SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 

 
FORM 6-K
 
Report of Foreign Private Issuer
Pursuant to Rule 13a-16 or 15d-16 of the
Securities Exchange Act of 1934
 
For the month of August, 2022
Commission File Number 1-14732
 

 
COMPANHIA SIDERÚRGICA NACIONAL
(Exact name of registrant as specified in its charter)
 
National Steel Company
(Translation of Registrant's name into English)
 
Av. Brigadeiro Faria Lima 3400, 20º andar
São Paulo, SP, Brazil
04538-132
(Address of principal executive office)
 
Indicate by check mark whether the registrant files or will file annual reports
under cover Form 20-F or Form 40-F. 
Form 20-F ___X___ Form 40-F _______

 Indicate by check mark whether the registrant by furnishing the information contained in this Form is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.  

Yes _______ No ___X____
 
 

 

Table of Contents

 

Company Information  
Capital Breakdown 1
Parent Company Financial Statements  
Balance Sheet – Assets 2
Balance Sheet – Liabilities 3
Statement of Income 4
Statement of Comprehensive Income 5
Statement of Cash Flows 6
Statement of Changes in Shareholders’ Equity  
01/01/2022 to 06/30/2022 8
01/01/2021 to 06/30/2021 9
Statement of Value Added 10
Consolidated Financial Statements  
Balance Sheet – Assets 11
Balance Sheet - Liabilities 12
Statement of Income 13
Statement of Comprehensive Income 14
Statement of Cash Flows 15
Statement of Changes in Shareholders’ Equity  
01/01/2022 to 06/30/2022 17
01/01/2021 to 06/30/2021 18
Statement of Value Added 19
Comments on the Company’s Consolidated Performance 20
Notes to the financial information 41
Comments on the Performance of Business Projections 87
Reports and Statements  
Unqualified Independent Auditors’ Review Report 91
Officers Statement on the Financial Statements 93
Officers Statement on Auditor’s Report 94

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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Version: 1

 

Company Information / Capital Breakdown

 

Number of Shares

(Units)

Current Year

06/30/2022

 
Paid-in Capital    
Common 1,326,093,947  
Preferred 0  
Total 1,326,093,947  
Treasury Shares    
Common 0  
Preferred 0  
Total 0  
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Parent Company Financial Statements / Balance Sheet - Assets    
(BRL Thousand)      
       
Code Description  Current Quarter 06/30/2022  Previous Year 12/31/2021
1 Total Assets 59,305,021 61,933,890
1.01 Current assets 16,366,983 18,241,837
1.01.01 Cash and cash equivalents 4,433,173 3,885,265
1.01.02 Financial investments 1,401,158 2,426,457
1.01.02.01 Financial investments measured a fair value through profit or loss 1,352,357 2,383,059
1.01.02.01.03 Financial investments measured a fair value through profit or loss – Usiminas’ shares 1,352,357 2,383,059
1.01.02.03 Financial investments at amortized cost 48,801 43,398
1.01.03 Trade receivables 1,854,781 2,375,512
1.01.04 Inventory 7,227,316 7,508,183
1.01.06 Recoverable taxes 941,881 1,255,697
1.01.08 Other current assets 508,674 790,723
1.01.08.03 Others 508,674 790,723
1.01.08.03.02 Prepaid expenses 247,108 185,968
1.01.08.03.03 Dividends receivable 150,989 486,506
1.01.08.03.04 Others 110,577 118,249
1.02 Non-current assets 42,938,038 43,692,053
1.02.01 Long-term assets 9,884,222 9,982,573
1.02.01.03 Financial investments at amortized cost 129,121 132,523
1.02.01.07 Deferred taxes assets 4,261,159 4,843,653
1.02.01.10 Other non-current assets 5,493,942 5,006,397
1.02.01.10.03 Recoverable taxes 590,323 691,286
1.02.01.10.04 Judicial deposits 238,559 222,481
1.02.01.10.05 Prepaid expenses 93,920 109,583
1.02.01.10.06 Receivable from related parties 2,942,999 2,442,198
1.02.01.10.07 Others 1,628,141 1,540,849
1.02.02 Investments 25,347,398 26,140,909
1.02.02.01 Equity interest 25,206,024 25,998,331
1.02.02.02 Investment Property 141,374 142,578
1.02.03 Property, plant and equipment 7,652,070 7,508,842
1.02.03.01 Property, plant and equipment in operation 6,784,486 6,752,158
1.02.03.02 Right of use in leases 15,040 15,996
1.02.03.03 Property, plant and equipment in progress 852,544 740,688
1.02.04 Intangible assets 54,348 59,729

 

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Parent Company Financial Statements / Balance Sheet – Liabilities
(BRL thousand)    
       
Code Description  Current Quarter 06/30/2022  Previous Year 12/31/2021
2 Total Liabilities 59,305,021 61,933,890
2.01 Current liabilities 13,459,031 16,202,230
2.01.01 Payroll and related taxes 171,229 133,595
2.01.02 Trade payables 4,180,474 4,710,811
2.01.03 Tax payables 305,068 761,868
2.01.04 Borrowings and financing 3,661,143 3,864,228
2.01.05 Other payables 5,107,961 6,696,157
2.01.05.02 Others 5,107,961 6,696,157
2.01.05.02.04 Dividends and interests on shareholder´s equity 455,002 1,125,359
2.01.05.02.05 Advances from customers 138,983 148,822
2.01.05.02.06 Trade payables – Forfaiting and Drawee risk 3,904,132 4,439,967
2.01.05.02.07 Lease liabilities 8,553 7,602
2.01.05.02.08 Other payables 601,291 974,407
2.01.06 Provisions 33,156 35,571
2.01.06.01 Provision for tax, social security, labor and civil risks 33,156 35,571
2.02 Non-current liabilities 24,580,507 25,416,662
2.02.01 Borrowings and financing 15,848,884 16,568,616
2.02.02 Other payables 211,404 319,859
2.02.02.02 Others 211,404 319,859
2.02.02.02.03 Lease liabilities 8,404 10,339
2.02.02.02.04 Derivative financial instruments 55,378 101,822
2.02.02.02.05 Trade payables 23,584 43,396
2.02.02.02.07 Other payables 124,038 164,302
2.02.04 Provisions 8,520,219 8,528,187
2.02.04.01 Provision for tax, social security, labor and civil risks 328,825 333,285
2.02.04.02 Other provisions 8,191,394 8,194,902
2.02.04.02.03 Provision for environmental liabilities and decommissioning of assets 164,670 159,254
2.02.04.02.04 Pension and healthcare plan 584,288 584,288
2.02.04.02.05 Provision for losses on investments 7,442,436 7,451,360
2.03 Shareholders’ equity 21,265,483 20,314,998
2.03.01 Paid-up capital 10,240,000 10,240,000
2.03.02 Capital reserves 32,720 32,720
2.03.04 Earnings reserves 9,697,708 10,092,888
2.03.04.01 Legal reserve 1,081,222 1,081,222
2.03.04.02 Statutory reserve 8,616,486 9,948,596
2.03.04.09 Treasury shares - (936,930)
2.03.05 Accumulated earnings (losses) 1,403,728 -
2.03.08 Other comprehensive income (108,673) (50,610)

 

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Parent Company Financial Statements / Statement of Income    
(BRL thousand)    
Code Description Current Quarter 04/01/2022 to 06/30/2022 Year to date 01/01/2022 to 06/30/2022 Same quarter previous year 04/01/2021 to 06/30/2021 YTD previous year  01/01/2021 to 06/30/2021
3.01 Revenues from sale of goods and rendering of services 6,139,087 12,537,589 6,278,019 11,651,298
3.02 Costs from sale of goods and rendering of services (4,894,623) (9,762,356) (4,044,092) (7,734,001)
3.03 Gross profit 1,244,464 2,775,233 2,233,927 3,917,297
3.04 Operating (expenses)/income (516,257) 532,629 2,344,866 5,647,796
3.04.01 Selling expenses (221,285) (463,615) (139,576) (306,788)
3.04.02 General and administrative expenses (60,660) (110,326) (59,784) (117,475)
3.04.04 Other operating income 18,022 37,592 133,525 2,665,102
3.04.05 Other operating expenses (572,375) (751,829) (161,151) (554,798)
3.04.06 Equity in results of affiliated companies 320,041 1,820,807 2,571,852 3,961,755
3.05 Income before financial income (expenses) and taxes 728,207 3,307,862 4,578,793 9,565,093
3.06 Financial income (expenses) (605,967) (1,361,652) 128,760 538,248
3.06.01 Financial income (597,115) (721,877) 796,765 1,376,103
3.06.02 Financial expenses (8,852) (639,775) (668,005) (837,855)
3.06.02.01 Net exchange differences over financial instruments 539,603 407,728 (331,205) (159,201)
3.06.02.02 Financial expenses (548,455) (1,047,503) (336,800) (678,654)
3.07  Income before income taxes 122,240 1,946,210 4,707,553 10,103,341
3.08 Income tax and social contribution 75,086 (542,482) 258,218 102,445
3.09 Net income  from continued operations 197,326 1,403,728 4,965,771 10,205,786
3.11 Net income for the year 197,326 1,403,728 4,965,771 10,205,786
3.99 Earnings per share – (Reais / Share)        
3.99.01 Basic earnings per share        
3.99.01.01 Common shares 0.14877 1.05710 3.59809 7.39488
3.99.02 Diluted earnings per share        
3.99.02.01 Common shares 0.14877 1.05710 3.59809 7.39488
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Parent Company Financial Statements / Statement of Comprehensive Income
(BRL thousand)
           
Code Description Current Quarter 04/01/2022 to 06/30/2022 Year to date 01/01/2022 to 06/30/2022 Same quarter previous year 04/01/2021 to 06/30/2021 YTD previous year  01/01/2021 to 06/30/2021
4.01 Net income for the year 197,326 1,403,728 4,965,771 10,205,786
4.02 Other comprehensive income (1,023,023) (282,869) 2,357,516 777,253
4.02.01 Actuarial gains over pension plan of subsidiaries, net of taxes 25 56 29 49
4.02.04 Cumulative translation adjustments for the year 155,081 (585,971) (278,587) (192,468)
4.02.11 Losses in cash flow hedge (1,282,476) 117,472 2,615,279 696,150
4.02.13 Cash flow hedge reclassified to income upon realization 341,734 421,030 - 252,250
4.02.15 (Loss)/gain cash flow hedge accounting, net taxes, from investments in subsidiaries (237,387) (235,456) 20,795 21,272
4.03 Comprehensive income for the year (825,697) 1,120,859 7,323,287 10,983,039

 

 

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Parent Company Financial Statements / Statements of Cash Flows – Indirect Method
(BRL thousand)
Code Description Year to date 01/01/2022 to 06/30/2022 YTD previous year  01/01/2021 to 06/30/2021
6.01 Net cash from operating activities 2,912,298 4,729,934
6.01.01 Cash from operations 1,792,049 3,368,586
6.01.01.01 Net income for the period 1,403,728 10,205,786
6.01.01.02 Financial charges in borrowing and financing raised 571,407 359,259
6.01.01.03 Financial charges in borrowing and financing granted (82,010) (21,175)
6.01.01.04 Depreciation, amortization and depletion 516,621 414,651
6.01.01.05 Equity in results of affiliated companies (1,820,807) (3,961,755)
6.01.01.06 Deferred taxes assets 305,085 (345,812)
6.01.01.08 Provision for tax, social security, labor, civil and environmental risks (6,875) (34,152)
6.01.01.09 Monetary and exchange variations, net (80,115) 490,789
6.01.01.10 Updated shares – Fair value through profit or loss 1,033,056 (815,514)
6.01.01.11 Net gains on the sale of the shares of CSN Mineração - (2,472,497)
6.01.01.12 Write-off and estimated losses net of reversal 282 1,680
6.01.01.13 Provision for environmental liabilities and decommissioning of assets 5,416 23,473
6.01.01.14 Charges on lease liabilities 846 1,016
6.01.01.15 Accrued for consumption and services (2,080) 3,339
6.01.01.16 Net gains on the sale of the shares of Usiminas - (505,844)
6.01.01.18 Dividends USIMINAS (103,671) -
6.01.01.19 Other provisions 51,166 25,342
6.01.02 Changes in assets and liabilities 1,120,249 1,361,348
6.01.02.01 Trade receivables - third parties 38,477 (627,190)
6.01.02.02 Trade receivables - related party 429,502 212,985
6.01.02.03 Inventory (95,441) (1,784,997)
6.01.02.04 Receivables - related parties/dividends 2,431,565 1,236,190
6.01.02.05 Recoverable taxes 414,779 900,930
6.01.02.06 Judicial deposits (16,078) (13,365)
6.01.02.09 Trade payables (551,701) 216,739
6.01.02.10 Trade payables – Forfaiting and Drawee risk (535,835) 1,566,598
6.01.02.11 Payroll and related taxes 37,634 42,560
6.01.02.12 Tax payables (456,291) 33,063
6.01.02.14 Payables to related parties 65,032 3,595
6.01.02.16 Interest paid (489,841) (434,194)
6.01.02.17 Interest received 1,593 -
6.01.02.19 Others (153,146) 8,434
6.02 Net cash investment activities (1,061,880) 3,923,617
6.02.01 Capital reduction in investee (278,399) (89,943)
6.02.02 Purchase of property, plant and equipment, intangible assets and  investment  property (633,551) (405,126)
6.02.08 Intercompany loans granted (150,312) (123,244)
6.02.09 Intercompany loans received 2,383 -
6.02.11 Financial Investments, net of redemption (2,001) 1,377,318
6.02.12 Net cash received from sale of CSN Mineração's shares - 3,164,612
6.03 Net cash used in financing activities (1,302,510) (9,688,906)
6.03.01 Borrowings and financing raised 1,196,064 40,903
6.03.02 Transactions cost - Borrowings and financing (5,188) (9,449)
6.03.03 Borrowings and financing – related parties 1,039,378 1,394,275
6.03.04 Amortization of leases (4,331) (4,345)
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6.03.05 Amortization of borrowings and financing (2,339,156) (3,714,366)
6.03.06 Amortization of borrowings and financing - related parties (107,673) (6,495,364)
6.03.07 Dividends and interest on shareholder’s equity (673,129) (900,560)
6.03.08 Share repurchase (408,475) -
6.05 Increase (decrease) in cash and cash equivalents 547,908 (1,035,355)
6.05.01 Cash and equivalents at the beginning of the year 3,885,265 4,647,125
6.05.02 Cash and equivalents at the end of the year 4,433,173 3,611,770

 

 

 

