SID Companhia Siderurgica Nacional

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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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

 

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

 

 

 

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)

 

 

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

5

(CONVENIENCE TRANSLATION INTO ENGLISH FROM THE ORIGINAL PREVIOUSLY ISSUED IN PORTUGUESE)
Quarterly Financial Information – June 30, 2022 – CIA SIDERURGICA NACIONAL	Version: 1

 

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

 

 

 

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)

 

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

 

 

 

 

 

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

 

 

 

 

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

 

 

 

 

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

 

 

 

 

11

(CONVENIENCE TRANSLATION INTO ENGLISH FROM THE ORIGINAL PREVIOUSLY ISSUED IN PORTUGUESE)
Quarterly Financial Information – June 30, 2022 – CIA SIDERURGICA NACIONAL	Version: 1

 

 

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

 

 

 

 

 

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

 

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

14

(CONVENIENCE TRANSLATION INTO ENGLISH FROM THE ORIGINAL PREVIOUSLY ISSUED IN PORTUGUESE)
Quarterly Financial Information – June 30, 2022 – CIA SIDERURGICA NACIONAL	Version: 1

 

 

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

 

15

(CONVENIENCE TRANSLATION INTO ENGLISH FROM THE ORIGINAL PREVIOUSLY ISSUED IN PORTUGUESE)
Quarterly Financial Information – June 30, 2022 – CIA SIDERURGICA NACIONAL	Version: 1

 

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

 

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

 

 

 

 

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

 

 

 

 

 

 

 

 

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

 

 

 

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

 

 

 

  

 

FINANCIAL RESULTS 2Q22

 

August 15, 2022

 

  

 

 

 

 

 

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.

 

 

 

 

 

 

 

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.

 

 

 

 

 

·

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).

 

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.

 

 

 

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 2^nd 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.

 

 

 

 

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:

 

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.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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.

 

 

 

 

 

 

 

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

 

 

·

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).

 

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.

 

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.

 

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.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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:

 

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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

1º

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

2º

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

105,907,300

3º

05/18/2022

106,000,000

from 05/19/2022 to 5/18/2023

105,407,300

105,907,300

 

·      CSN Cimentos S.A

 

i. Drop down - Cement

 

The cement activities had been carried out as a business unit of CSN and, recently, the Company chose to segregate these activities to its subsidiary CSN Cimentos. This segregation was approved at an Extraordinary General Meeting of CSN Cimentos, held on January 31, 2021, which, among other matters, approved a capital increase in CSN Cimentos in the amount of BRL2,956,094, with the issuance of 2,956,094,491 new common shares, which were fully subscribed and paid up on the same date by the Company, upon checking of the net assets, liabilities, goods, rights and obligations related to CSN's cement segment, as described in detail in the Appraisal Report, also approved at the aforementioned meeting

 

Find below the breakdown of the net assets contributed:

 

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		12/31/2020		01/31/2021
Assets		Appraisal reports		Close balance
Trade receivables		37,171		54,684
Inventories		134,309		164,460
Other assets		29,186		30,228
Property, plant and equipment		3,151,349		3,129,161
Intangíible assets		8,086		8,086
Liabilities
Trade payables		(253,186)		(278,538)
Other payables current		(42,074)		(34,301)
Lease liabilities		(42,257)		(24,430)
Other provisions		(66,490)		(64,125)
Net assets		2,956,094		2,985,225

 

ii. Acquisition of control of the companies Elizabeth Cimentos and Elizabeth Mineração.

 

On August 31, 2021, CSN Cimentos acquired 99.97% of the total capital stock of Elizabeth Mineração and 99.99% of the shares of Elizabeth Cimentos, with 88.746% of direct equity interest and 11.254% of indirect equity interest (through Elizabeth Mineração). The assets acquired are located in the northeast region of Brazil. Upon completion of the transaction, CSN Cimentos expects relevant operational, logistical, management and commercial synergies, a better product mix and expansion of its customers base.

 

a)

Determination of the purchase price

 

In accordance with CPC15 (R1) / IFRS3, the purchase price is determined by the sum of the assets acquired, liabilities assumed, equity interests issued, non-controlling interest and the fair value of any interest held prior to the transaction. The table below summarizes the price considered for accounting purposes:

 

Item		Comment		Elizabeth Cimentos		Elizabeth Mineração		Reference
Assets transferred		A payment in the amount of R$201 milion is being carried out in the transaction.		77,768		123,947		(i)
Assets transferred		Refers to financial adjustment of working capital and debt.		(3,914)		(5,116)		(i)
Equity interests issued		Shares issued by Elizabeth Cimentos and acquired by CSN Cimentos.		526,037				(ii)
Purchase price considered for the business combination				599,891		118,831

 

(i) The transaction included payments by CSN Cimentos of BRL77,768 and BRL123,947 on August 31, 2021, for each Elizabeth entity, and an adjustment receivable in the amount of BRL3,914 and BRL5,1116 in December 2021 related to working capital adjustment provided for in the sale agreement.

 

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(ii) In August 2021 the Elizabeth Cimentos performed a primary issuance of 2,382,758,512 new common shares, nominatives and without nominal value, which were fully acquired by CSN Cimentos.

