Usinas Siderurgicas de Minas Gerais S/A recently announced its medium- and long-term investments.

Over the last few years, Usiminas has strengthened its position and achieved a strong financial condition, integrating its system with technology and quality and expanding its strategic options. The group reaped the fruits of its last investment cycle, earning approximately US$3 billion between 1997 and 2002.

Usiminas says that the main benefit of the last few years' efforts is to be able now to define new strategic and investment alternatives, which should create more value and further strengthen the group’s competitive position and domestic market leadership, thereby facilitating continued growth. The medium- and long-term strategy of Usiminas will advance on the following two fronts:

• Strengthening and growing in the local market. Usiminas will make important investments totaling US$1.5 billion over the next five years in quality and product mix improvement in its mills. The investments will allow Usiminas to make it possible to transform slabs into finished products or basic products into other, higher value-added products with increasingly better quality. Usiminas says it will focus on the most attractive key segments.
• Growth and internationalization. Usiminas will take advantage of its capacity as an efficient and competitive steel producer, actively seeking partners and/or acquisitions abroad, which will allow the company to grow internationally in such a way as to create value. The key factor of this strategy is the construction of a 5 million tonne/year plant, an investment of around US$3 billion. The project and selection of main partners, such as CVRD, is in progress. The necessary strategic partnerships and assured international demand for slabs are pre-conditions for the new mill. With this strategy, Usiminas will substantially increase its crude steel capacity and better position the company to take advantage of the present environment for consolidation in the industry and deconstruction/migration of production capacity to countries with low cost, namely Brazil.

Specifically, on the first front, targeting the domestic market, significant investments in quality are foreseen (secondary metallurgical equipment) in the Ipatinga plant. This reinforces Usiminas' leadership in technology in segments such as the automotive and large-diameter tubes industries, among others. Also in Ipatinga, construction of a new coke oven plant is scheduled, which will make the plant self-sufficient in coke, and another thermoelectric power plant, which increase the plant's self-sufficiency to 50%. Finally, in anticipation of market growth, Usiminas intends to begin capacity expansion in the plate mill by 300 thousand tonnes per year.

Also on the first front, the group plans to build a new 4 million tonne/year hot strip mill at the Cubatao plant. The new rolling mill will allow the Group to increase the supply of greater range of high quality products (including both thinner and thicker products). Also at the Cubatao plant, two continuous casting machines and auxiliary steel shop equipment will be revamped, increasing total capacity of the Usiminas System to 10.0 million tonnes (from the present 9.5 million tonnes).

On the second strategic front, the construction of a new steel plant, requires two conditions: First, the new mill should be built in partnership with other companies in such a manner as to achieve scale and minimize risks; second, production of the new mill should have secured demand abroad through self-owned rolling facilities or long-term contracts with international partners. Usiminas has been working on this front of growth and internationalization.

Usiminas' CEO, Dr. Rinaldo Campos Soares, highlighted that these important steps for the future of the company in Brazil and abroad rely on the support of its ever-present shareholders, collaborators and trade partners. Finally, Soares emphasized that, with these medium- and long-term strategies, Usiminas will continue to exercise its role as a driver of development in the national steel industry, in the communities where it operates and in the Brazilian economy — maintaining its basic values while becoming stronger and growing in Brazil and globally.

Usinas Siderurgicas de Minas Gerais S/A is an integrated steel producer with consolidated net revenues of R$ 12.2 billion in 2004. The Usiminas System, made up of Usiminas and Cosipa, has an annual production capacity of 9.5 million tonnes of raw steel and occupies a position of leadership in the domestic flat steel market in the automobile industry, auto parts, agricultural and highway machinery sectors, electrical and electronic equipment segments and large-diameter pipe industry.