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Parent Company Financial Statements / Statement of Changes in Equity - 01/01/2022 to 06/30/2022
(BRL thousand)
               
Code Description Paid-up capital Capital reserve, granted options and treasury shares Earnings reserve Retained earnings (accumulated losses) Other comprehensive income Shareholders’ equity
5.01 Opening balances 10,240,000 32,720 10,092,888 - (50,610) 20,314,998
5.03 Adjusted opening balances 10,240,000 32,720 10,092,888 - (50,610) 20,314,998
5.04 Capital transaction with shareholders - - (395,180) - 224,806 (170,374)
5.04.04 Treasury shares acquired - (395,180) - - - (395,180)
5.04.08 (Loss) / gain on the percentage change in investments - - - - 224,806 224,806
5.04.10 Treasury shares canceled - 1,332,110 (1,332,110) - - -
5.04.11 Reclassifications of treasury shares - (936,930) 936,930 - - -
5.05 Total comprehensive income - - - 1,403,728 (282,869) 1,120,859
5.05.01 Net income for the period - - - 1,403,728 - 1,403,728
5.05.02 Other comprehensive income - - - - (282,869) (282,869)
5.05.02.04 Cumulative translation adjustments for the year - - - - (585,971) (585,971)
5.05.02.06 Actuarial gains/(losses) on pension plan, net of taxes - - - - 56 56
5.05.02.07 (Loss) / gain on cash flow hedge accounting, net of taxes - - - - 303,046 303,046
5.07 Closing balance 10,240,000 32,720 9,697,708 1,403,728 (108,673) 21,265,483
                             

 

 

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Parent Company Financial Statements / Statement of Changes in Equity - 01/01/2021 to 06/30/2021
(BRL thousand)
               
Code Description Paid-up capital Capital reserve, granted options and treasury shares Earnings reserve Retained earnings (accumulated losses) Other comprehensive income Shareholders’ equity
5.01 Opening balances 6,040,000 32,720 5,824,350 - (1,983,619) 9,913,451
5.03 Adjusted opening balances 6,040,000 32,720 5,824,350 - (1,983,619) 9,913,451
5.04 Capital transaction with shareholders - - - - 820,203 820,203
5.04.10 Net gain of transaction primary and secondary distribution shares of CSN Mineração - - - - 829,486 829,486
5.04.11 (Loss) / gain on the percentage change in investments - - - - (9,283) (9,283)
5.05 Total comprehensive income - - - 10,205,786 777,253 10,983,039
5.05.01 Net income for the period - - - 10,205,786 - 10,205,786
5.05.02 Other comprehensive income - - - - 777,253 777,253
5.05.02.04 Cumulative translation adjustments for the year - - - - (192,468) (192,468)
5.05.02.08 Actuarial gains/(losses) on pension plan, net of taxes - - - - 49 49
5.05.02.11 (Loss) / gain hedge accounting, net of taxes - - - - 969,672 969,672
5.07 Closing balance 6,040,000 32,720 5,824,350 10,205,786 (386,163) 21,716,693

 

 

 

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Parent Company Financial Statements / Statement of Value Added
(BRL thousand)
Code Description Year to date 01/01/2022 to 06/30/2022 YTD previous year  01/01/2021 to 06/30/2021
7.01 Revenues 15,156,167 17,935,438
7.01.01 Sales of products and rendering of services 15,136,063 14,590,533
7.01.02 Other revenues 9,834 3,346,351
7.01.04 Allowance for (reversal of) doubtful debts 10,270 (1,446)
7.02 Raw materials acquired from third parties (11,807,941) (10,843,054)
7.02.01 Cost of sales and services (10,778,847) (9,547,170)
7.02.02 Materials, electric power, outsourcing and other (951,557) (1,249,979)
7.02.03 Impairment/recovery of assets (77,537) (45,905)
7.03 Gross value added 3,348,226 7,092,384
7.04 Retentions (516,319) (414,250)
7.04.01 Depreciation, amortization and depletion (516,319) (414,250)
7.05 Value added created 2,831,907 6,678,134
7.06 Value added received 2,837,249 5,293,435
7.06.01 Equity in results of affiliates companies 1,820,807 3,961,755
7.06.02 Financial income 308,825 1,376,103
7.06.03 Others 707,617 (44,423)
7.06.03.01 Other and exchange gains 707,617 (44,423)
7.07 Value added for distribution 5,669,156 11,971,569
7.08 Value added distributed 5,669,156 11,971,569
7.08.01 Personnel 618,594 627,278
7.08.01.01 Salaries and wages 475,769 464,881
7.08.01.02 Benefits 113,188 133,345
7.08.01.03 Severance payment (FGTS) 29,637 29,052
7.08.02 Taxes, fees and contributions 1,267,837 340,758
7.08.02.01 Federal 1,040,473 108,265
7.08.02.02 State 227,364 232,493
7.08.03 Remuneration on third-party capital 2,378,997 797,747
7.08.03.01 Interest 579,028 373,175
7.08.03.02 Rental 903 4,315
7.08.03.03 Other and passive exchange variations 1,799,066 420,257
7.08.04 Remuneration on Shareholders' capital 1,403,728 10,205,786
7.08.04.03 Retained earnings (accumulated losses) 1,403,728 10,205,786
       
       

 

 

 

 

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Consolidated Financial Statements / Balance Sheet - Assets
(BRL thousand)
Code Description Current Quarter 06/30/2022 Previous Year 12/31/2021
1 Total assets 76,839,104 79,379,103
1.01 Current assets 31,779,625 34,972,354
1.01.01 Cash and cash equivalents 14,923,694 16,646,480
1.01.02 Financial investments 1,628,846 2,644,732
1.01.02.01 Financial investments measured a fair value through profit or loss 1,352,357 2,383,059
1.01.02.01.03 Financial investments measured a fair value through profit or loss – Usiminas’ shares 1,352,357 2,383,059
1.01.02.03 Financial investments at amortized cost 276,489 261,673
1.01.03 Trade receivables 2,744,419 2,597,838
1.01.04 Inventory 10,564,327 10,943,835
1.01.06 Recoverable taxes 1,362,437 1,655,349
1.01.08 Other current assets 555,902 484,120
1.01.08.03 Others 555,902 484,120
1.01.08.03.02 Prepaid expenses 287,894 225,036
1.01.08.03.03 Dividends receivable 61,924 76,878
1.01.08.03.04 Derivative financial instruments 45,161 -
1.01.08.03.05 Others 160,923 182,206
1.02 Non-current assets 45,059,479 44,406,749
1.02.01 Long-term assets 11,141,960 11,206,737
1.02.01.03 Financial investments at amortized cost 144,828 147,671
1.02.01.05 Inventory 798,765 656,193
1.02.01.07 Deferred taxes assets 4,456,818 5,072,092
1.02.01.10 Other non-current assets 5,741,549 5,330,781
1.02.01.10.03 Recoverable taxes 871,175 965,026
1.02.01.10.04 Judicial deposits 356,865 339,805
1.02.01.10.05 Prepaid expenses 114,105 133,614
1.02.01.10.06 Receivable from related parties 2,506,658 2,070,305
1.02.01.10.07 Others 1,892,746 1,822,031
1.02.02 Investments 4,471,970 4,011,828
1.02.02.01 Equity interest 4,311,326 3,849,647
1.02.02.02 Investment Property 160,644 162,181
1.02.03 Property, plant and equipment 21,897,171 21,531,134
1.02.03.01 Property, plant and equipment in operation 17,277,619 17,305,628
1.02.03.02 Right of use in leases 591,784 581,824
1.02.03.03 Property, plant and equipment in progress 4,027,768 3,643,682
1.02.04 Intangible assets 7,548,378 7,657,050
           

 

 

 

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Consolidated Financial Statements / Balance Sheet – Liabilities
(BRL thousand)
       
Code Description Current Quarter 06/30/2022 Previous Year 12/31/2021
2 Total Liabilities 76,839,104 79,379,103
2.01 Current liabilities 18,893,497 24,541,616
2.01.01 Payroll and related taxes 385,470 328,443
2.01.02 Trade payables 5,842,677 6,446,999
2.01.03 Tax payables 1,219,614 3,308,614
2.01.04 Borrowings and financing 4,928,846 5,486,859
2.01.05 Other payables 6,451,764 8,904,654
2.01.05.02 Others 6,451,764 8,904,654
2.01.05.02.04 Dividends and interests on shareholder´s equity 454,089 1,206,870
2.01.05.02.05 Advances from customers 1,052,495 2,140,783
2.01.05.02.06 Trade payables – Forfaiting and Drawee risk 4,170,914 4,439,967
2.01.05.02.07 Lease liabilities 127,991 119,047
2.01.05.02.09 Other payables 646,275 997,987
2.01.06 Provisions 65,126 66,047
2.01.06.01 Provision for tax, social security, labor and civil risks 65,126 66,047
2.02 Non-current liabilities 34,087,866 31,463,098
2.02.01 Borrowings and financing 29,822,652 27,020,663
2.02.02 Other payables 1,930,764 1,948,164
2.02.02.02 Others 1,930,764 1,948,164
2.02.02.02.03 Advances from customers 913,565 947,896
2.02.02.02.04 Lease liabilities 502,232 492,504
2.02.02.02.05 Derivative financial instruments 80,615 101,822
2.02.02.02.06 Trade payables 52,079 98,625
2.02.02.02.07 Other payables 382,273 307,317
2.02.03 Deferred taxes assets 301,300 503,081
2.02.04 Provisions 2,033,150 1,991,190
2.02.04.01 Provision for tax, social security, labor and civil risks 511,772 508,305
2.02.04.02 Other provisions 1,521,378 1,482,885
2.02.04.02.03 Provision for environmental liabilities and decommissioning of assets 937,090 898,597
2.02.04.02.04 Pension and healthcare plan 584,288 584,288
2.03 Shareholders’ equity 23,857,741 23,374,389
2.03.01 Paid-up capital 10,240,000 10,240,000
2.03.02 Capital reserves 32,720 32,720
2.03.04 Earnings reserves 9,697,708 10,092,888
2.03.04.01 Legal reserve 1,081,222 1,081,222
2.03.04.02 Statutory reserve 8,616,486 9,948,596
2.03.04.09 Treasury shares - (936,930)
2.03.05 Accumulated earnings (losses) 1,403,728 -
2.03.08 Other comprehensive income (108,673) (50,610)
2.03.09 Earnings attributable to the non-controlling interests 2,592,258 3,059,391
       
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Consolidated Financial Statements / Statements of Income
(BRL thousand)
Code Description Current Quarter 04/01/2022 to 06/30/2022 Year to date 01/01/2022 to 06/30/2022 Same quarter previous year 04/01/2021 to 06/30/2021 YTD previous year  01/01/2021 to 06/30/2021
3.01 Revenues from sale of goods and rendering of services 10,565,922 22,335,788 15,391,573 27,304,901
3.02 Costs from sale of goods and rendering of services (7,560,441) (14,847,726) (7,111,092) (13,289,876)
3.03 Gross profit 3,005,481 7,488,062 8,280,481 14,015,025
3.04 Operating (expenses)/income (1,234,203) (2,161,450) (1,171,899) 270,617
3.04.01 Selling expenses (503,932) (947,928) (680,194) (1,102,780)
3.04.02 General and administrative expenses (146,922) (290,252) (145,440) (279,903)
3.04.04 Other operating income 26,215 49,616 135,965 2,696,197
3.04.05 Other operating expenses (663,970) (1,046,551) (537,351) (1,111,463)
3.04.06 Equity in results of affiliated companies 54,406 73,665 55,121 68,566
3.05 Income before financial income (expenses) and taxes 1,771,278 5,326,612 7,108,582 14,285,642
3.06 Financial income (expenses) (890,012) (2,015,249) (339,051) (540,558)
3.06.01 Financial income (462,956) (498,815) 791,755 1,377,340
3.06.02 Financial expenses (427,056) (1,516,434) (1,130,806) (1,917,898)
3.06.02.01 Net exchange differences over financial instruments 583,747 462,423 (330,030) (386,358)
3.06.02.02 Financial expenses (1,010,803) (1,978,857) (800,776) (1,531,540)
3.07  Income before income taxes 881,266 3,311,363 6,769,531 13,745,084
3.08 Income tax and social contribution (511,935) (1,578,089) (1,256,871) (2,535,111)
3.09 Net income  from continued operations 369,331 1,733,274 5,512,660 11,209,973
3.11 Consolidated net income for the year 369,331 1,733,274 5,512,660 11,209,973
3.11.01 Earnings  attributable to the controlling interests 197,326 1,403,728 4,965,771 10,205,786
3.11.02 Earnings it attributable to the non-controlling interests 172,005 329,546 546,889 1,004,187
3.99 Basic and diluted earnings per share - - - -
3.99.01.01 Common shares 0.14877 1.05710 3.59809 7.39488
3.99.02.01 Common shares 0.14877 1.05710 3.59809 7.39488
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Consolidated Financial Statements / Statement of Comprehensive Income
(BRL thousand)
           
Code Description Current Quarter 04/01/2022 to 06/30/2022 Year to date 01/01/2022 to 06/30/2022 Same quarter previous year 04/01/2021 to 06/30/2021 YTD previous year  01/01/2021 to 06/30/2021
4.01 Consolidated net income for the year 369,331 1,733,274 5,512,660 11,209,973
4.02 Other comprehensive income (1,083,398) (342,641) 2,520,809 783,109
4.02.01 Actuarial gains/(losses) over pension plan of subsidiaries, net of taxes (41) 56 32 55
4.02.04 Cumulative translation adjustments for the year 155,081 (585,971) (278,587) (192,468)
4.02.10 Losses in cash flow hedge (1,282,476) 117,472 2,615,279 696,150
4.02.12 Cash flow hedge reclassified to income upon realization, net of taxes 341,734 421,030 - 252,250
4.02.14 Losses from cash flow hedge accounting, net of taxes (282,269) (279,801) - (195,613)
4.02.15 Cash flow hedge accounting Platts reclassified to income upon realization (15,427) (15,427) 184,085 222,735
4.03 Consolidated comprehensive income for the year (714,067) 1,390,633 8,033,469 11,993,082
4.03.01 Earnings  attributable to the controlling interests (825,697) 1,120,859 5,670,168 10,983,039
4.03.02 Earnings it attributable to the non-controlling interests 111,630 269,774 2,363,301 1,010,043

 

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Consolidated Financial Statements / Statements of Cash Flows – Indirect Method
(BRL thousand)
       