 

b)

Goodwill on acquisition of control of Elizabeth Cimentos and Elizabeth Mineração

 

In accordance with item 32 of CPC15(R1) / IFRS3, the acquirer must recognize goodwill based on expected future profitability on the acquisition date, measured by the amount the purchase price exceeds the fair value of the assets acquired and liabilities assumed (purchase price allocation). The acquisition of Elizabeth Cimentos generated goodwill for expected future profitability of BRL83,266, as shown in the table below.

 

Item		Reference		Elizabeth Cimentos		Elizabeth Mineração
Purchase price considered		item (i) and (ii)		599,891		118,831
Fair value of the assets and liabilities acquired				516,625		118,831
Goodwill for future profitability expected				83,266		-

 

The goodwill for expected future earnings is recorded under intangible assets and, since it does not have a determinable useful life, it is not amortized in accordance with CPC04(R1)/IAS38. As from the year 2022, CSN Cimentos will perform the recoverability test for this asset in accordance with the requirements of CPC01(R1)/IAS36.

 

In the acquisition of Elizabeth Mineração, the price paid was fully allocated to the assets acquired, with no goodwill for future profitability generated.

 

(i)

Fair value of assets acquired, and liabilities assumed

 

The following table shows the fair value allocation of the assets acquired and liabilities assumed on August 31, 2021, considering the direct and indirect interests, calculated based on independent appraisers' reports.

 

						Elizabeth Cimentos						Elizabeth Mineração
		Carrying amounts		Fair value adjustments		Total fair value		Carrying amounts		Fair value adjustments		Total fair value
Cash and cash equivalents		52,570				52,570		2,197				2,197
Trade receivables		27,571				27,571		1,027				1,027
Receivables from related parties		96,374				96,374		9,035				9,035
Inventories		44,157				44,157		1,017				1,017
Recoverable taxes		18,616				18,616		931				931
Short-term investments		14,689				14,689
Other assets		17,734				17,734		673				673
Investment								40,653		24,845		65,498
Property, plant and equipment		373,574		161,367		534,941		15,092		77,089		92,181
Intangíible assets		798		59,456		60,254		500		269,385		269,885
Total assets acquired		646,083		220,823		866,906		71,125		371,319		442,444
Borrowings and financing		198,778				198,778		182,402				182,402
Trade payables		22,735				22,735		446				446
Taxes payable		19,202				19,202		37,158				37,158
Debits with related parties								96,350				96,350
Other payables		44,052				44,052		7,257				7,257
Total liabilities assumed		284,767				284,767		323,613				323,613
Net equity acquired		361,316		220,823		582,139		(252,488)		371,319		118,831
Indirect investiment		(40,663)		(24,851)		(65,514)
Net equity acquired		320,653		195,972		516,625		(252,488)		371,319		118,831

 

The fair value allocation resulted in a total gain of BRL567,297, distributed among Elizabeth Cimentos and Elizabeth Mineração's main assets. The following table shows the composition of the allocated amounts and a summary of its measurement methodology.

 

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Assets acquired		Valuation method		Carrying amounts		Fair value adjustment		Total fair value
Property, plant and equipment		Valued using the "MARKET APPROACH" method, where the fair value of the asset is estimated by comparing it with similar or comparable assets that have been sold or listed for sale in the primary or secondary market.		388,666		238,456		627,122
Mining rights		Evaluated by the MPEEM method that measures the present value of future income to be generated during the remaining useful life of a given asset. Using the analysis of the company's projected results as a reference, the pre-tax cash flows directly attributable to the asset are calculated, as of the base date stipulated in the evaluation.		500		269,385		269,885
Licenses		Valued using the WITH / WITHOUT method, which estimates the intangible value by the difference between discounted cash flow models with and without the asset.		798		59,456		60,254
				389,964		567,297		957,261

 

The subsidiary CSN Cimentos has hired an independent appraiser to prepare an appraisal report of the tangible and intangible assets and allocation of the excess price paid. As provided for in item 45 of CPC15(R1) / IFRS3, the Company has up to 12 months to adjust the measurement of amounts, due to unknown events at the acquisition date. After the conclusion of the appraisal report, the Company reclassified the amount of BRL27,667 from goodwill for future profitability to goodwill allocated to licenses and mining rights.

 

iii.Acquisition of Santa Ana Energética and Topázio Energética

On June 30, 2022, the Company's subsidiaries CSN Cimentos and CSN Energia acquired 100% of the shares of Santa Ana Energética S.A. ("Santa Ana"), and of Topázio Energética S.A. ("Topázio"), which, in turn, holds 100% of the shares of Brasil Central Energia Ltda. ("BCE"), a subsidiary of Topázio, which holds the concession to operate the Sacre II Small Hydroelectric Power Plant ("PCH Sacre" and, together with PCH Santa Ana, the "PCHs"), provided for in the Agreement for the Purchase and Sale of Shares and Other Covenants entered into on April 8, 2022.

The transaction value included a payment by CSN Cimentos on June 30, 2022, in the amount of BRL466,153, initially classified under the investment account and which will be used as a starting point for the purchase price identification process. The acquirer has hired an independent company to prepare an appraisal report of the tangible and intangible assets and allocation of the excess price paid, to be concluded in the third quarter of 2022.

 

As provided for in item 45 of CPC 15 (R1) / IFRS 3, the Company has up to 12 months to adjust in the measurement of amounts due to not considered events.

