Janeiro)
Ing Terminal MRS
J. Bonifcio Plant
40
Cubato Terminal
Total Investments of:
US$ 14.1 billion

41
Financial Highlights
Over the last few years, Usiminas has prepared itself for this new phase
Usiminas
US$ Million
5,000
46%
Ebitda Ebitda Margin
42% 35% 35% 36% 35%
4,000
35% 31%
32%
35%
3,000
2,269
2,000
2,581 2,010
1,922 999
1,000
530
734
657
831
721
1999
2000
2001
2002
2003
2004
2005
2006
2007
1Q08
March, 2008
43
Usiminas
Over the last few years, Usiminas has prepared itself for this new phase
US$ Million
5,000
3.1
4,000
Net Debt
Net Debt / Ebitda
2.3 0.7 0.4 0.2 -0.2 0.1
3,000
2,491
2,334 1,317
2,000
1,000
860 355 387 (537)

2002 2003 2004 2005 2006 2007 1Q08
March, 2008
44
Usiminas
The Investment Program foresees the following funding:
Main Financial Transactions
ECAs
Type BNDES
Amount US$ million 400 600
Amount R$ million 400 500 500 -
Term Years 6 6 10 4/5 5/7
Own Funds ~ 50%
Capital Markets
BNDES Eurobond
Commerc'l Banks
Debentures Pre Payment
Estimated funding in the amount of ~ US$ 6.0 billion up to 2012

45
Usiminas
Estimated Capex for the Investment Program fits into the capital structure considered adequate for the company
US$ million
2008 2009 2010 2011 2012 TOTAL
STEELMAKING
MINING
TOTAL
1,480 2,550 4,410 1,830 360 10,630
960 1,060 480 770 200 3,470
2,440 3,610 4,890 2,600 560 14,100
46
Market trends - 2008
Demand growth
Domestic Market 2008
(thousand tons)
12,922 11,669
9,229
9,902
+10.7% +17.8%
2005
Source: IBS / Usiminas
2006
2007
2008
48
Demand growth by segment

CONSUMER SEGMENTS 1 - AUTOMOTIVE OEMs Autoparts 2 - INDUSTRIAL Industry Appliances 3 - SERVICE CENTERS Distribuition Civil Construction General Total
Domestic Market 2008

2006 2007 2008 08 / 07 % 13.7 14.0 13.5 7.8 11.2 0.6 10.4 9.8 13.0 10.7
2,677 1,150 1,527 2,337 1,541 796 4,888 3,934 954 9,902
3,198 1,384 1,814 2,706 1,842 864 5,765 4,586 1,179 11,669
3,636 1,578 2,058 2,918 2,049 869 6,367 5,035 1,332 12,922
1 OEMs = Original Equipment Manufacturer 2 - Industry: Shipbuilding/Tractors/agriculture/Highway/Industrial/Bottles/Containers/Large-diameter Tubes/Other Appliances: Eletro-electronics/Domestic Appliances / Safes and Furniture 3 - Distribuition : Rerolling/Small-diameter tubes/Distribution Civil Construction: Civil construction/ Shapes 49
Market trends - 2008
Overview
International Market 2008

Europe - Demand increasing slightly Eastern Europe growing 15% - From net exporter in 2005 to net importer - Main exporters reducing exports - Prices increasing slightly
USA - Low inventory levels - Imports decreasing - 10% - Exports increasing - 17% - Stable prices
sia - Growth in demand - Prices increasing slighttly - Regional transactions - Exports barriers threats China - Growth in demand - 12% - Production increase - 10% - Reduction of 23% in net exports (accum. 2008) - Stable prices - Threat of higher export taxes
Latin America - Significant demand growth - Exports decreasing - Higher imports - Prices increasing slightly
Middle East - Strong demand growth pushed by energy and civil construction sectors - High level of imports
51
Declarations contained in this presentation in relation to the busines outlook of the Comapany, operational and financial projections and references to the growth potential of the Comapany constitute mere forecasts and were based on the expectations of the Management in relation to future performance. These expectations are highly dependent on market behavior, of the economic situation in Brazil, on industry and international markets, and are, therefore, subject to changes.
www.usiminas.com.br/ri
ADR Level I
Investor Relations:
Bruno Seno Fusaro (Head of IR) brunofusaro@usiminas.com.br Tel.: +55-31-3499-8772 Fax: +55-31-3499-9357 Gilson Rodrigues Bentes gilson@cosipa.com.br Tel.: +55-31-3499-8617 +55-11-5070-8980 Luciana Valadares dos Santos lsantos@usiminas.com.br Tel.: +55-31-3499-8619
52
Matheus Perdigo Rosa mprosa@usiminas.com.br Tel.: +55-31-3499-8056
Diogo Dias Gonalves dgoncalves@usiminas.com.br Tel.: +55-31-3499-8710
Usiminas Speeding up its Investment Program

So Paulo July 24, 2008

Usiminas Acelerando Webcast Ingl

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Usiminas Speeding up its Investment Program

So Paulo July 24, 2008

Global Steel Industry

4.9 4.4 3.6 2.8 2.2 Average 2.9

4.9 Average 4.8 3.7

4.0 3.0 2.0 1.0 0.0

2.0 1.0 0.0

Source: IMF - July 2008 4

Global Steel Industry

1,800 1,600 1,400 1,200 1,000 800 600 400 200 0

52% 85% 81% 69%

35% 30% 25% 20% 15%

34% 26% 29%

48% 15% 19% 31%

Global Production Global Variation

Global Steel Industry

140 120 100

395 269 217 210 287

Brazilian Steel Industry

Inflation (%) - IPCA

5.4 4.8 3.8 3.2

8.5 6.8 6.6 6.9 4.2

3.0 2.0 1.0 0.0

Source: IBGE , Bacen 7

Brazilian Steel Industry

Others 6% CSN 16% ArcelorMittal 30%

Gerdau 22% Usiminas 26%

Source: IBS - 2008 e Metal Bulletin - 2008

Prices in US$/ton in the US (spot market) - HRC

722 606 562

350 375 336 342

443 342 375 342 358 287 256 259 331

Source: CRU Monitor - Steel

Usiminas within this context

Distribuition/ Services Mining

Usiminas within this context

Average global production cost is 38% above Usiminas

Average (basis = 100)

Brazilian Demand (Flat Steel)

USA, Japan & EU-15 China

18.2 15.2 16.1 17.1

13.0 11.7 10.1 9.9

8.9 8.4 8.6 8.6

Source: IBS April 2008

Speeding up Usiminas Investment Program

Value creation for shareholders, customers and community

US$ 14.1 billion

US$ 14.1 billion

New Slab Plant (Santana do Paraso)

Industrial area occupied by Usiminas today = 4.0 km2

Usiminas airport area = 4.2 km2 (flat)

Outstanding location Flat land / Abundant water

Synergy with existing structure Labor with a vocation

New Slab Plant (Santana do Paraso)

TOTAL Investments: US$ 5.7 billion *

New Slab Plant (Santana do Paraso)

Potential for higher return

Lower implementation risks

Opening up of future options

New Slab Plant (Santana do Paraso)

Potential for higher return

New Slab Plant (Santana do Paraso)

Expectation of lower environmental restriction