Code Description Year to date 01/01/2022 to 06/30/2022 YTD previous year  01/01/2021 to 06/30/2021
6.01 Net cash from operating activities (983,646) 8,247,905
6.01.01 Cash from operations 4,498,374 9,347,326
6.01.01.01 Earnings  attributable to the controlling interests 1,403,728 10,205,786
6.01.01.02 Earnings attributable to the non-controlling interests 329,546 1,004,187
6.01.01.03 Financial charges in borrowing and financing raised 1,123,146 926,025
6.01.01.04 Financial charges in borrowing and financing granted (69,714) (18,533)
6.01.01.05 Depreciation, amortization and depletion 1,320,050 1,012,257
6.01.01.06 Equity in results of affiliated companies (73,665) (68,566)
6.01.01.07 Deferred taxes assets 307,888 (419,632)
6.01.01.08 Provision for tax, social security, labor, civil and environmental risks 6,190 (24,207)
6.01.01.09 Monetary and exchange variations, net (861,285) 421,525
6.01.01.10 Net gains on the sale of the shares of Usiminas - (505,844)
6.01.01.12 Updated shares – Fair value through profit or loss 1,033,056 (815,514)
6.01.01.13 Charges on lease liabilities 34,124 29,388
6.01.01.14 Accrued for consumption and services 11,291 36,854
6.01.01.15 Write-off and estimated losses net of reversal 6,612 3,816
6.01.01.17 Provision for environmental liabilities and decommissioning of assets 38,493 47,735
6.01.01.18 Net gains on the sale of the shares of CSN Mineração - (2,472,497)
6.01.01.19 Dividends USIMINAS (103,672) -
6.01.01.20 Other provisions (7,414) (15,454)
6.01.02 Changes in assets and liabilities (5,482,020) (1,099,421)
6.01.02.01 Trade receivables - third parties (986,383) (2,483,688)
6.01.02.02 Trade receivables - related party 40,232 (56,342)
6.01.02.03 Inventory (331,276) (2,385,574)
6.01.02.04 Dividends received 103,672 -
6.01.02.05 Recoverable taxes 386,763 890,858
6.01.02.06 Judicial deposits (17,060) (20,798)
6.01.02.08 Trade payables (616,644) 1,784,174
6.01.02.09 Trade payables – Forfaiting and Drawee risk (269,053) 1,566,598
6.01.02.10 Payroll and related taxes 61,784 80,481
6.01.02.11 Tax payables (2,292,821) 1,092,910
6.01.02.13 Payables to related parties 52,059 (21,153)
6.01.02.14 Advances from customers (393,005) (344,575)
6.01.02.15 Interest paid (1,057,410) (1,008,722)
6.01.02.16 Receipt/(payment) of cash flow hedge operations 22,286 (252,394)
6.01.02.18 Others (185,164) 58,804
6.02 Net cash investment activities (2,395,977) 3,266,218
6.02.01 Cash received from the acquisition of investments -Topázio and Santa Ana 6,486 -
6.02.02 Investments (272,239) (62,520)
6.02.03 Purchase of property, plant and equipment, intangible assets and  investment  property (1,539,406) (1,107,313)
6.02.11 Intercompany loans granted (112,693) (105,479)
6.02.13 Financial Investments, net of redemption (11,972) 1,376,918
6.02.14 Net cash received from sale of CSN Mineração's shares - 3,164,612
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6.02.15 Acquisition of investments in Topázio Energética, Santa Ana and Brasil Central (466,153) -
6.03 Net cash used in financing activities 1,636,655 284,590
6.03.01 Borrowings and financing raised 9,545,800 6,895,202
6.03.03 Transactions cost - Borrowings (232,189) (128,980)
6.03.04 Issuance of new CSN Mineração's shares - 1,347,862
6.03.05 Amortization of borrowings and financing (5,934,235) (6,697,746)
6.03.06 Amortization of leases (66,137) (54,972)
6.03.07 Dividends and interest on shareholder’s equity (1,266,016) (1,076,776)
6.03.08 Share repurchase (410,568) -
6.04 Exchange rate on translating cash and cash equivalents 20,182 13,454
6.05 Increase (decrease) in cash and cash equivalents (1,722,786) 11,812,167
6.05.01 Cash and equivalents at the beginning of the year 16,646,480 9,944,586
6.05.02 Cash and equivalents at the end of the year 14,923,694 21,756,753

 

 

 

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Consolidated Financial Statements / Statements of Changes in Equity - 01/01/2022 to 06/30/2022
(BRL thousand)
Code Description Paid-up capital Capital reserve, granted options and treasury shares Earnings reserve Retained earnings (accumulated losses) Other comprehensive income Shareholders’ equity Non-controlling interests Shareholders’ equity
5.01 Opening balances 10,240,000 32,720 10,092,888 - (50,610) 20,314,998 3,059,391 23,374,389
5.03 Adjusted opening balances 10,240,000 32,720 10,092,888 - (50,610) 20,314,998 3,059,391 23,374,389
5.04 Capital transaction with shareholders - - (395,180) - 224,806 (170,374) (736,907) (907,281)
5.04.04 Treasury shares acquired - (395,180) - - - (395,180) (1,638) (396,818)
5.04.07 Interest on equity - - - - - - (510,463) (510,463)
5.04.08 (Loss)/gain on the percentage change in investments - - - - 224,806 224,806 (224,806) -
5.04.09 Reclassifications of treasury shares - (936,930) 936,930 - - - - -
5.04.10 Treasury shares canceled - 1,332,110 (1,332,110) - - - - -
5.05 Total comprehensive income - - - 1,403,728 (282,869) 1,120,859 269,774 1,390,633
5.05.01 Net income for the year - - - 1,403,728 - 1,403,728 329,546 1,733,274
5.05.02 Other comprehensive income - - - - (282,869) (282,869) (59,772) (342,641)
5.05.02.04 Cumulative translation adjustments for the year - - - - (585,971) (585,971) - (585,971)
5.05.02.06 Actuarial gains/(losses) on pension plan, net of taxes - - - - 56 56 - 56
5.05.02.07 (Loss) / gain on cash flow hedge accounting, net of taxes - - - - 303,046 303,046 (59,772) 243,274
5.07 Closing balance 10,240,000 32,720 9,697,708 1,403,728 (108,673) 21,265,483 2,592,258 23,857,741

 

 

 

 

 

 

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Consolidated Financial Statements / Statements of Changes in Equity - 01/01/2021 to 06/30/2021
(BRL thousand)
Code Description Paid-up capital Capital reserve, granted options and treasury shares Earnings reserve Retained earnings (accumulated losses) Other comprehensive income Shareholders’ equity Non-controlling interests Shareholders’ equity
5.01 Opening balances 6,040,000 32,720 5,824,350 - (1,983,619) 9,913,451 1,338,054 11,251,505
5.03 Adjusted opening balances 6,040,000 32,720 5,824,350 - (1,983,619) 9,913,451 1,338,054 11,251,505
5.04 Capital transaction with shareholders - - - - 820,203 820,203 1,031,325 1,851,528
5.04.01 Capital increase proposed - - - - - - 294,900 294,900
5.04.06 Dividends - - - - - - (196,017) (196,017)
5.04.10 Net gain of transaction primary and secondary distribution shares of CSN Mineração - - - - 829,486 829,486 923,159 1,752,645
5.04.11 (Loss) / gain on the percentage change in investments - - - - (9,283) (9,283) 9,283 -
5.05 Total comprehensive income - - - 10,205,786 777,253 10,983,039 1,010,043 11,993,082
5.05.01 Net income for the year - - - 10,205,786 - 10,205,786 1,004,187 11,209,973
5.05.02 Other comprehensive income - - - - 777,253 777,253 5,856 783,109
5.05.02.04 Cumulative translation adjustments for the year - - - - (192,468) (192,468) - (192,468)
5.05.02.08 Actuarial gains/(losses) on pension plan, net of taxes - - - - 49 49 6 55
5.05.02.11 (Loss) / gain hedge accounting, net of taxes - - - - 969,672 969,672 5,850 975,522
5.07 Closing balance 6,040,000 32,720 5,824,350 10,205,786 (386,163) 21,716,693 3,379,422 25,096,115

 

 

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Consolidated Financial Statements / Statements of Value Added
(BRL thousand)
Code Description Year to date 01/01/2022 to 06/30/2022 YTD previous year  01/01/2021 to 06/30/2021
7.01 Revenues 25,461,350 34,033,566
7.01.01 Sales of products and rendering of services 25,459,603 30,685,970
7.01.02 Other revenues (4,632) 3,347,472
7.01.04 Allowance for (reversal of) doubtful debts 6,379 124
7.02 Raw materials acquired from third parties (16,536,910) (16,565,222)
7.02.01 Cost of sales and services (14,613,156) (13,611,274)
7.02.02 Materials, electric power, outsourcing and other (1,838,129) (2,863,516)
7.02.03 Impairment/recovery of assets (85,625) (90,432)
7.03 Gross value added 8,924,440 17,468,344
7.04 Retentions (1,316,597) (1,009,505)
7.04.01 Depreciation, amortization and depletion (1,316,597) (1,009,505)
7.05 Value added created 7,607,843 16,458,839
7.06 Value added received 2,267,121 851,837
7.06.01 Equity in results of affiliated companies 73,665 68,431
7.06.02 Financial income 531,887 1,377,340
7.06.03 Others 1,661,569 (593,934)
7.07 Value added for distribution 9,874,964 17,310,676
7.08 Value added distributed 9,874,964 17,310,676
7.08.01 Personnel 1,284,948 1,146,537
7.08.01.01 Salaries and wages 1,014,204 880,646
7.08.01.02 Benefits 215,277 221,108
7.08.01.03 Severance payment (FGTS) 55,467 44,783
7.08.02 Taxes, fees and contributions 2,646,069 3,622,802
7.08.02.01 Federal 2,357,651 3,142,482
7.08.02.02 State 264,219 459,489
7.08.02.03 Municipal 24,199 20,831
7.08.03 Remuneration on third-party capital 4,210,673 1,331,364
7.08.03.01 Interest 1,170,046 968,893
7.08.03.02 Rental 1,968 7,400
7.08.03.03 Others 3,038,659 355,071
7.08.04 Remuneration on Shareholders' capital 1,733,274 11,209,973
7.08.04.03 Retained earnings (accumulated losses) 1,403,728 10,205,786
7.08.04.04 Non-controlling interests in retained earnings 329,546 1,004,187

 

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FINANCIAL RESULTS 2Q22

 

August 15, 2022

 

  

 

 

 

 

 

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Quarterly Financial Information – June 30, 2022 – CIA SIDERURGICA NACIONAL Version: 1

São Paulo, August 15, 2022 - Companhia Siderúrgica Nacional ("CSN") (B3: CSNA3) (NYSE: SID) discloses its second quarter of 2022 (2Q22) financial results in Brazilian Reais, with all financial statements consolidated in accordance with accounting practices adopted in Brazil issued by the Accounting Pronouncements Committee ("CPC"), approved by the Brazilian Securities and Exchange Commission ("CVM") and the Federal Accounting Council ("CFC") and in accordance with international financial reporting standards (“IFRS”), issued by the International Accounting Standards Board (“IASB”).

 

The comments address the Company's consolidated results in the second quarter of 2022 (2Q22) and the comparisons are in relation to the second quarter of 2021 (2Q21) and the first quarter of 2022 (1Q22). The BRL/USD exchange rate was 5.00 on 06/30/2021; 4.74 on 03/31/2022 and 5.24 on 06/30/2022.

 

 

Operational and financial highlights of 2Q22

 

 

DIVERSIFICATION HELPING TO MITIGATE THE INSTABILITY INCREASE IN INTERNATIONAL MARKETS

 

Although the mining segment was impacted by a lower price realization in 2Q22, the steel industry was able to present a resilient performance, along with other businesses, such as cement, logistics and energy that also had a solid operational performance.

As a result, adjusted EBITDA for the quarter reached BRL3.3 billion with an EBITDA margin of 31%.

 

INCREASED PRODUCTION AND SALES IN MINING, DESPITE LOWER PRICE REALIZATION

 

The quarter was led by a price realization below than what was seen in the previous quarter, due to the retraction of Platts price, the increase in freight cost and the negative effect of the provisioned price adjustment.

As a result, the mining segment had an Adjusted EBITDA of BRL931 million, with a margin of 36%.

       
 

PRICE INCREASE IN THE STEEL INDUSTRY HELPED TO OFFSET THE GROWING UNCERTAINTIES VERIFIED IN THE QUARTER

 

A sharp price increase at the beginning of the quarter helped to offset the cost pressure and weaker volume shown in the period, mainly due to a downtrend in the European market and an irregular behavior in the local market.

Therefore, the EBITDA margin of the segment remained at 25%, even with the costs pressure.

 

TRANSFORMATION IN THE ENERGY SEGMENT

 

CSN has made 3 acquisitions in the energy segment recently, consolidating its strategy of seeking self-sufficiency and competitiveness.

This movement is aligned with the objective of supporting the growth of the Group's operations and the CSN's energy pillar.

       
 

STRONG RECOVERY IN THE CEMENT SEGMENT

 

After a weaker start of 2022, due to seasonality and cost inflation, the cement segment presented a strong recovery in 2Q22, with both volume and price growth.

As a result, the Adjusted EBITDA in the segment showed a strong expansion of 64% compared to the previous quarter, with a 34% margin.

   

 

 

 

 

 

 

 

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Consolidated Table - Highlights

 

 

¹ Adjusted EBITDA is calculated from net income (loss), plus depreciation and amortization, taxes on income, net financial result, income from investment participation, income from other operating income/expenses and includes a proportional participation of 37.27% of the EBITDA of the joint subsidiary MRS Logística.

² Adjusted Ebitda Margin is calculated from Adjusted Ebitda divided by Management Net Revenue.

³ Adjusted Net Debt and Adjusted Cash/Availability consider 37.27% of MRS, in addition to not considering Forfaiting and Cashed Risk transactions.

 

Consolidated Results

 

· Net revenue accrued BRL10,566 million in 2Q22, representing a 10.2% decline when compared to 1Q22. This result is mainly a consequence of Platts’ negative price adjustments in the mining segment, that ended up offsetting the higher sales volume in the period.

 

· The cost of goods sold (COGS) totaled BRL7,560 million in 2Q22, representing an increase of 3.7% compared to 1Q22, as a result of historical price increases of some raw materials such as coal and coke, as well as higher costs of fleet movement in the mining and steel operations, with the rise of fuel prices.

 

· The decrease in revenue, with higher cost pressure, negatively impacted the gross margin that reached 28% in 2Q22 and was 9.6 p.p. lower than 1Q22. This performance mainly reflects the price contraction observed in the mining segment.