 

9.d)

Joint ventures and joint operations financial information

 

The balance sheet and income statement balances of the companies whose control is shared are shown below and refer to 100% of the companies’ results:

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								06/30/2022								12/31/2021
		Joint-Venture						Joint-Operation		Joint-Venture						Joint-Operation
Equity interest (%)		MRS Logística		Transnordestina Logística		Equimac S.A.		Itá Energética		MRS Logística		Transnordestina Logística		Equimac S.A.		Itá Energética
		37.27%		47.26%		50.00%		48.75%		37.27%		47.26%		50.00%		48.75%
Balance sheet
Current Assets
Cash and cash equivalents		1,226,488		1,464		11,141		60,295		1,836,612		1,259		2,077		42,500
Advances to suppliers		21,632		10,081		433		1,263		44,011		11,486		407		1,254
Other current assets		1,040,984		54,680		8,671		18,243		1,065,913		55,334		8,862		18,453
Total current assets		2,289,104		66,225		20,245		79,801		2,946,536		68,079		11,346		62,207
Non-current Assets
Other non-current assets		946,186		218,232		2,060		20,003		980,861		124,776				19,578
Investments, PP&E and intangible assets		9,907,671		10,533,706		32,746		340,151		9,614,144		10,145,422		28,964		358,265
Total non-current assets		10,853,857		10,751,938		34,806		360,154		10,595,005		10,270,198		28,964		377,843
Total Assets		13,142,961		10,818,163		55,051		439,955		13,541,541		10,338,277		40,310		440,050
Current Liabilities
Borrowings and financing		868,251		201,870		8,114				767,992		228,769		4,041
Lease liabilities		399,094				599				383,323
Other current liabilities		1,311,813		140,119		3,548		30,987		1,513,799		157,946		4,063		40,473
Total current liabilities		2,579,158		341,989		12,261		30,987		2,665,114		386,715		8,104		40,473
Non-current Liabilities
Borrowings and financing		3,123,653		6,952,711		14,402				3,551,278		6,665,700		15,351
Lease liabilities		1,528,394				284				1,718,366
Other non-current liabilities		756,786		1,199,439		1,353		18,802		759,538		928,254				16,098
Total non-current liabilities		5,408,833		8,152,150		16,039		18,802		6,029,182		7,593,954		15,351		16,098
Shareholders’ equity		5,154,970		2,324,024		26,751		390,166		4,847,245		2,357,608		16,855		383,479
Total liabilities and shareholders’ equity		13,142,961		10,818,163		55,051		439,955		13,541,541		10,338,277		40,310		440,050

 

								01/01/2022 a 06/30/2022								01/01/2021 a 06/30/2021
		Joint-Venture						Joint-Operation				Joint-Venture				Joint-Operation
Equity interest (%)		MRS Logística		Transnordestina Logística		Equimac S.A.		Itá Energética		MRS Logística		Transnordestina Logística		Equimac S.A.		Itá Energética
		37.27%		47.26%		50.00%		48.75%		37.27%		47.26%		50.00%		48.75%
Statements of Income
Net revenue		2,543,969		340		16,639		94,428		2,128,326		138		4,116		116,169
Cost of sales and services		(1,673,615)				(10,417)		(46,173)		(1,379,667)				(3,241)		(38,000)
Gross profit		870,354		340		6,222		48,255		748,659		138		875		78,169
Operating (expenses) income		(69,477)		(22,861)		(1,587)		(36,376)		(133,500)		(31,620)		(612)		(32,504)
Financial income (expenses), net		(333,712)		(11,063)		(1,308)		(139)		(194,988)		(9,189)		7		(920)
Income before income tax and social contribution		467,165		(33,584)		3,327		11,740		420,171		(40,671)		270		44,745
Current and deferred income tax and social contribution		(159,831)				(590)		(4,242)		(142,301)						(15,220)
Profit / (loss) for the period		307,334		(33,584)		2,737		7,498		277,870		(40,671)		270		29,525

 

9.e)

TRANSNORDESTINA LOGÍSTICA SA (“TLSA”)

 

It is in the pre-operational phase and should remain so until the completion of Mesh II. The approved schedule, which provided for the completion of the work for January 2017, is currently under discussion with the responsible bodies. Its Management understands that new deadlines for the completion of the project will not substantially negatively imply the expected return on investment.

 

Management relies on resources from its shareholders and third parties to complete the work, which it expects to be available, based on previously concluded agreements and recent discussions between the parties involved. After evaluating this matter, Management concluded that the use of the project’s business continuity accounting basis in the preparation of the interim financial statements was considered appropriate.

 

9.f)

Intention and/or acquire companies

 

·

LafargeHolcim

 

On September 9, 2021, CSN Cimentos S.A., a non-publicly held subsidiary of CSN, and which concentrates the group's cement manufacturing and sales operations ("CSN Cimentos") entered into a stock purchase agreement through which it intends to acquire 100% (one hundred percent) of the shares issued by LafargeHolcim, with the Company as guarantor of its obligations. The business was valued at a base value of US$1.025 billion, subject to price adjustment and the amount held in escrow, in addition to the other terms and conditions provided for in the respective contract, including approval by CADE. On that same date, the Company deposited in an escrow account the amount of US$50 million as part of the negotiations for the acquisition.