 

· In 2Q22, sales, general and administrative expenses totaled BRL651 million, a level 10.8% higher than 1Q22, as a consequence of the better commercial activity observed in the period for the mining and cement segments, generating a higher freight expense, further enhanced by the increase in the C3 route in the quarter.

 

· The group of other operating income and expenses was negative in BRL638 million in 2Q22, mainly affected by the hedge accounting cash flow operations that totaled BRL342 million in the period.

 

· The financial result was BRL890 million negative in 2Q22, representing a 21% decline compared to the previous quarter, as a consequence of the currency exchange rate, but partially offset by the devaluation of Usiminas shares.

 

 

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· The equity result was positive at BRL54 million in 2Q22, a performance 184% higher than in the previous quarter, as a consequence of the MRS results recovery of levels closer to those recorded last year.

 

 

 

· In 2Q22, the Company's net income was BRL369 million, a result 73% lower than last quarter, highlighting the Platts price adjustment impact in the Company, which was partially offset by solid steel results and record cement results.

 

 

Adjusted EBITDA

 

 

* The Company discloses its adjusted EBITDA excluding participation in investments and other operating income (expenses), understanding that it should not be considered in the calculation of recurring Operational Cash generation.

 

· In 2Q22, Adjusted EBITDA was BRL3,262 million, with an Adjusted EBITDA margin of 29.7% or 9.2 p.p. below than last quarter. This reduction in profitability is a direct consequence of the performance in the mining segment, with the lower realization of iron ore prices during the period. When you look at others segments, there is stability in the steel industry and a strong recovery in profitability for cement, which once again presented margins above 30% (it was 34.2% in 2Q22).
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Adjusted EBITDA (BRLMM) and Adjusted Margin¹ (%)

 

¹ Adjusted EBITDA Margin is calculated from the division between Adjusted EBITDA and Adjusted Net Revenue, which considers 100% of the stakes in CSN Mineração's consolidation and 37.27% in MRS.

 

Adjusted Cash Flow¹

 

Adjusted Cash Flow in 2Q22 reached BRL830 million in 2Q22, reversing the negative result observed in the previous quarter with the normalization of working capital and the seasonality in the payment of taxes verified in 1Q22. Additionally, the cash flow of 2Q22 was positively impacted by the reduction in working capital that was able to mitigate the lower operating result with a reduction in accounts receivable, even considering increases in CAPEX and financial expenses.

 

Adjusted cash flow¹ in 2Q22 (BRLMM)

 

¹ The concept of adjusted cash flow is calculated from adjusted Ebitda, subtracting Ebitda from Jointly Controlled Companies, CAPEX, IT, Financial Results and Changes in Assets and Liabilities², excluding the effect of the Glencore advance.

² Adjusted Working Capital is composed by the change in Net Working Capital, plus the change in accounts of long-term assets and liabilities and disregarding the net change in IT and SC.

 

Debt

 

On June 30, 2022, consolidated net debt reached BRL21,034 million, with the maintenance of high cash levels, and with the leverage indicator measured by the Net Debt/EBITDA ratio reaching 1.31x. This increase in leverage is a consequence of the exchange rate variation and disbursements made in the period, such as the payment of dividends and interests on equity, in addition to the acquisition of the Santa Ana and Sacre SHPs.

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Debt (BRLBillion) and

Net Debt / Adjusted EBITDA (x)

¹ Net Debt / EBITDA: To calculate the debt, please consider the final dollar of each period and for net debt and EBITDA the average dollar of the period.

 

The Company remains very active in its objective of extending its debt: during the second quarter of 2022, CSN concluded a long-term operation with SACE in the amount of USD 375 MM through its subsidiary CMIN, which also issued its 2nd infrastructure debenture operation of BRL1.4 billion. These resources will be used in capacity expansion projects in the mining segment.

 

Amortization Schedule (BRLBi)

¹ IFRS: does not consider participation in MRS (37.27%).

² Gross Debt/Management Net considers participation in MRS (37.27%) and gross interest.

3 Medium term after completion of the Liability Management Plan.

 

Foreign Exchange Exposure

 

The accrued net foreign exchange exposure in the consolidated Balance Sheet of 2Q22 was USD 502 million, as shown in the table below, in line with the company's policy of minimizing the impacts of exchange rate volatility on its results. The Hedge Accounting adopted by CSN correlates with the projected dollar exports flow of future debt maturities in the same currency. Therefore, the dollar debt exchange variation is temporarily recorded in the equity, being brought to the result when the dollar revenues from said exports occur.

 

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Investments

 

A total of BRL838 million was invested in 2Q22, an increase of 20% compared to the previous quarter, as a result of the advances in mining expansion projects (Itabirito, tailings filtration and port expansion), as well as repairs of UPV's steel operations and coke batteries.

 

 

Net Working Capital

 

The Net Working Capital applied to the business totaled BRL4,301 million in 2Q22, a decrease of 2% when compared to 1Q22, with the reduction in receivables partially offset by punctually high inventories due to the costs of the raw material.

 

The calculation of the Net Working Capital applied to the business does not take Glencore's advance, as shown in the following table:

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¹ Other CCL Assets: Considers employees advances and other accounts receivable.

² Other CCL Liabilities: Considers other accounts payable, dividends payable, installment taxes and other provisions.

³ Inventories: Does not consider the effect of the provision for inventory losses. For the calculation of the SME, warehouse balances are not considered

 

Acquisitions in the Energy Sector

 

Recently, the Company announced the acquisition of 3 different assets in the energy segment, consolidating its strategy of achieving self-sufficiency in energy. On April 8, 2022, the Company announced to the market the acquisition of SHP's Santa Ana and Sacre, which has an installed capacity of 36.3 MW, with the closing of this acquisition occurring on 06/30/22 and the assets being directed to cement operations. Also, the acquisition of the Quebra-Queixo Hydroelectric Powerplant announcement was made on 07/25/2022 and the conclusion is still pending on regulatory approvals. This asset has an installed capacity of 120 MW (guaranteed capacity of 57.4 MW) and will support the energy supply for mining expansion projects. Finally, on 07/29/2022, the Company won the privatization auction of CEEE-G, a relevant renewable generation platform in Rio Grande do Sul, with 15 own assets (HEPs and SHPs), a total installed capacity of 920 MW and an average physical guaranteed capacity of 399 MW, along with 11 minor participations and 3 wind projects under development.

 

 

 

 

 

 

 

 

 

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2Q22 Results (BRLmillion) Steel Mining Logistics (Port) Logistics (Railway) Energy Cement Corporate Expenses/Elimination Consolidated
                 
Net Revenue  7,706  2,608  77  592  47  475  (940)  10,566
Internal Market  5,248  411.20  77  592  47  475  (1,032)  5,819
Foreign Market  2,458  2,196  -     -     -     -     93  4,747
COGS  (5,789)  (1,832)  (53)  (386)  (49)  (301)  849  (7,560)
Gross profit  1,917  776  24  206  (2)  174  (90)  3,005
DGA/DVE  (313)  (87.03)  (8)  (34)  (8)  (69)  (132)  (651)
Depreciation  301  242  8  126  4  57  (95)  643
Proportional EBITDA of joint contr.  -           -     -     -     -     265  265
Adjusted EBITDA  1,905  931  24  298  (6)  163  (52)  3,262
                 
1Q22 Results (BRLmillion) Steel Mining Logistics (Port) Logistics (Railway) Energy Cement Corporate Expenses/Elimination Consolidated
                 
Net Revenue  7,882  3,861  76  458  44  386  (938)  11,770
Internal Market  5,185  515.38  76  458  44  386  (991)  5,673
Foreign Market  2,697  3,346  -     -     -     -     53  6,097
COGS  (5,827)  (1,595)  (55)  (342)  (47)  (272)  850  (7,287)
Gross profit  2,055  2,266  21  117  (3)  114  (88)  4,483
DGA/DVE  (327)  (62.42)  (10)  (31)  (9)  (69)  (80)  (587)
Depreciation  295  242  9  123  4  54  (92)  635
Proportional EBITDA of joint contr.  -           -     -     -     -     187  187
Adjusted EBITDA  2,024  2,445  20  209  (7)  99  (72)  4,718
                 
2Q21 Results (BRLmillion) Steel Mining Logistics (Port) Logistics (Railway) Energy Cement Corporate Expenses/Elimination Consolidated
                 
Net Revenue  8,144  7,357  72  487  55  343  (1,067)  15,392
Internal Market  6,050  904  72  487  55  343  (1,415)  6,495
Foreign Market  2,094  6,453  -     -     -     -     349  8,896
COGS  (5,452)  (2,312)  (52)  (312)  (35)  (204)  1,255  (7,111)
Gross profit  2,693  5,045  20  175  21  139  188  8,280
DGA/DVE  (250)  (141)  (11)  (31)  (8)  (33)  (352)  (826)
Depreciation  256  176  9  108  4  42  (92)  502
Proportional EBITDA of joint contr.  -           -     -     -     -     217  217
Adjusted EBITDA  2,699  5,080  17  252  18  147  (39)  8,174

 

Steel Result

 

According to the World Steel Association (WSA), global crude steel production totaled 490.3 million tons (Mt) in the quarter, 4.2% below the same period in 2021 as a result of the impacts from the conflict between Russia and Ukraine and the outcome of stricter social distancing policies in some Chinese cities. China produced 57% of the global volume (280.1 Mt), which represents a reduction of 3.8% compared to the same period in 2021. Despite this slowdown, the Chinese government has sought to increase investment in infrastructure through economic stimulus that should keep demand at a high level throughout this year. Brazil produced 8.8 Mt in the quarter, which corresponds to an annual decline of 6.4%, as a result of the cost pressure suffered by the industry in the first half, in addition to the increase in uncertainties regarding the demand sustainability. For 2022, the global market is expected to have a stable production of approximately 1,840 Mton.

 

Steel Production (thousand tons)

 

CSN’s plate production on the 2Q22 totaled 890,000 tons, a stable performance compared to the previous quarter. However, the production of flat laminates, our main market of operation, reached 767 kton, which represents a contraction of 7.3% in relation to 1Q22, due to planned maintenance on the production line.

 

 

 

 

 

 

 

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Sales Volume (Kton) - Steel

 

Total sales reached 1,067.000 tons in the second quarter of 2022, a volume 7.8% lower than last quarter. When analyzing the evolution in the different markets, it is noticed that domestic sales totaled 724,000 tons of steel products and were 4% lower than in 1Q22, as a result of uncertainties regarding price dynamics and demand behavior. In the foreign market, 2Q22 sales accrued 342,000 tons, 15% below the 1Q22 volume, as a consequence of a lower commercial activity in the operations of SWT and Lusosider, resulting from the lower consumption of steel in the European market and all the instability brought by the conflict between Russia and Ukraine. In the quarter, 18,000 tons were exported directly, and 324,000 tons were sold by our subsidiaries abroad, with 67,000 tons by LLC (25% quarterly increase), 183,000 tons by SWT and 75,000 tons by Lusosider.

 

In relation to the total sales volume, in 2Q22, compared to the previous quarter, the automotive (+40%), home appliances (+40%) and general industry (+35%) segments were the main positive highlights of the quarter, and ended up compensating for the more uncertain period experienced by the distribution sector.

 

 

According to ANFAVEA (National Association of Motor Vehicle Manufacturers), the production in the second quarter registered 596,000 units, a 20% increase when compared to last quarter and an 8.1% increase compared to the same period of 2021. The Association also projects a 4.1% growth in production for 2022, with a production of 2,340,000 vehicles units.

 

According to the Brazil Steel Institute (IABr) data, crude steel production in the quarter accrued 8.8Mt, a performance 4.7% lower than in the same period last year. Apparent Consumption was 6.1 Mton, a 15.6% retraction compared to 2Q21. Also, the Steel Industry Confidence Indicator (ICIA) of June was 45.4 points, a drop of 5.7 p.p. compared to March and below the 50-point dividing line, which indicates lower confidence for the next six months in the local market.

 

According to the IBGE data, the monthly index of household appliance production in the first two months of the quarter recorded a 16.9% decline compared to the same period of the previous year. For this year, the home appliances market is expected to have a moderate growth after the strong sales volume seen in the sector in 2020 and 2021.

Sale by Market Segment

 

 

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· Net revenue in Steel reached BRL7,706 million in 2Q22, 2% lower than in 1Q22. As commented earlier, the increase in the sales price was eventually offset by the reduction in the volume sold. In this sense, the average domestic market price in 2Q22 was 5.3% higher than in 1Q22, a performance that accompanies the increase in the prices of raw materials for steel production. Moreover, the average foreign market price was 7.1% higher compared to last quarter, a performance pulled by U.S. and Germany domestic prices, which showed a strong growth at the beginning of the quarter.

 

· The cost of consumed plate in 2Q22 reached BRL4,386/t, which represents a 4.5% increase over the previous quarter as a result of (i) the increase in the coal price, (ii) the increase in the price of gas used for the manufacture of steel, and (iii) the lower dilution of fixed costs due to the lower volume of production.

 

Cost of plate with deprec. (BRL/t)

Production Cost 2Q22


 

· The Company's steel Adjusted EBITDA reached BRL1,905 million in 2Q22 and was 5.8% lower than in 1Q22, with an EBITDA margin of 24.7% (-0.9 p.p.). Despite the lower profitability and increased cost pressure of some raw materials at the beginning of the year, this performance reinforces the Company's resilience and the ability to generate results even in an environment of inflationary pressure and economic uncertainties.

 

Adjusted EBITDA and Steel Margin

(BRL/MM and %)

 

 

 

Mining Result

 

The quarter in China was marked by the maintenance of stimulus to the infrastructure sector, lower than expected performance in the real estate market and maintenance of the Covid Zero policy that eventually resulted in the isolation of several major cities, bringing instability and uncertainty regarding the economic impacts and prospects. In addition, the conflict between Russia and Ukraine, the inflationary effects and the increase of interest rates have also backed-up the raising concern about iron ore demand and energy supply to European countries, contributing yet another component of instability to the transoceanic market. In this context, the price of iron ore ended 2Q22 on a downward trend, returning to November/21 levels and undergoing adjustments throughout the quarter. However, the 2Q22 average price did not vary as much, performing on USD 137.9/dmt (Platts, Fe62%, N. China), 2.6% lower than 1Q22 (USD 141.6/dmt), but 31% below 2Q21 (USD 200.01/dmt).

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In relation to sea freight, the BCI-C3 Route (Tubarão-Qingdao) observed a more significant impact, reaching an average of $30.2/wmt in 2Q22, which represented a 32% increase compared to the previous quarter, mainly driven by the higher bulk costs.

 

Total Production - Mining
(thousand tones)

Sales Volume - Mining

(thousand tons)

 

 

· Iron ore production totaled 8,283 ktons in 2Q22, an 29% increase compared to 1Q22, as a result of improved production with the reduction of impacts of rain volumes in the period.

 

· Sales volume reached 7,574 ktons in 2Q22, a performance 9.3% higher than the previous quarter as a result of the drier period observed throughout the quarter, enabling an increase in port shipments. To contextualize this performance, the sales volume for the foreign market was 15.2% higher than in 1Q22. However, it is important to highlight that this performance could have been even better if it were not for the still high volume of rainfall in April, especially in the State of Rio de Janeiro where the Company’s Port is located, delaying a more consistent recovery.

 

· In 2Q22, net revenue totaled BRL2,608 million and was 32.5% lower than in the last quarter, as a result of a lower price realization that offset the increase in production and commercial activity presented in the period. Unitary net revenue was $72.03 per wet ton, down 33% from 1Q22, a performance that reflects not only the lower price of the index benchmark, but also the impact of more expensive sea freight and a negative realization of provisioned price from previous quarters in the period.

 

· The cost of goods sold from mining totaled BRL1,832 million in 2Q22, an increase of 14.8% compared to the previous quarter, as a result of the higher volume produced in the period, in addition to the higher costs of diesel used in the mine fleet and the increase in rail transport costs. The C1 Cost was USD 24.3/t in 2Q22, 3.8% higher when compared to 1Q22, mainly a result of the factors mentioned above. This ended up compensating for the greater dilution of fixed cost due to the increase in the volume produced, the exchange rate impact and the reduction of the cost in TECAR.

 

· Adjusted EBITDA reached BRL931 million in 2Q22, with quarterly EBITDA margin of 35.7% or 27.6 p.p. lower than that recorded in 1Q22. The lower performance of the realized prices, together with increases in C1 costs, freight and greater participation of third-party volumes were the main responsible for the decrease in mining margins in the period.

 

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Cement Result

 

After a challenging start of 2022 with a seasonality accentuated by the high volume of rainfall in January and February, the cement segment continued to face challenges in 2Q22 with raw material cost pressures and commercial activity limited by high inflation and interest rates. However, it has already been possible to verify a resumption of construction and, according to the National Union of the Cement Industry (SNIC), cement sales reached 15.9 Mton in 2Q22 and was 6.7% higher compared to the previous quarter, but still 3.0% below the same period from last year. In this context, the real estate market has been resilient with the increase in real estate units sold throughout the quarter, according to the Brazilian Chamber of the Construction Industry (CBIC), and the Industrial Entrepreneur Confidence Index (ICEI) presenting values above 50 in all indicators.

 

in the case of CSN Cimentos, the recovery came from both commercial activity and the strong price adjustment applied at the beginning of the quarter, an adjustment that was necessary to offset the higher production costs in the period. Sales on the 2Q22 accrued 1,261 kton and were 6% higher than in the previous quarter, as a result of the assertive commercial strategy, in addition to seasonality, with a drier quarter.

 

Sales Volume - Cements (thousand tones)

 

* Alhandra's operations were integrated in September 2021.

 

· Net revenue reached an all-time high of BRL475 million in 2Q22, a performance 23.1% higher than last quarter, driven by volume recovery with higher prices applied in the period.

 

· Unitary costs also rose in the quarter as a result of the price increase of imported coke and freight distribution costs.

 

· After all, Adjusted EBITDA increased by 64.1% compared to the previous quarter, reaching BRL163 million in 2Q22 and with an Adjusted EBITDA margin of 34.2%, or 8.6 p.p. above the margin recorded in 1Q22. This improvement reflects the Company's ability to generate results even in a period of inflationary pressure, highlighting not only the strength of the brand, but also all the operational efficiency of CSN's plants.
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Logistics Result

 

Rail Logistics: In 2Q22, net revenue reached BRL592 million, with Adjusted EBITDA of BRL298 million and Adjusted EBITDA margin of 50.3%. Compared to 1Q22, net revenue increased 30% due to increased prices of transported goods. In the same comparison line, Adjusted EBITDA was 42% higher.

 

Port Logistics: In 2Q22, 308,000 tons of steel products were shipped by Sepetiba Tecon, in addition to 15,000 containers, 4,000 tons of general cargo and 219,000 tons of bulk. Compared to the previous quarter, the two most significant variations were in the volume of steel products, with an increase of 24%, and in the bulk sales, which reported a 40% decline. As a result, net revenue of the port segment was 2% higher than in the last quarter, reaching BRL77 million in 2Q22. Additionally, there was a decline in sales and administrative expenses that led the Adjusted EBITDA to increase 21.5% in the quarter, reaching BRL24 million and an Adjusted EBITDA margin of 31.3% in the period, or 5.1 p.p. superior.

 

Energy Result

 

In 2Q22, the volume of energy traded generated net revenue of BRL47 million, with negative adjusted EBITDA of BRL6 million. Compared to 1Q22, net revenue increased by 7% due to lower exposure to the short-term market. This reflects a greater adherence of energy consumption carried out by industrial plants, which also resulted in an EBITDA improvement of 17% in the period.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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ESG - Environmental, Social & Governance

 

ESG COMMITMENTS - CSN GROUP

 

AXIS ESG Goals

Capital Natural

Climate Change
ü  Reduction of 10% of CO2e emissions per ton of crude steel by 2035, WSA (World Steel Association) methodology compared to 2018.
ü  Reduction of 20% of CO2e emissions per ton of crude steel by 2035, WSA (World Steel Association) methodology compared to 2018.
ü  Reduction of 28% of CO2e emissions per ton of cement by 2030, reaching 375 kgCO2e/t cement, CSI (Cement Sustainability Initiative) methodology. Equivalent to the target set in the CSI roadmap for the sector in 2050, base year 2020.
ü  Reduction of 30% in CO2e emissions per ton of ore produced by 2035 (scopes 1 and 2), base year 2019.
ü  Net Zero by 2044 in the emissions of scopes 1 and 2 of CSN Mineração.
Atmospheric Emissions
ü  Reduction of 40% of particulate matter emissions per ton of crude steel produced at UPV by 2030, base year 2019.
Efficiency in Water Use and Effluent Management
ü  Reduce new water consumption for iron ore production by at least 10% per ton of ore produced by 2030 compared to the base year 2018.

Intellectual Capital

Innovation
ü  Between 2020 and 2022, develop two new products/services on the ESG theme.
ü  By 2022, we will conduct six weeks of training in innovation, ESG and Venture Capital in the CSN Group units in relation to 2020.
Governance, Ethics and Compliance
ü  Continuously increase our Compliance Index to the best governance practices provided for in CVM Resolution No. 80/2022 (considered Practice and Partial Practice).

Human and Social Capital

 

 

 

Social Responsibility
ü  By 2022, increase by 39% the care of children and adolescents by the Garoto Cidadão project in relation to 2020.
Health and safety at work
ü  Continuously achieve the zero-fatality rate throughout the CSN Group (own and third parties).
ü  Reduce by 30% the accident frequency rate (CAF+SAF – own and third parties) by 2030 in the CSN Group compared to 2020. (factor of 1 million HHT)
ü  Reduce by 30% the number of days of sick leave by accident with own employees by 2030 compared to 2021.
Dam Management and Mischaracterization
ü  Perform the complete mischaracterization of the dams built upstream of CSN Mineração by 2030.
Diversity and Inclusion
ü  Achieve 28% female representation in the CSN Group by 2025 compared to 2020.

 

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ESG PERFORMANCE - CSN

 

Starting in the second quarter of 2022, CSN begins a new format for disclosing its ESG shares and performance. The new model allows stakeholders to have access to key results, quarterly indicators and can now follow them effectively and even more agilely.

The information included in this release was selected based on relevance and materiality to the company. Quantitative indicators are presented in comparison with the period that best represents the metric for monitoring these. Thus, some are compared with the same quarter of the previous year, and others will be with the average of the previous period, ensuring a comparison based on seasonality and periodicity.

More detailed historical data on CSN's performance and initiatives can be verified in the Integrated Report 2021, released in June 2022 (esg.csn.com.br/nossa-empresa/relatorio-integrado-gri). The assurance of ESG indicators occurs annually for the closing of the Integrated Report, so the information contained in the quarterly releases is subject to adjustments arising from this process.

The Integrated Report 2021 released in June 2022, follows internationally recognized guidelines and frameworks, such as GRI, IIRC, SASB and TCFD and are presented with due correlation with the SDGs and Principles of the Global Compact.

With the completion of the survey and integration of CSN's risks and climate opportunities to its internal risk matrix, the Integrated Report for 2021 was the first in which CSN carried out the structured disclosure based on TCFD reporting format.

Also in this quarter, expanding the partnership between ITOCHU Corporation and CSN Group in 2021, the two parties signed a Memorandum of Understanding (MOU) with Shell International Petroleum Company Ltd. to work jointly in the development of solutions for decarbonization of the operations of the CSN group. The main objective of this collaboration is the advancement in the decarbonization strategy through the application of new technologies focused mainly on the Steel and Mining segment.

Also, in this period the new ESG website was launched with the proposal to present in a more agile and transparent way the Actions and ESG indicators of the Company. Go to esg.csn.com.br.

ESG RATINGS

 

In the second half of 2022 there was an evolution in the Company's performance in the MSCI and Mood's ESG - V.E. and TPI (Transition Pathway Initiative) global initiative that assesses the maturity of companies in relation to the transition to a low-carbon economy.

 

 

 

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PERFORMANCE OF THE MAIN ESG TARGETS

 

  Indicators Unit 2021 Accumulated 2022 Status Goal Goal (Year)
Environmental Steel Emission Intensity (WSA)¹ tCO2e/t raw steel 1.98 2.13 1.68 2035
Intensity of Emission Cements (CSI)² kg CO2e/t cement 483 486 374 2030
Mining Emission Intensity (GHG)³ kgCO2e /ton of ore4 6.26 6.91 4.04 2035
Social Frequency Rate5 CAF+SAF 2.4 1.9 0.74 2030
Governance Diversity (women in the functional framework) % 17.5 19.2 28% 2025

 

¹ Considers the scope 1+2 emissions and production of the UPV and SWT units

²Considers the emissions of scopes 1 and 2 divided per ton of iron ore produced at CSN Mineração, according to the methodology of the Brazilian GHG Protocol Program.

³ Considers emissions only from CSN Mining Scope 1 mobile combustion category. They represent 95% of CSN Mineração's Scope 1 emissions, noting that scope 2 emission is zero due to electricity consumption coming from 100% renewable sources. The data reported in the Company's Integrated Report 2021, considers the total emissions of the company CSN Mineração, scope 1 and 2. The emission intensity was reported 6.58 kgCO2e/ton of ore produced.

4 For the year 2022 Alhandra came to be considered in the data management of CSN Cimentos.

5 Rate considers (CAF+SAF - own and third/1 million hours worked)

 

ENVIRONMENTAL MANAGEMENT

 

Mining and Cements

 

Electrification of vehicles in Casa de Pedra and CSN Cimentos

 

In July 2022, in a ceremony held in Congonhas, 2 electric trucks produced by Sany were symbolic delivery and that will be used in the movement of tailings in the Casa de Pedra mine. These equipment’s are part of the company's fleet renewal plan. The forecast is initially to electrify the fleet of lighter vehicles within 4 years.

Also in a pioneering way, CSN Cimentos has partnered with Sany to test a 100% electric truck in its operations. The truck will be used in limestone mining activities, making the company the first cement company in Brazil to use electric trucks in its fleet.

 

Co-processing in Arcos

 

CSN Cimentos, arcos unit, started waste co-processing operations in June 2022.

The new process seeks to optimize the fossil fuel matrix, reducing the consumption of petroleum coke, with partial replacement by solid waste (pieces of wood, tire chip, among others), contributing to the reduction of CO2 emissions. With the implementation of the co-processing process in oven 2, the intensity of GHG emissions decreased by 5% compared to May 2022, considering only 15 days of operation. Thus, the expectation is that even more expressive results will be achieved in the coming months, with a significant reduction in emissions for the year 2022.

 

 

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NATURAL CAPITAL - ENVIRONMENTAL INDICATORS

 

· Management of air quality indicators
Air quality CSN¹ Unit 2Q21 2Q22 Δ%
NOX Emission t 1,489 1,118 -25
SOX issue t 930 798 -14
MP issue t 835 867 +4

 

 

· Water management
CSN² Water Management Unit 2Q21 2Q22 Δ%
Water catchment Megaliters 22,461 22,045 -2
Water disposal Megaliters 16,977 17,872 +5
Water consumption Megaliters 5,421 4,173 -23

(2) Considers all steel units and cement plants in Brazil

 

CSN Water Management Unit 2021 Accumulated 2022 Δ%
Intensity by steel production M³ /ton of steel 18.94 20.33 +7
Intensity per cement production M³/ton of cement 0.07 0.06 -14
Intensity by ore production M³/ton of ore 0.21 0.25 +20

 

· Waste management
Waste Management CSN³ Unit 2Q21 2Q22 Δ%
Waste generation Class 14 Tons 2,805.35 4,920.03 +75
Class 2 waste generation Tons 642,440.92 651,592.65 +1
Percentage sent for reuse and reprocessing % 96% 90% -6

(3) Considers all steel units and cement plants in Brazil

(4) Due to the demolition and refurbishment of the coke Battery #3 in the UPV, there was an increase in Class I Residue in the unit.

 

 

DAM MANAGEMENT

 

In the second quarter of 2022, the Vigia Auxiliary Dam was definitively disregarded and deregistered as a dam of FEAM (State Environmental Foundation) and ANM (National Mining Agency) which removed the structure of the SIGBM (Integrated Mining Dam Management System) register.

Next quarter, it is expected to be completed the decharacterization work of the Vigia Dam, belonging to the Casa de Pedra Complex.