 

The acquisition of the above-mentioned company will add a production capacity to CSN Cimentos of 10.3 million tons of cement per year ("MTPA") through cement plants strategically located in the Southeast, Northeast and Midwest regions, in addition to substantial reserves of high-quality limestone and concrete and aggregates units. Significant operational, logistical, management and commercial synergies are expected, with room for evolution in the product mix and expansion of the customer base.

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·

Acquisition of Metalgráfica

 

On November 23, 2021, the Company, as investor, the controlling shareholders of Metalgráfica Iguaçu S.A. ("Metalgráfica"), and Metalgráfica, as consenting intervening party, entered into the Investment Agreement and Other Covenants, whereby the parties agreed to combine the operations of both companies by incorporating all the shares issued by Metalgráfica, in accordance with the exchange ratio to be defined pursuant to the Brazilian Corporation Law and the CVM regulations. This operation will increase the competitiveness of the CSN Group's metal packaging business and strengthen our national chain, mainly in relation to substitute packaging. On April 25, 2022, CADE approved the acquisition of Metalgráfica Iguaçu.

 

 

9.g)

Investment properties:

 

The balance of investment properties is shown below:

 

						Consolidated						Parent Company
		Land		Buildings		Total		Land		Buildings		Total
Balance at December 31, 2021		101,542		60,639		162,181		94,286		48,292		142,578
Cost		101,542		87,977		189,519		94,286		74,392		168,678
Accumulated depreciation				(27,338)		(27,338)				(26,100)		(26,100)
Balance at December 31, 2021		101,542		60,639		162,181		94,286		48,292		142,578
Depreciation (note 24)				(1,537)		(1,537)				(1,204)		(1,204)
Balance at June 30, 2022		101,542		59,102		160,644		94,286		47,088		141,374
Cost		101,542		87,977		189,519		94,286		74,392		168,678
Accumulated depreciation				(28,875)		(28,875)				(27,304)		(27,304)
Balance at June 30, 2022		101,542		59,102		160,644		94,286		47,088		141,374

 

The Company's management estimate of the fair value of the investment properties was realized for December 31, 2021.

The fair value of investment property in the consolidated balance of June 30, 2022, and December 31, 2021, is BRL2,055,976 and in the parent company BRL1,992,956.

 

The average estimated useful lives for the period are as follows (in years):

 

			Consolidated				Parent Company
	06/30/2022		12/31/2021		06/30/2022		12/31/2021
Buildings	27		27		28		28

 

10.

PROPERTY, PLANT AND EQUIPMENT

 

															Consolidated
	Land		Buildings and Infrastructure		Machinery, equipment and facilities		Furniture and fixtures		Construction in progress		Right of use (i)		Other (*)		Total
Balance at December 31, 2021	349,495		3,019,934		13,800,888		29,037		3,643,682		581,824		106,274		21,531,134
Cost	349,495		5,358,388		29,348,048		190,847		3,643,682		754,606		445,870		40,090,936
Accumulated depreciation			(2,338,454)		(15,547,160)		(161,810)				(172,782)		(339,596)		(18,559,802)
Balance at December 31, 2021	349,495		3,019,934		13,800,888		29,037		3,643,682		581,824		106,274		21,531,134
Effect of foreign exchange differences	(13,712)		(22,782)		(73,065)		(875)		(7,971)		(1,030)		(284)		(119,719)
Acquisitions			14,923		170,330		2,320		1,315,887		19,948		34,458		1,557,866
Capitalized interest (1) (notes 26 and 29)									62,863						62,863
Write-offs (note 25)			428		(6,749)								(291)		(6,612)
Depreciation (note 24)			(93,501)		(1,109,252)		(2,953)				(40,668)		(15,853)		(1,262,227)
Transfers to other asset categories	3,829		40,996		937,146		131		(985,244)				3,142
Transfers to intangible assets									(2,358)						(2,358)
Right of use - Remesurement											31,666				31,666
Acquisition of Topázio Energética, Santa Ana and Brasil Central (note 9.c)	544		76,042		21,870				909		233				99,598
Others					5,149						(189)				4,960
Balance at June 30, 2022	340,156		3,036,040		13,746,317		27,660		4,027,768		591,784		127,446		21,897,171
Cost	340,156		5,805,354		30,013,038		188,921		4,027,768		804,308		468,246		41,647,791
Accumulated depreciation			(2,769,314)		(16,266,721)		(161,261)				(212,524)		(340,800)		(19,750,620)
Balance at June 30, 2022	340,156		3,036,040		13,746,317		27,660		4,027,768		591,784		127,446		21,897,171

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																Parent Company
		Land		Buildings and Infrastructure		Machinery, equipment and facilities		Furniture and fixtures		Construction in progress		Right of use (i)		Other (*)		Total
Balance at December 31, 2021		25,618		281,942		6,416,890		9,089		740,688		15,996		18,619		7,508,842
Cost		25,618		497,690		14,085,249		97,544		740,688		35,633		127,281		15,609,703
Accumulated depreciation				(215,748)		(7,668,359)		(88,455)				(19,637)		(108,662)		(8,100,861)
Balance at December 31, 2021		25,618		281,942		6,416,890		9,089		740,688		15,996		18,619		7,508,842
Acquisitions						106,932		456		525,143		2,300		1,020		635,851
Capitalized interest (1) (notes 26 and 29)										17,527						17,527
Write-offs (note 25)						(282)										(282)
Depreciation (note 24)				(9,935)		(492,572)		(883)				(3,457)		(2,943)		(509,790)
Transfers to other asset categories				1,973		427,531		1		(430,568)				1,063		-
Transfers to intangible assets										(246)						(246)
Right of use - Remesurement												201				201
Others						(33)										(33)
Balance at June 30, 2022		25,618		273,980		6,458,466		8,663		852,544		15,040		17,759		7,652,070
Cost		25,618		497,799		14,622,089		98,000		852,544		38,134		129,314		16,263,498
Accumulated depreciation				(223,819)		(8,163,623)		(89,337)				(23,094)		(111,555)		(8,611,428)
Balance at June 30, 2022		25,618		273,980		6,458,466		8,663		852,544		15,040		17,759		7,652,070