 

 

 

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SOCIAL DIMENSION

 

HEALTH AND SAFETY AT WORK

 

Health and safety at work 2Q21 2Q22 Δ%
Number of accidents with and without leave (own) 30 23 -23
Number of accidents with and without leave (third parties) 20 14 -30
Fatality (own) 0 1 -
Fatality (third parties) 0 0 -
Frequency rate of mandatory reporting accidents (factor of 200,000 HHT) 0.52 0.38 -27
Frequency rate of mandatory communication work accidents (factor 1 MM HHT) 2.60 1.91 -27
Accident severity rate (factor of 200,000 HHT) 18 72 +300
Accident severity rate (1MM HHT factor) 88 360 +309

 

PEOPLE MANAGEMENT

 

Employment¹ Unit 2Q21 2Q22 Δ%
Women on staff % 16.4 19.2 +17
Women in leadership positions % 11.1 11.8 +6
People with disabilities % 1.1 1.3 +18
Racial Diversity        
        Yellow % 1.3 1.4 +8
        White % 43.4 42.7 -2
        Indigenous % 0.3 0.3 0
        Black % 14.3 14.8 +3
        Brown % 37.0 38.2 +3
        Not informed % 3.52 2.6 -26
Turnover % 1.2 1.3 +8

¹ The data does not consider employees "Non-CLT" and "Internship Program"

 

Training Unit 2Q21 2Q22 Δ%
Training hours Hours 103,560 101,917 -2
Trained employees Number 8,471 7,592 -10
Investment in training BRL 557,719 697,261 +25

 

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VALUE CHAIN

 

Sustainable Value Chain Unit 2Q21 2Q22 Δ%
Purchases from local suppliers % 33.5 30.6 -8.7

 

SOCIAL RESPONSABILITY

 

With the commitment to transform lives and communities around CSN's operations in the second quarter of 2022, the CSN Foundation participated in the "Walk for Peace", with approximately 4,000 people. Event held in conjunction with UNAS (Union of Nuclei, Associations of Residents of Heliopolis and Region), of which it is a partner of Garoto Cidadão, a project of the CSN Foundation active in the three CCAS of the Heliopolis region.

 

In Congonhas, we conducted a training in partnership with the Municipal Council for the Rights of Children and Adolescents (CMDCA), the Department of Education and the Secretariat of Social Assistance, to dialogue on children's rights and their understanding of their rights. In addition, the "Know to prevent" questionnaire was applied, with the intention of diagnosing the understanding of children and adolescents regarding the violation of their rights, in all we obtained approximately 1,200 responses.

 

The CSN Foundation materializes the SDDs in its programs and projects, with the involvement in the dissemination of knowledge about the SDDs and the 2030 Agenda.

 

 

 

 

 

 

 

In addition to these actions, the Foundation maintained its projects, obtaining at the end of the second quarter of 2022:

 

  1Q22 2Q22
Impacted young people¹ 3,483 3,981
Public cultural initiatives 3,387 69,673

¹ Young people impacted by the projects Citizen Boy, Empower, Young Apprentice, Internship, Steel Drums and Football

² Public present in the public presentations, carried out by the projects: Citizen Boy, Truck, Steel Drums, Cultural Center and Stories that stay.

 

The CSN Foundation also acts in support of CSN with the selection of projects from other entities to expand its social performance through tax incentive laws. Thus, we analyze external projects for CSN to evaluate and select projects that will be sponsored through tax incentive laws. The initiative must be aligned with the company's objectives in transforming people's society and lives. BRL1.03 million were invested by the end of the second quarter of 2022.

 

Capital Markets

 

In the second quarter of 2022, CSN shares devalued 40.6%, while the Ibovespa index fell 18.06%. The average daily value of CSNA3 shares traded at B3 was BRL309.6 million. On the New York Stock Exchange (NYSE), the Company's American Depositary Receipts (ADRs) devaluation was 45.9%, while Dow Jones fell 11.2%. The average daily ADRs (SID) trading on the NYSE was USD 25.8 million.

 

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2Q22
Number of shares in thousands 1,326,094.0
Market Value  
Closing Quote (BRL/share) 15.44
Closing Quote (USD/ADR) 2.93
Market Value (BRLmillion) 20,475
Market Value (USD million) 3,885
Change in period  
CSNA3 (BRL) -40.6%
SID (USD) -45.9%
Ibovespa (BRL) -18.1%
Dow Jones (USD) -11.2%
Volume  
Daily average (thousand shares) 11,899
Daily average (BRLthousand) 309,605
Daily average (thousand ADRs) 5,101
Daily average (USD thousand) 25,767

Source: Bloomberg

 

 

 

Some of the statements contained herein are future perspectives that express or imply expected results, performance or events. These perspectives include future results that may be influenced by historical results and statements made in 'Perspectives'. Current results, performance and events may differ significantly from hypotheses and perspectives and involve risks such as: general and economic conditions in Brazil and other countries; interest rate and exchange rate levels, protectionist measures in the U.S., Brazil and other countries, changes in laws and regulations, and general competitive factors (globally, regionally or nationally).

  

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INCOME STATEMENT

CONSOLIDATED - Corporate Law - In Thousands of Reais

 

 

 

 

 

 

 

 

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BALANCE SHEET

CONSOLIDATED - Corporate Law - In Thousands of Reais

 


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CASH FLOW STATEMENT

CONSOLIDATED - Corporate Law - In Thousands of Reais

 

 

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1. DESCRIPTION OF BUSINESS

 

Companhia Siderúrgica Nacional “CSN”, also referred to as “Company”, is a publicly held company incorporated on April 9, 1941, under the laws of the Federative Republic of Brazil (Companhia Siderúrgica Nacional, its subsidiaries, joint ventures, joint operations and associates are collectively referred to herein as the "Group”). The Company’s registered office is located in São Paulo, SP, Brazil.

 

CSN is listed on the São Paulo Stock Exchange (B3 S.A.- Brasil, Bolsa, Balcão) and on the New York Stock Exchange (NYSE).

 

The Group's main operating activities are divided into five (5) segments as follows:

 

· Steel:

 

The Company’s main industrial facility is the Presidente Vargas Steelworks (“UPV”), located in the city of Volta Redonda, State of Rio de Janeiro. This segment consolidates all operations related to the production, distribution and sale of flat steel, long steel, metallic containers, and galvanized steel. In addition to the facilities in Brazil, CSN has commercial operations in the United States and operations in Portugal and Germany to achieve markets and providing excellent services for final consumers. Its steel is used in home appliances, civil construction, package and automobile industries.

 

· Mining:

 

The production of iron ore is developed in the cities of Congonhas, Ouro Preto and Belo Vale, State of Minas Gerais – by subsidiary CSN Mineração.

Iron ore is sold basically in the international market, especially in Europe and Asia. The prices charged in these markets are historically cyclical and subject to significant fluctuations over short periods of time, driven by several factors related to global demand, strategies adopted by the major steel producers, and the foreign exchange rate. All these factors are beyond the Company’s control. The ore transportation is carried out through the Terminal de Carvão e Minérios from the Itaguai Port– (“TECAR”), a solid bulk terminal, one of the four terminals that comprise the Itaguai Port, located in the State of Rio de Janeiro. Imports of coal and coke are also carried out through this terminal by provision of services by CSN Mineração to CSN. The Company´s mining activities also comprises of tin exploitation, which is based in the State of Rondônia, to supply the needs of UPV. The excess of raw material is sold to subsidiaries and third parties.

 

As a pioneer in the use of technologies that result in the possibility of stacking the tailings generated in the iron ore production process, the Company has had its iron ore production since January 2020, 100% independent of tailings dams. After significant investments in recent years to raise the level of reliability, mischaracterization and dry stacking, the Company has moved on to a scenario in which 100% of its waste goes through a dry filtration process and is disposed of in geotechnically controlled batteries, areas exclusively destined for stacking.

 

Because of these measures, the decommissioning of the dams is the natural way of processing dry waste.

 

All our mining dams are positively certified and comply with the environmental legislation in force.

 

· Cements

 

CSN entered the cement production market in 2009, catapulted by the synergy between this activity and CSN's current business. Beside the UPV facilities, in Volta Redonda / RJ, the Company installed a business unit, which produces CP-III type cement using the slag produced by the UPV’s own blast furnaces. It also explores limestone and dolomite at the Arcos / MG unit, to meet the needs of the Steel and the cement plant. Additionally, in Arcos / MG, the clinker production operation is located.

 

On January 31, 2021, the Company concluded the drop down of the cement business and, accordingly, all assets and liabilities related to the cement business were transferred from CSN to its subsidiary recently incorporated CSN Cimentos S.A. (“CSN Cimentos”)

 

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On August 31, 2021, the Company completed the acquisition of control of Elizabeth Cimentos S.A. ("Elizabeth Cimentos") and Elizabeth Mineração S.A. ("Elizabeth Mineração"), with operations in the Northeast region, especially in Paraíba and Pernambuco, under the terms of the Investment Agreement, Purchase and Sale of Quotas, Shares and Other Covenants entered into on June 29, 2021. With the closing of this transaction, CSN Cimentos now has a total capacity of 6 million tons per year.

 

On September 9, 2021, CSN Cimentos signed the Agreement for the Sale and Purchase of the Shares in LafargeHolcim (Brasil) S.A., whereby it intends to acquire 100% of the shares issued by LafargeHolcim (Brasil) S.A. ("LafargeHolcim"), such transaction being subject to approval by the Conselho Administrativo de Defesa Econômica (“CADE”). With the closing of this transaction, CSN Cimentos will have a total capacity of 16.3 million tons per year. The deal was valued at US$1.025 billion and involves cash payments. On the same date, the Company deposited in an Escrow Account with Banco Santander the amount of US$50 million as part of the negotiations for the acquisition of LafargeHolcim, see note 9.f.

 

· Logistics:

 

Railroads:

 

CSN has interests in three railroad companies: MRS Logística S.A., which manages the former Southeast Railway System of Rede Ferroviária Federal S.A (“RFFSA”)., Transnordestina Logística S.A. (“TLSA”) and FTL - Ferrovia Transnordestina Logística S.A. (“FTL”), which the hold the concession to operate the former Northeast Railway System of RFFSA, in the States of Maranhão, Piauí, Ceará, Rio Grande do Norte, Paraíba, Pernambuco, Alagoas - stretches from São Luís to Altos, Altos to Fortaleza, Fortaleza to Sousa, Sousa to Recife/Jorge Lins, Recife/Jorge Lins to Salgueiro, Jorge Lins to Propriá, Paula Cavalcante to Cabedelo, Itabaiana to Macau (Mesh I) and TLSA is responsible for the stretches from Eliseu Martins-Trindade, Trindade-Salgueiro, Salgueiro-Porto Suape, Salgueiro - Missão Velha and Missão Velha - Pecém (Mesh II), under construction.

 

Ports:

 

The Company operates in the State of Rio de Janeiro, by means of its subsidiary Sepetiba Tecon S.A., operates the Container Terminal (“TECON”) and by means of its subsidiary CSN Mineração, the TECAR, both located at the Itaguaí Port. Established in the harbor of Sepetiba, the mentioned port has a privileged highway, railroad, and maritime access.

 

TECON is responsible for the shipments of CSN´s steel products, movement and storage of containers, vehicles, general cargo, among other products; and TECAR performs the operational activities of loading and unloading of solid bulk ships, storage and distribution (road and rail) of coal, coke, zinc concentrate, sulfur, iron ore and other bulk, intended for the seaborne market, for our own operation and for third parties.

 

· Energy:

 

Since the energy supply is fundamental in CSN´s production process, the Company owns and operates facilities to generate electric power for guaranteeing its self-sufficiency.

 

On June 30, 2022, the Company's subsidiaries, CSN Cimentos and CSN Energia S.A. ("CSN Energia"), completed the acquisition of Santa Ana Energética S.A., as well as Topázio Energética S.A. ("Topázio") and, indirectly, Brasil Central Energia Ltda. ("BCE"), a subsidiary of Topázio, under the terms of the Share Purchase Agreement entered into on April 8, 2022 with Brookfield Americas Infrastructure (Brazil Power) Fundo de Investimento em Participações Multiestratégia, a private equity fund managed by Brookfield Brasil Asset Management Investimentos Ltda, see note 9.c.

 

· GOING CONCERN

 

The Management understands that the Company has adequate resources to continue its operations. Accordingly, the Company's interim financial statements for the period ended June 30, 2022, have been prepared on a going concern basis.

 

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

2.a) Declaration of conformity
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The consolidated and parent company interim financial statements have been prepared and are being presented in accordance with accounting practices adopted in Brazil based on the provisions of the Brazilian Corporate Law, pronouncements, guidelines and interpretations issued (CPC), approved by CVM, besides the own standards issued by the Brazilian Securities and Exchange Commission (“CVM”) and International Financial Reporting Standards (“IFRS”) issued by the International Accounting Standard Board (IASB) and highlight all the relevant information at the interim financial statements, and only this information, which correspond to those used by the Company's management in its activities. The consolidated interim financial information is identified as "Consolidated" and the parent company's individual interim financial information is identified as "Parent Company"

 

2.b) Basis of presentation

 

The interim financial statements were prepared based on the historical cost and were 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 and CPCs allows an option between cost or another measurement criterion, the cost of acquisition criterion was used.

 

The preparation of these interim financial statements requires Management to use certain accounting estimates, judgments and assumptions that affect the application of Accounting Polices and the amounts reported on the balance sheet date of assets, liabilities, income, and expenses may differ from actual future results. The assumptions used are based on history and other factors considered relevant and are reviewed by the Company’s management.

 

The interim financial information has been prepared and is being presented in accordance with CPC 21 (R1) - “Interim Financial Reporting” and IAS 34 - “Interim Financial Reporting”, consistently with the standards issued by the CVM.

 

This interim financial information does not include all requirements of annual or full financial statements and, accordingly, should be read in conjunction with the Company’s financial statements for the year ended December 31, 2021.The accounting policies, when applicable and relevant, are included in the respective explanatory notes and are consistent with the previous period presented.

 

Therefore, in this interim financial information the following notes are not repeated, either due to redundancy or to the materiality in relation to those already presented in the annual financial statements:

 

Note 10 - Basis of consolidation and investments

Note 12 - Intangible assets

Note 18 - Income tax and social contribution

Note 19 - Installment taxes

Note 20 - Tax, social security, labor, civil, environmental provisions and judicial deposits

Note 30 - Employee benefits

Note 31 - Commitments

 

The consolidated financial statements were approved by Board of Directors on August 15, 2022.

 

2.c) Functional currency and presentation currency

 

The accounting records included in the interim financial statements of each of the Company’s subsidiaries are measured using the currency of the principal of the economic environment in which each subsidiary operates (“the functional currency”). The consolidated and parent company interim financial statements are presented in BRL(reais), which is the Company’s functional and reporting currency.

 

Foreign currency transactions are translated into the functional currency using the exchange rates prevailing on the transaction or valuation dates, in which the items are remeasured. The balances of the asset and liability accounts are translated using the exchange rate on the balance sheet date. As of June 30, 2022, US$1.00 was equivalent to BRL5.2380 (BRL5.5805 on December 31, 2021) and €1.00 was equivalent to BRL5.4842 (BRL6.3210 on December 31, 2021), according to the rates obtained from Central Bank of Brazil website

 

2.d) Statement of value added

 

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Pursuant to Law 11,638/07, the presentation of the statement of value added is required for all publicly held companies. These statements were prepared in accordance with CPC 09 - Statement of Value Added, approved by CVM Resolution 557/08. The IFRS does not require the presentation of this statement and for IFRS purposes is presented as additional information.

The statement of value added should highlight the wealth generated by the Company and demonstrate its distribution.

 

3. CASH AND CASH EQUIVALENTS

 

      Consolidated       Parent Company
  06/30/2022   12/31/2021   06/30/2022   12/31/2021
Cash and banks              
In Brazil  38,999    68,638    16,531    58,951
Abroad 7,169,856    10,007,399     420,782   1,438,851
  7,208,855    10,076,037     437,313   1,497,802
               
Investments              
In Brazil 7,149,314   6,493,832   3,471,467   2,387,463
Abroad   565,525    76,611     524,393  
  7,714,839   6,570,443   3,995,860   2,387,463
   14,923,694    16,646,480   4,433,173   3,885,265

 

Our investments are basically in private and public securities with yields linked to the variation of Interbank Deposit Certificates (CDI) and repo operations backed by National Treasury Notes respectively. The Company invests part of the funds through exclusive investment funds which have been consolidated in these financial statements.

 

Our investments abroad are in private securities in top-rated banks and are remunerated at pre-fixed rates.

 

4. FINANCIAL INVESTMENTS

 

                Consolidated               Parent Company
    Current   Non-current   Current   Non-current
    06/30/2022   12/31/2021   06/30/2022   12/31/2021   06/30/2022   12/31/2021   06/30/2022   12/31/2021
Investments (1)    276,489     261,673   15,707   15,148   48,801    43,398        
Usiminas shares (2)    1,352,357     2,383,059             1,352,357     2,383,059        
Bonds (3)            129,121    132,523            129,121    132,523
     1,628,846     2,644,732    144,828    147,671    1,401,158     2,426,457    129,121    132,523

 

(1) These are restricted financial investments 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.
(2) Part of the shares guarantees a portion of the Company's debt.
(3) Bonds with Fibra bank due in February 2028 (see note 20.a).

 

 

5. TRADE RECEIVABLES

 

      Consolidated       Parent Company
  06/30/2022   12/31/2021   06/30/2022   12/31/2021
Trade receivables              
Third parties              
Domestic market 1,279,390   1,218,179   745,325   751,616
Foreign market 1,581,587   1,472,190   184,587   236,882
  2,860,977   2,690,369   929,912   988,498
Allowance for doubtful debts (220,739)   (236,927)   (122,957)   (133,227)
  2,640,238   2,453,442   806,955   855,271
Related parties (Note 20 a)  104,181   144,396   1,047,826   1,520,241
  2,744,419   2,597,838   1,854,781   2,375,512

 

The composition of the gross balance of accounts receivable from third party customers is shown as follows:

 

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        Consolidated       Parent Company
    06/30/2022   12/31/2021   06/30/2022   12/31/2021
Current    2,354,979    2,255,200    763,359    803,910
Past-due up to 30 days    262,534    164,019   39,577   44,135
Past-due up to 180 days   57,021   67,822   19,903   16,024
Past-due over 180 days    186,443    203,328    107,073    124,429
     2,860,977    2,690,369    929,912    988,498

 

The changes in estimated credit losses are as follows:

        Consolidated       Parent Company
    06/30/2022   12/31/2021   06/30/2022   12/31/2021
Opening balance   (236,927)   (228,348)   (133,227)   (143,735)
(Loss)/Reversal estimated     7,237     1,755     2,689     3,277
Recovery and write-offs of receivables      8,951     6,287     7,581     3,683
Drop down of Cements (note 9.c)                    3,548
Acquisition of Elizabeth          (16,621)          
Closing balance   (220,739)   (236,927)   (122,957)   (133,227)

 

6. INVENTORIES

 

      Consolidated       Parent Company
  06/30/2022   12/31/2021   06/30/2022   12/31/2021
Finished goods 4,118,269   4,457,842   2,208,833   2,570,354
Work in progress 3,357,472   2,710,149   2,188,417   1,695,075
Raw materials 3,152,964   3,638,952   2,422,544   2,799,869
Storeroom supplies  834,159   770,296   451,693   364,872
Advances to suppliers 16,321   121,519   10,984   92,439
Provision for losses   (116,093)     (98,730)     (55,155)     (14,426)
  11,363,092   11,600,028     7,227,316     7,508,183
               
Classified:              
Current 10,564,327   10,943,835   7,227,316   7,508,183
Non-current (1) 798,765   656,193        
  11,363,092   11,600,028     7,227,316     7,508,183

 

1. Long-term iron ore inventories that will be used after the construction of the processing plant, which will produce pellet feed.

 

The changes in estimated losses on inventories are as follows:

 

        Consolidated       Parent Company
    06/30/2022   12/31/2021   06/30/2022   12/31/2021
Opening balance     (98,730)   (109,038)     (14,426)     (35,832)
(Estimated losses) / Reversal of inventories with low turnover and obsolescence     (17,363)   10,308     (40,729)   17,101
Drop down of Cements (note 9.c)                  4,305
Closing balance   (116,093)     (98,730)     (55,155)     (14,426)

 

7. RECOVERABLE TAXES

 

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      Consolidated       Parent Company
  06/30/2022   12/31/2021   06/30/2022   12/31/2021
State Value-Added Tax   1,049,777     1,162,900    783,310    895,880
Brazilian federal contributions (1)   1,019,486     1,352,100    627,943    980,316
Other taxes  151,246    105,375    120,951   70,787
    2,220,509     2,620,375     1,532,204     1,946,983
               
Classified:              
Current   1,362,437     1,655,349    941,881     1,255,697
Non-current  871,175    965,026    590,323    691,286
    2,233,612     2,620,375     1,532,204     1,946,983

 

The accumulated tax credits arise basically from ICMS, PIS and COFINS credits on purchases of raw materials and fixed assets used in production. The realization of these credits normally occurs through offset with debits of these taxes, generated by sales operations and other taxed expenses.

 

(1) In a judgment finalized on September 24, 2021, the Federal Supreme Court, with general repercussion, decided for the unconstitutionality of the levy of IRPJ and CSLL on amounts of interest on arrears at the SELIC rate received because of the repetition of undue tax payment. Although the decision is still pending publication, and the Company's specific lawsuit is still pending judgment, based on its best estimate to date CSN reassessed the judgment on this lawsuit, as required by ICPC22/IFRIC23 and recorded a credit in the amount of BRL229.000 After the final and unappealable decision of the Company's legal action, these amounts will be considered in the tax assessments, in accordance with the Federal Tax Authorities of Brazil.

 

 

8. OTHER CURRENT AND NON-CURRENT ASSETS

 

Other current and non-current assets are as follows:

              Consolidated               Parent Company
  Current Non-current   Current Non-current
  06/30/2022   12/31/2021   06/30/2022   12/31/2021   06/30/2022   12/31/2021   06/30/2022   12/31/2021
Judicial deposits (note 18)         356,865   339,805           238,559   222,481
Prepaid expenses 287,894   225,036   54,994   74,503   247,108   185,968   46,570   62,233
Actuarial asset (note 20 a)         59,111   59,111           47,350   47,350
Derivative financial instruments (note 20) 45,161                            
Trading securities 4,890   12,028           4,793   11,935        
Eletrobrás compulsory loan (note 20) 5,375   4,511   1,307,342   1,143,228   5,375   4,511   1,517,775   1,290,295
Other receivables from related parties (note 20 a) 1,828   1,828   1,199,316   927,077   53,288   47,296   1,425,224   1,151,903
Eletrobrás compulsory loan (1)         892,655   859,607           891,623   858,876
Dividends receivables (note 20 a) 61,924   76,878           150,989   486,506        
Employee debts 48,707   43,542           27,748   25,531        
Receivables by indemnity (2)         543,753   534,896           543,753   534,896
Other (3) 100,123   120,297   456,338   427,528   19,373   28,976   192,765   147,077
  555,902   484,120   4,870,374   4,365,755   508,674   790,723   4,903,619   4,315,111

 

1. This is a certain and due amount, arising from the res judicata favorable decision to the Company, which is irreversible and irrevocable, to apply the STJ's consolidated position on the subject, which culminated in the conviction of Eletrobrás to the payment of the correct interest and monetary adjustment of the Compulsory Loan. The res judicata decision, as well as the certainty about the amounts involved in the liquidation of the sentence (judicial procedure to request the satisfaction of the right), allowed the conclusion that the entry of this value is certain. In addition to this amount already recorded, the Company continues to seek alternatives for the recovery of additional credits and the estimate can reach an amount greater than BRL350 million.

 

2. This is a net, certain and enforceable amount, resulting from the final and unappealable decision of the Court in favor of the Company in 2020, due to losses and damages resulting from the sinking of the voltage in the supply of energy in the periods from January / 1991 to June / 2002.

 

3. Non-current assets refer mainly to the deposit in escrow account made by CSN Cimentos. with Banco Santander, in the amount of US$50 million, equivalent to BRL262 million updated on June 30, 2022, as part of the negotiations for the acquisition of LafargeHolcim.
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9. BASIS OF CONSOLIDATION AND INVESTMENTS

 

The information related to the activities of jointly controlled subsidiaries, joint operations, associates and other investments did not change in relation to what was disclosed in the Company's financial statements as of December 31, 2021. Therefore, Management decided not to repeat them in the accounting information interim of June 30, 2022.

   Number of shares held by CSN in units  Equity interests (%)  
Companies 06/30/2022   12/31/2021   Core business
             
Direct interest in subsidiaries: full consolidation            
CSN Islands VII Corp.  20,001,000 100.00    100.00    Financial transactions 
CSN Inova Ventures  50,000 100.00    100.00    Equity interests and Financial transactions  
CSN Islands XII Corp. 1,540 100.00    100.00    Financial transactions 
CSN Steel S.L.U.  22,042,688 100.00    100.00    Equity interests and Financial transactions  
TdBB S.A (*) 100.00    100.00    Equity interests 
Sepetiba Tecon S.A.   254,015,052 99.99   99.99    Port services 
Minérios Nacional  S.A.   141,719,295 99.99   99.99    Mining and Equity interests 
Companhia Florestal do Brasil  71,171,281 99.99   99.99    Reforestation 
Estanho de Rondônia S.A.   195,454,162 99.99   99.99    Tin Mining  
Companhia Metalúrgica Prada   555,142,354 99.99   99.99    Manufacture of containers and distribution of steel products 
CSN Mineração S.A.   4,374,779,493 79.75   78.24    Mining  
CSN Energia S.A.   43,149 99.99   99.99    Sale of electric power 
FTL - Ferrovia Transnordestina Logística S.A.   510,726,198 92.71   92.71    Railroad logistics 
Nordeste Logística S.A.  99,999 99.99   99.99    Port services 
CSN Inova Ltd.   10,000 100.00    100.00    Advisory and implementation of new development projec 
CBSI - Companhia Brasileira de Serviços de Infraestrutura 4,669,986 99.99   99.99    Equity interests and product sales and iron ore 
CSN Cimentos S.A.   385,663,787 99.99   99.99    Manufacturing and sale of cement  
Berkeley Participações e Empreendimentos S.A. 1,000 100.00    100.00    Electric power generation and equity interests 
CSN Inova Soluções S.A.  999 99.99   99.99    Equity interests 
CSN Participações I  999 99.99   99.99    Equity interests 
Circula Mais Serviços de Intermediação Comercial S.A.(1) 1 0.01   99.99    Commercial intermediation for the purchase and sale of assets and materials in general 
CSN Participações III  999 99.99   99.99    Equity interests 
CSN Participações IV 999 99.99   99.99    Equity interests 
CSN Participações V 999 99.99   99.99    Equity interests 
             
Indirect interest in subsidiaries: full consolidation            
Lusosider Projectos Siderúrgicos S.A.   100.00    100.00    Equity interests and product sales 
Lusosider Aços Planos, S. A.   99.99   99.99    Steel and Equity interests 
CSN Resources S.A.   100.00    100.00    Financial transactions and Equity interests 
Companhia Brasileira de Latas    99.99   99.99    Sale of cans and containers in general and Equity interests 
Companhia de Embalagens Metálicas MMSA    99.99   99.99    Production and sale of cans and related activities 
Companhia de Embalagens Metálicas - MTM    99.99   99.99    Production and sale of cans and related activities 
CSN Steel Holdings 1, S.L.U.    100.00    100.00    Financial transactions, product sales and Equity interests 
CSN Productos Siderúrgicos S.L.    100.00    100.00    Financial transactions, product sales and Equity interests 
Stalhwerk Thüringen GmbH    100.00    100.00    Production and sale of long steel and related activities 
CSN Steel Sections Polska Sp.Z.o.o    100.00    100.00    Financial transactions, product sales and Equity interests 
CSN Mining Holding, S.L     78.24   78.24    Financial transactions, product sales and Equity interests 
CSN Mining GmbH    78.24   78.24    Financial transactions, product sales and Equity interests 
CSN Mining Asia Limited    78.24   78.24    Commercial representation 
Lusosider Ibérica S.A.    100.00    100.00    Steel, commercial and industrial activities and equity interests 
CSN Mining Portugal, Unipessoal Lda.    78.24   78.24    Commercial and representation of products 
Companhia Siderúrgica Nacional, LLC   100.00    100.00    Import and distribution/resale of products 
Elizabeth Cimentos S.A.   99.98   99.98    Manufacturing and sale of cement  
Elizabeth Mineração Ltda (2)       99.96    Mining  
Santa Ana Energética S.A.(3)   100.00      Electric power generation 
Topázio Energética S.A. (3)   100.00      Electric power generation 
Brasil Central Energia Ltda. (3)   100.00      Electric power generation 
Direct interest in joint operations: proportionate consolidation            
Itá Energética S.A.   253,606,846 48.75   48.75    Electric power generation 
Consórcio da Usina Hidrelétrica de Igarapava   17.92   17.92    Electric power consortium 
             
Direct interest in joint ventures: equity method            
MRS Logística S.A. (4)  63,377,198 18.64   18.64    Railroad transportation 
Aceros Del Orinoco S.A. (*)   31.82   31.82    Dormant company 
Transnordestina Logística S.A. (5)  24,670,093 47.26   47.26    Railroad logistics 
Equimac S.A 2,123 50.00   50.00    Rental of commercial and industrial machinery and equipment 
             
Indirect interest in joint ventures: equity method            
MRS Logística S.A. (4)   14.58   14.58    Railroad transportation 
             
Direct interest in associates: equity method            
Arvedi Metalfer do Brasil S.A.   57,224,882 20.00   20.00    Metallurgy and Equity interests 
             
Exclusive funds: full consolidation            
Diplic II  - Private credit balanced mutual fund   100.00    100.00    Investment fund 
Caixa Vértice - Private credit balanced mutual fund   100.00    100.00    Investment fund 
VR1 - Private credit balanced mutual fund   100.00    100.00    Investment fund 

(*) Dormant companies.