(*) Refer substantially to: i) in the consolidated table: assets for railway use, such as yards, rails, mines, and sleepers; and ii) in the parent company's table: improvements to third-party assets, vehicles and hardware.

 

(1)

The cost of capitalized interest is calculated, basically, for the projects in the Steel and Mining which refer, substantially, to:

- CSN: Technological updates and acquisition of new equipment for maintenance of the production capacity of UPV Plant (RJ);

- CSN Mineração: Expansion of Casa de Pedra (MG) and TECAR (RJ).

 

(i)

Right of use

 

Below the movements of the right of use:

 

									Consolidated
	Land		Buildings and Infrastructure		Machinery, equipment and facilities		Others		Total
Balance at December 31, 2021	439,285		68,145		53,759		20,635		581,824
Cost	500,826		94,196		99,103		60,483		754,608
Accumulated depreciation	(61,541)		(26,051)		(45,344)		(39,848)		(172,784)
Balance at December 31, 2021	439,285		68,145		53,759		20,635		581,824
Effect of foreign exchange differences			(27)		(872)		(131)		(1,030)
Addition					3,497		16,451		19,948
Acquisition of Topázio Energética, Santa Ana and Brasil Central (note 9.c)					233				233
Remesurement	19,508		173		9,850		2,135		31,666
Depreciation	(12,025)		(5,905)		(16,876)		(5,862)		(40,668)
Transfers to other asset categories					127		(127)
Others			(189)						(189)
Balance at June 30, 2022	446,768		62,197		49,718		33,101		591,784
Cost	520,334		94,350		111,034		78,593		804,311
Accumulated depreciation	(73,566)		(32,153)		(61,316)		(45,492)		(212,527)
Balance at June 30, 2022	446,768		62,197		49,718		33,101		591,784

 

								Parent Company
		Land		Machinery, equipment and facilities		Others		Total
Balance at December 31, 2021		15,543		40		413		15,996
Cost		33,307		137		2,189		35,633
Accumulated depreciation		(17,764)		(97)		(1,776)		(19,637)
Balance at December 31, 2021		15,543		40		413		15,996
Addition				2,300				2,300
Remesurement		201						201
Depreciation		(3,061)		(272)		(124)		(3,457)
Balance at June 30, 2022		12,683		2,068		289		15,040
Cost		33,508		2,437		2,189		38,134
Accumulated depreciation		(20,825)		(369)		(1,900)		(23,094)
Balance at June 30, 2022		12,683		2,068		289		15,040

 

 

 

The average estimated useful lives are as follows (in years):

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			Consolidated				Parent Company
	06/30/2022		12/31/2021		06/30/2022		12/31/2021
Buildings and Infrastructure	34		34		32		31
Machinery, equipment and facilities	18		18		20		21
Furniture and fixtures	12		12		13		13
Others	9		10		12		12

 

 

11.

INTANGIBLE ASSETS

 

													Consolidated				Parent Company
	Goodwill		Customer relationships		Software		Trademarks and patents		Rights and licenses (*)		Others		Total		Software		Total
Balance at December 31, 2021	3,729,236		207,912		66,440		213,609		3,437,883		1,970		7,657,050		59,729		59,729
Cost	3,969,643		816,206		221,712		213,609		3,484,778		1,970		8,707,918		167,771		167,771
Accumulated amortization	(131,077)		(608,294)		(155,272)				(46,895)				(941,538)		(108,042)		(108,042)
Adjustment for accumulated recoverable value	(109,330)												(109,330)
Balance at December 31, 2021	3,729,236		207,912		66,440		213,609		3,437,883		1,970		7,657,050		59,729		59,729
Effect of foreign exchange differences			(27,127)		(567)		(28,278)				(260)		(56,232)
Acquisitions and expenditures					242				1,246				1,488
Transfer of property, plant and equipment					1,876				482				2,358		246		246
Amortization (note 24)			(29,650)		(7,167)				(19,469)				(56,286)		(5,627)		(5,627)
Balance at June 30, 2022	3,729,236		151,135		60,824		185,331		3,420,142		1,710		7,548,378		54,348		54,348
Cost	3,969,643		706,921		220,268		185,331		3,487,969		1,710		8,571,842		168,016		168,016
Accumulated amortization	(131,077)		(555,786)		(159,444)				(67,827)				(914,134)		(113,668)		(113,668)
Adjustment for accumulated recoverable value	(109,330)												(109,330)
Balance at June 30, 2022	3,729,236		151,135		60,824		185,331		3,420,142		1,710		7,548,378		54,348		54,348

(*) Composed mainly of mining rights. Amortization is based on production volume.