 

(1) On March 10, 2022, the change in the company's name from "CSN Participações II S.A." to "Circula Mais Serviços de Intermediação Comercial S.A."; the change in the corporate purpose from "equity investments" to "commercial intermediation for the purchase and sale of assets and materials in general" was approved at the Meeting. On the same date, as a result of share transfers, 99.99% of the shares became held by CSN Inova Soluções S.A. and 0.01% of the shares became held by the Company;

 

(2) On April 30, 2022, Elizabeth Mineração was merged into CSN Cimentos, so that, with the merger of the company and its respective extinction, CSN Cimentos became the legal successor by incorporation of the company, universally and for all legal purposes, with all its rights and obligations;

 

(3) On June 30, 2022, the Company's subsidiaries CSN Cimentos and CSN Energia acquired 100% of the shares of Santa Ana Energética S.A. and Topázio Energética S.A., which, in turn, holds 100% of the shares of Brasil Central Energia Ltda;

 

 

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(4) On June 30, 2022, and December 31, 2021, the Company directly held 63,377,198 shares, of which 26,611,282 were common shares and 36,765,916 preferred shares, and its direct subsidiary CSN Mineração S.A. held 63,338,872 shares, of which 25,802,872 were common shares and 37,536,000 preferred shares, in MRS Logística S.A.

 

(5) On June 30, 2022, and December 31, 2021, the Company held 24,670,093, being 24,168,304 common shares and 501,789 Class B preferred shares, of the company Transnordestina Logística S.A.

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9.a) Investments in joint ventures, joint operations, associates and other investments

 

The number of shares, the balances of assets and liabilities, shareholders’ equity and the profit / (loss) amounts for the period in those investees are as follows:

                06/30/2022               06/30/2021
Companies   Participation in         Participation in    
  Assets   Liabilities   Shareholders’ equity   Profit /(Loss) for the period   Assets   Liabilities   Shareholders’ equity   Profit /(Loss) for the period
               
               
               
Investments under the equity method                                
Subsidiaries                                
CSN Islands VII Corp.   502,021   3,130,245    (2,628,224)    128,251   533,108   3,289,583    (2,756,475)     61,098
CSN Inova Ventures   9,074,740   10,585,194    (1,510,454)     (185,868)     9,121,133   10,445,718    (1,324,585)    (229,121)
CSN Islands XII Corp.   2,307,739   5,554,445    (3,246,706)   72,106     2,569,183   5,887,995    (3,318,812)    (78,526)
CSN Steel S.L.U.   5,017,085     38,938   4,978,147    413,672     5,517,653   367,372   5,150,281     14,392
Sepetiba Tecon S.A.   803,624   490,719   312,905    (90)   812,701   499,706   312,995     3,450
Minérios Nacional  S.A.   524,101   221,024   303,077   6,993   501,969   205,885   296,084   133,488
Valor Justo - Minérios Nacional           2,123,507                2,123,507    
Estanho de Rondônia S.A.   148,325   205,377    (57,052)    (5,533)   125,066   176,554    (51,488)   (9,700)
Companhia Metalúrgica Prada   899,038   651,559   247,479     (18,332)   893,439   627,628   265,811     92,770
CSN Mineração S.A.   24,135,448   13,970,431   10,165,017    1,233,236   26,989,379   16,036,647    10,952,732   3,852,844
CSN Energia S.A.   109,756     35,176     74,580     (17,184)   133,967     42,204   91,763     1,608
FTL - Ferrovia Transnordestina Logística S.A.   508,392   335,673   172,720     (24,752)   489,628   292,156   197,472    (14,026)
Companhia Florestal do Brasil     51,052     3,106     47,946    (1,298)     51,308     2,063   49,245   (1,716)
Nordeste Logística    62    63     (1)     1    64    65     (1)     (4)
CBSI - Companhia Brasileira de Serviços de Infraestrutura 140,318   121,067     19,251    (5,877)   135,544   110,416   25,128     6,703
Goodwill - CBSI - Companhia Brasileira de Serviços de Infraestrutura           15,225                15,225    
CSN Cimentos   7,250,618   3,145,348   4,105,270   46,578     4,676,213   617,457   4,058,756     92,088
    51,472,319   38,488,365   15,122,687    1,641,903   52,550,355   38,601,449    16,087,638   3,925,348
Joint-venture and Joint-operation                                
Itá Energética S.A.   214,478     24,272   190,206   3,655   214,524     27,578   186,946     14,394
MRS Logística S.A.   2,449,769   1,488,914   960,855   57,285     2,524,062   1,620,565   903,497     51,793
Transnordestina Logística S.A.   5,112,794   4,014,432   1,098,362     (15,872)     4,885,994   3,771,760   1,114,234    (19,222)
Fair Value (*) - Transnordestina           271,116                271,116    
Equimac S.A     27,526     11,469     16,057   1,369     20,155     11,727     8,428     135
    7,804,567   5,539,087   2,536,596   46,437     7,644,735   5,431,630   2,484,221     47,100
Associates                                
Arvedi Metalfer do Brasil     44,831     21,236     23,595   2,514     46,739     25,198   21,541     1,438
      44,831     21,236     23,595   2,514     46,739     25,198   21,541     1,438
Classified at fair value through profit or loss (note 13 l)                                
Panatlântica           187,967               190,321    
            187,967               190,321    
Other investments                                
Profits on subsidiaries' inventories            (170,802)    129,494             (300,295)    (19,705)
Investment Property           141,374                142,578    
Others             63,545   459           63,545     7,574
              34,117    129,953            (94,172)    (12,131)
Total investments           17,904,962    1,820,807            18,689,549   3,961,755
                                 
Classification of investments in the balance sheet                              
Investments in assets           25,206,024                25,998,331    
Investments with negative equity            (7,442,436)                (7,451,360)    
Investment Property           141,374                142,578    
            17,904,962                18,689,549    

 

(*) As of June 30, 2022, and December 31, 2021, the net balance of BRL271,116 refers to the Fair Value generated by the loss of control of Transnordestina Logística SA in the amount of BRL659,105 and impairment of BRL387,989.

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9.b) Changes in investments in subsidiaries, jointly controlled companies, joint operations, associates, and other investments
      Consolidated       Parent Company
  06/30/2022   12/31/2021   06/30/2022   12/31/2021
       
Opening balance of investments (assets) 3,849,647   3,535,906   25,998,331   19,401,494
Opening balance of loss provisions (liabilities)       (7,451,360)     (5,942,863)
Total 3,849,647   3,535,906    18,546,971    13,458,631
Capital increase and (Decrease)/acquisition of shares (1)   366,739    58,178   5,079   3,894,624
Dividends (2) (26)   (61,898)     (2,010,348)     (3,162,117)
Comprehensive income (3) 345   453    (634,228)    (519,638)
Update of shares measured at fair value through profit or loss (Note 13 II)   (2,354)     109,254     (2,354)     109,254
Sales of equity interest (note 9.c) (4)        (692,115)
Net gain due to increased capital and issued new shares in n investments (note 9.c) (5)         822,093
Equity in results of affiliated companies (6)   101,957     219,508   1,820,807   4,629,144
Amortization of fair value - investment MRS   (5,873)   (11,747)    
Others 891     (7)    37,661   7,095
Closing balance of investments (assets) 4,311,326   3,849,647    25,206,024    25,998,331
Balance of provision for investments with negative equity (liabilities)       (7,442,436)     (7,451,360)
Total 4,311,326   3,849,647    17,763,588    18,546,971

 

(1) Consolidated: Acquisition of shares in June 2022 of the companies Topázio Energética S.A., Santa Ana Energética S.A. and indirect acquisition of Brasil Central Energia Ltda. In 2021, through CSN Inova Ventures, strategic investments were made in startups, as follows: 2D Materials, H2Pro Ltda., 1S1 Energy, Traive INC., OICO Holdings and Clarke Software, with a total amount invested of US$ 4,950, corresponding to BRL27,040.

 

Parent Company: In 2022, the amount refers to the capital increase carried out in the company Equimac S.A.. In 2021, refers mainly to the capital increase in the subsidiary CSN Cimentos, in the amount of BRL2,956,094, resulting from the payment by CSN of net assets composed of certain assets and liabilities (as described below note 9.c).

 

(2) Parent Company: refers mainly to dividends distributed by CSN Mineração, totaling BRL2,009,940 in 2021 and BRL2,984,155 in 2022.

 

(3) Refers to the conversion into presentation currency of investments abroad whose functional currency is not the Real, actuarial gain/(loss) and reflection and hedge of investments reflecting investments accounted for under the equity method.

 

(4) In 2021, refers to the disposal of part of the equity interest of the company CSN Mineração at the cost of disposal of shares (see note 9.c).

 

(5) In 2021, refers to gain on the change in the percentage of ownership interest in the subsidiary CSN Mineração, after the issue of shares.

 

(6) The reconciliation of equity in earnings of companies with shared control classified as joint ventures and associates and the amount presented in the income statement is presented below and results from the elimination of the results of CSN's transactions with these companies:

 

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      Consolidated
  06/30/2022   06/30/2021
   
Equity in results of affiliated companies      
MRS Logística S.A. 114,541   103,560
Transnordestina Logística S.A.  (15,872)    (19,222)
Arvedi Metalfer do Brasil S.A.  2,514    1,438
Equimac S.A.  1,369    135
Others (595)    2,089
  101,957     88,000
Eliminations      
To cost of sales   (33,968)    (28,852)
To taxes   11,549    9,810
Others      
Amortizated at fair value - Investment in MRS (5,873)   (5,873)
Others      5,481
Equity in results    73,665     68,566

 

9.c) Main events occurred in the subsidiaries in 2021 e 2022

 

·      CSN MINERAÇÃO

 

·      IPO of CSN MINERAÇÃO

 

Headquartered in Congonhas, in the State of Minas Gerais, CSN Mineração SA has as its main objective the production, purchase and sale of iron ore, and has the commercialization of products in the foreign market as its focal point. As of November 30, 2015, CSN Mineração SA started to centralize CSN’s mining operations, including the establishments of the Casa de Pedra mine, the TECAR port and an 18.63% stake in MRS. CSN Mineração publicly held corporation and its shares are listed on the São Paulo Stock Exchange, B3 - Brasil, Bolsa, Balcão.

 

The interest held by CSN in this subsidiary is 79.75% on June 30, 2022 and 78.24% on December 31, 2021.

 

Below as the main transactions occurred in the subsidiary is 2021:

 

a) Initial Public Offering (IPO)

 

On February 17, 2021, the subsidiary CSN Mineração concluded its initial public offering at B3 – Brasil, Bolsa, Balcão. The final prospectus of the public offering consisted of: (i) primary distribution of 161,189,078 shares (“Primary Offering”); and (ii) secondary distribution of 422,961,066 shares, being initially 372,749,743 shares (“Secondary Offering”), increased by 50,211,323 supplementary shares held by CSN (“Supplementary Shares”).

 

The price per share was fixed at BRL8.50 after the collection of intention of investments collected from institutional buyers in Brasil and abroad.

 

Upon conclusion of the offering, the Company’s interest in the subsidiary CSN Mineração changed from 87.52% to 78.24%.

 

i. Primary Distribution of Shares

 

Upon the primary distribution, CSN Mineração issued 161,189,078 shares (“Primary Offering”) and capitalized the total amount of BRL1,370,107 (BRL1,347,862 net of transaction costs).

 

The issuance of 161,189,078 shares diluted the Company’s interest in the capital of CSN Mineração and, accordingly, the Company recognized in other comprehensive income a gain from the change of ownership percentage.

 

The impact of the transaction is presented below:

 

56  

(CONVENIENCE TRANSLATION INTO ENGLISH FROM THE ORIGINAL PREVIOUSLY ISSUED IN PORTUGUESE)

 
   
Quarterly Financial Information – June 30, 2022 – CIA SIDERURGICA NACIONAL Version: 1

 

Gain on participation in the capital increase 1,060,530
Loss due to dilution of participation with issue of new shares   (231,044)
Equity adjustment by dilution of share percentage   (7,393)
Net gain from the transaction 822,093

 

ii. Secondary Distribution of Shares

 

Upon the secondary distribution of shares, the Companhia Siderúrgica Nacional sold 327,593,584 common shares and, additionally, in March 2021 sold supplementary 50,211,323 common shares, totaling 377,804,907 or 9.3% of shares previously held, in the total amount of BRL3,211,342 (BRL3,164,612 net of transaction costs). The gain for the sale was recognized as Other Operating Income.

 

The main impacts of the transaction are presented as follows:

 

Equity in the transaction    9,947,525
Number of share before initial public offering    5,430,057,060
Cost per share    R$ 1.83
     
Number of shares sold by CSN    377,804,907
Price per share    R$ 8.50
     
(+) Net cash generated in the transaction     3,211,342
(-) Transaction cost      (46,730)
(=) net cash reveivable (a)    3,164,612
(-) Cost of shares  (b)   (692,115)
(=) Net gain from the transaction (a)+(b)    2,472,497

 

b) Share repurchase programs of subsidiary CSN Mineração

 

On March 24, 2021, November 3, 2021, and May 18,2022, the Board of Directors of CSN Mineração approved the Share Repurchase Plans, to remain in treasury and subsequent disposal or cancellation, pursuant to CVM Instruction 567/2015, described below.

 

On May 18, 2022, the cancellation of 105,907,300 nominative common shares without a nominal value, repurchased and held in treasury, was approved at a Board of Directors' Meeting. On June 30, 2022, the subsidiary CSN Mineração had no treasury shares.

 

Program   Board’s Authorization   Authorized quantity   Program period   Average buyback price   Minimum and maximum buyback price   Number bought back   Share cancelation   Treasury balance 
   03/24/2021     58,415,015    from 3/25/2021 to 9/24/2021     R$6.1451     R$5.5825 and R$6.7176     52,940,500         52,940,500
   11/03/2021     53,000,000    from 11/04/2021 to 9/24/2022     R$6.1644     R$5.0392 and R$6.1208     52,466,800        105,907,300
     05/18/2022           Not applicable     Not applicable