 

The average useful life by nature is as follows (in years):

 

			Consolidated				Parent Company
	06/30/2022		12/31/2021		06/30/2022		12/31/2021
Software	9		9		10		9
Customer relationships	13		13

 

11.a)

Goodwill impairment test

 

Goodwill arising from expected future profitability of acquired companies and intangible assets with indefinite useful lives (brands) were allocated to CSN’s cash generating units (CGUs) which represent the lowest level of assets or group of assets of the Company. According to CPC 01 (R1) / IAS36, when a CGU has an intangible asset with no defined useful life allocated, the Company must perform an impairment test.

 

The assumptions used for impairment assessment in December 2021 remain in place and there is no event that would justify recording impairment on June 30, 2022.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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12.

BORROWINGS AND FINANCING

 

The balances of loans, financing and debentures that are recorded at amortized cost are as follows:

 

									Consolidated							Parent Company
			Current Liabilities				Non-current Liabilities				Current Liabilities			Non-current Liabilities
			06/30/2022		12/31/2021		06/30/2022		12/31/2021		06/30/2022		12/31/2021	06/30/2022		12/31/2021
Foreign Debt
Floating Rates:
Prepayment			1,165,092		1,626,521		6,135,427		3,875,713		676,741		1,557,329	1,641,327		1,099,080
Fixed Rates:
Bonds, Perpetual bonds, Facility, CCE and ACC			637,571		678,239		16,078,178		15,380,392
Intercompany											461,830		61,018	7,997,372		8,218,041
Fixed interest in EUR
Intercompany											20,763		600	1,438,131		1,312,209
Facility			241,317		550,460		38,389		79,013
			2,043,980		2,855,220		22,251,994		19,335,118		1,159,334		1,618,947	11,076,830		10,629,330
Debt agreements in Brazil
Floating Rate Securities in R$:
BNDES/FINAME/FINEP, Debentures, NCE and CCB			2,950,708		2,677,516		7,957,182		7,886,796		2,525,772		2,269,603	4,802,910		5,977,676
			2,950,708		2,677,516		7,957,182		7,886,796		2,525,772		2,269,603	4,802,910		5,977,676
Total Borrowings and Financing			4,994,688		5,532,736		30,209,176		27,221,914		3,685,106		3,888,550	15,879,740		16,607,006
Transaction Costs and Issue Premiums			(65,842)		(45,877)		(386,524)		(201,251)		(23,963)		(24,322)	(30,856)		(38,390)
Total Borrowings and Financing + Transaction cost			4,928,846		5,486,859		29,822,652		27,020,663		3,661,143		3,864,228	15,848,884		16,568,616

 

12.a)

Borrowing and amortization, financing, and debentures

 

The following table shows amortization and funding during the period:

 

				Consolidated				Parent Company
		06/30/2022		12/31/2021		06/30/2022		12/31/2021
Opening balance		32,507,522		35,270,653		20,432,844		28,282,246
New debts		9,545,800		12,915,332		2,235,442		5,699,542
Repayment		(5,934,235)		(17,639,178)		(2,446,829)		(14,280,369)
Payments of charges		(1,057,410)		(2,137,782)		(489,841)		(819,648)
Accrued charges (note 26)		1,186,009		2,140,961		579,851		759,955
Acquisition of Elizabeth				372,123
Others (1)		(1,496,188)		1,585,413		(801,440)		791,118
Closing balance		34,751,498		32,507,522		19,510,027		20,432,844

 

1.

Including unrealized exchange and monetary variations and funding cost.

 

On June 30, 2022, the Company entered into new debt agreements and amortized borrowings as shown below:

 

·      Funding and Amortization

 

						Consolidated
						06/30/2022
Nature		New debts		Repayment		Interest payment
Prepayment		2,131,170		(210,526)		(67,650)
Bonds, Perpetual bonds, ACC, CCE and Facility (1)		4,956,250		(1,865,490)		(429,166)
BNDES/FINAME, Debentures, NCE and CCB (2)		2,458,380		(3,858,219)		(560,594)
		9,545,800		(5,934,235)		(1,057,410)

 

(1) In the first quarter of 2022, the Company, through its subsidiary CSN Resources, issued debt securities in the foreign market in the amount of US$500 million, equivalent to BRL2.6 billion, maturing in 2032 ("Notes"). Additionally, it used part of the funds in the amount of US$300 million, equivalent to BRL1.5 billion in the "Tender Offer" for the Notes issued by CSN Resources, maturing in 2026. These Notes are unconditionally and irrevocably guaranteed by the Company. In the first quarter of 2022, the Company contracted a loan in the amount of US$115 million equivalent to BRL605 million through its subsidiary CSN Cimentos, maturing between 2025 and 2027.

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In the second quarter of 2022 the subsidiary CSN Mineração contracted a prepayment of US$445 million equivalent to BRL2.1 billion, with maturity between 2025 and 2032.

 

(2) In the first quarter of 2022 The Company, through its subsidiary CSN Cimentos, issued 1,200 debentures in the total amount of BRL1.2 billion, maturing between 2030 and 2032. The CSN contracted a loan in the amount of BRL600 million from Banco do Brasil maturing in May 2022.

 

The following table shows the average interest rate:

 

				Consolidated				Parent Company
				06/30/2022				06/30/2022
		Average interest rate (i)		Total debt		Average interest rate (i)		Total debt
US$		5.50%		24,016,268		1.34%		10,777,270
EUR		1.39%		279,706		3.34%		1,458,894
R$		14.72%		10,907,890		14.87%		7,328,682
				35,203,864				19,564,846

 

(i)

To determine the average interest rate on debt contracts with floating rates, the Company used the rates applied on June 31, 2022. In the Parent Company, it considers the interest rate of the contracts as intercompany.

 

12.b)

Maturities of loans, financing and debentures presented in current and non-current liabilities

						Consolidated						Parent Company
						06/30/2022						06/30/2022
		Borrowings and financing in foreign currency		Borrowings and financing in national currency		Total		Borrowings and financing in foreign currency		Borrowings and financing in national currency		Total
2022		1,243,646		1,570,262		2,813,908		498,823		1,348,170		1,846,993
2023		1,538,341		2,249,380		3,787,721		1,552,734		1,840,981		3,393,715
2024		998,056		987,650		1,985,706		3,858,899		722,588		4,581,487
2025		1,183,753		728,127		1,911,880		927,874		652,580		1,580,454
2026		2,471,929		874,680		3,346,609		447,925		802,580		1,250,505
2027 a 2030		8,937,774		2,328,184		11,265,958		4,688,010		1,788,878		6,476,888
After 2030		7,922,475		2,169,607		10,092,082		261,899		172,905		434,804
		24,295,974		10,907,890		35,203,864		12,236,164		7,328,682		19,564,846

 

·      Covenants

 

The Company maintains contracts that provide for the fulfillment of certain non-financial obligations, as well as the maintenance of certain parameters and performance indicators, such as the equity ratio disclosure of its audited financial statements according to regulatory deadlines or payment of commission for risk assumption, if the indicator of net debt to EBITDA reaches the levels foreseen in those contracts.

 

Until now, the Company follows all financial and non-financial obligations (covenants) of its current contracts

 

13.

FINANCIAL INSTRUMENTS

 

13.a)

- Identification and valuation of financial instruments

 

The Company may operate with several financial instruments, with emphasis on cash and cash equivalents, including financial investments, marketable securities, accounts receivable from customers, accounts payable to suppliers and borrowings and financing. Additionally, we may also operate with derivative financial instruments, such as swap exchange rate, swap interest and derivatives with commodities.

 

Considering the nature of the instruments, the fair value is basically determined by the use of quotations in the capital markets in Brazil and the Mercantile and Futures Exchange. The amounts recorded in current assets and liabilities have immediate liquidity. Considering the term and characteristics of these instruments, fair values do not differ from the recorded amounts.

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·

Classification of financial instruments

														Consolidated
Consolidated								06/30/2022						12/31/2021
		Notes		Fair value through profit or loss		Measured at amortized cost		Balances		Fair value through profit or loss		Measured at amortized cost		Balances
Assets
Current
Cash and cash equivalents		3				14,923,694		14,923,694				16,646,480		16,646,480
Short-term investments		4		1,352,357		276,489		1,628,846		2,383,059		261,673		2,644,732
Trade receivables		5				2,744,419		2,744,419				2,597,838		2,597,838
Dividends and interest on equity		8				61,924		61,924				76,878		76,878
Derivative financial instruments		8		45,161				45,161
Trading securities		8		4,890				4,890		12,028				12,028
Loans - related parties		8				5,375		5,375				4,511		4,511
Total				1,402,408		18,011,901		19,414,309		2,395,087		19,587,380		21,982,467
Non-current
Investments		4				144,828		144,828				147,671		147,671
Other trade receivables		8				2,345		2,345				2,345		2,345
Eletrobrás compulsory loan		8				892,655		892,655				859,607		859,607
Receivables by indemnity		8				543,753		543,753				534,896		534,896
Loans - related parties		8				1,307,342		1,307,342				1,143,228		1,143,228
Investments		9		187,967				187,967		190,321				190,321
Total				187,967		2,890,923		3,078,890		190,321		2,687,747		2,878,068
Total Assets				1,590,375		20,902,824		22,493,199		2,585,408		22,275,127		24,860,535
Liabilities
Current
Borrowings and financing		12				4,994,688		4,994,688				5,532,736		5,532,736
Leases		14				127,991		127,991				119,047		119,047
Trade payables		15				5,842,677		5,842,677				6,446,999		6,446,999
Trade payables -  drawee risk		16				4,170,914		4,170,914				4,439,967		4,439,967
Dividends and interest on capital		16				454,089		454,089				1,206,870		1,206,870
Total						15,590,359		15,590,359				17,745,619		17,745,619
Non-current
Borrowings and financing		12				30,209,176		30,209,176				27,221,914		27,221,914
Leases		14				502,232		502,232				492,504		492,504
Trade payables		15				52,079		52,079				98,625		98,625
Derivative financial instruments		16		80,615				80,615		101,822				101,822
Total				80,615		30,763,487		30,844,102		101,822		27,813,043		27,914,865
Total Liabilities				80,615		46,353,846		46,434,461		101,822		45,558,662		45,660,484

 

 

 

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														Parent Company
Parent Company								06/30/2022						12/31/2021
		Notes		Fair value through profit or loss		Measured at amortized cost		Balances		Fair value through profit or loss		Measured at amortized cost		Balances
Assets
Current
Cash and cash equivalents		3				4,433,173		4,433,173				3,885,265		3,885,265
Short-term investments		4		1,352,357		48,801		1,401,158		2,383,059		43,398		2,426,457
Trade receivables		5				1,854,781		1,854,781				2,375,512		2,375,512
Dividends and interest on equity		8				150,989		150,989				486,506		486,506
Trading securities		8		4,793				4,793		11,935				11,935
Loans - related parties		8				5,375		5,375				4,511		4,511
Total				1,357,150		6,493,119		7,850,269		2,394,994		6,795,192		9,190,186
Non-current
Investments		4				129,121		129,121				132,523		132,523
Other trade receivables		8				1,003		1,003				1,003		1,003
Eletrobrás compulsory loan		8				891,623		891,623				858,876		858,876
Receivables by indemnity		8				543,753		543,753				534,896		534,896
Loans - related parties		8				1,517,775		1,517,775				1,290,295		1,290,295
Investments		9		187,967				187,967		190,321				190,321
Total				187,967		3,083,275		3,271,242		190,321		2,817,593		3,007,914
Total Assets				1,545,117		9,576,394		11,121,511		2,585,315		9,612,785		12,198,100
Liabilities
Current
Borrowings and financing		12				3,685,106		3,685,106				3,888,550		3,888,550
Leases		14				8,553		8,553				7,602		7,602
Trade payables		15				4,180,474		4,180,474				4,710,811		4,710,811
Trade payables -  drawee risk		16				3,904,132		3,904,132				4,439,967		4,439,967
Dividends and interest on capital		16				455,002		455,002				1,125,359		1,125,359
Total						12,233,267		12,233,267				14,172,289		14,172,289
Non-current
Borrowings and financing		12				15,879,740		15,879,740				16,607,006		16,607,006
Derivative financial instruments		13		55,378				55,378		101,822				101,822
Leases		14				8,404		8,404				10,339		10,339
Trade payables		16				23,584		23,584				43,396		43,396
Total				55,378		15,911,728		15,967,106		101,822		16,660,741		16,762,563
Total Liabilities				55,378		28,144,995		28,200,373		101,822		30,833,030		30,934,852

·

Fair value measurement

 

The table below shows the financial instruments recorded at fair value through profit or loss, classifying them according to the fair value hierarchy:

Consolidated						06/30/2022						12/31/2021
		Level 1		Level 2		Balances		Level 1		Level 2		Balances
Assets
Current
Financial investments		1,352,357				1,352,357		2,383,059				2,383,059
Derivative financial instruments				45,161		45,161
Trading securities		4,890				4,890		12,028				12,028
Non-current
Investments		187,967				187,967		190,321				190,321
Total Assets		1,545,214		45,161		1,590,375		2,585,408				2,585,408
Liabilities
Non-current
Derivative financial instruments				80,615		80,615				101,822		101,822
Total Liabilities				80,615		80,615				101,822		101,822

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Level 1 - Data are prices quoted in an active market for items identical to the assets and liabilities being measured.

 

Level 2 - Consider inputs observable in the market, such as interest rates, exchange rates, etc., but are not prices negotiated in active markets.

 

There are no assets or liabilities classified as level 3.

 

13.b)

- Financial risk management:

 

The Company uses risk management strategies with guidance on the risks incurred by us. The nature and general position of financial risks are regularly monitored and managed in order to assess results and the financial impact on cash flow. Credit limits and hedge quality of counterparties are also reviewed periodically.

 

Market risks are hedged when we consider necessary to support the corporate strategy or when it is necessary to maintain the level of financial flexibility.

 

We are exposed to exchange rate, interest rate, market price and liquidity risks.

 

The Company may manage some of the risks through the use of derivative instruments not associated with any speculative trading or short selling.

 

·

Exchange rate risk:

 

The exposure arises from the existence of assets and liabilities denominated in Dollar or Euro, since the Company’s functional currency is substantially the Real and is called natural exchange exposure. The net exposure is the result of the offsetting of the natural exchange exposure by the instruments of hedge adopted by CSN.

 

The consolidated net exposure as of June 30, 2022, is shown below:

 

				06/30/2022
Foreign Exchange Exposure		(Amounts in US$’000)		(Amounts in €’000)
Cash and cash equivalents overseas		1,368,747		6,273
Trade receivables		162,425		5,898
Financial investments		24,651
Other assets		57,323		(32)
Total Assets		1,613,146		12,139
Borrowings and financing		(4,585,007)		(7,000)
Trade payables		(489,347)		(2,742)
Other liabilities		(16,176)		(5)
Total Liabilities		(5,090,530)		(9,747)
Foreign exchange exposure		(3,477,384)		2,392
Cash flow hedge accounting		4,262,190
Dollar - to - real NDF		(100,000)
Exchange rate swap CDI x Dollar		(67,000)
Exchange rate swap Real x Dollar		(115,000)
Net foreign exchange exposure		502,806		2,392

 

CSN uses as a strategy the Hedge Accounting, as well as derivative financial instruments to protect future cash flows.

 

Sensitivity analysis of Derivative Financial Instruments and Consolidated Foreign Exchange Exposure

 

The Company considered scenarios 1 and 2 to be 25% and 50% deterioration for currency volatility, using the exchange rate closing rate as of June 30, 2022, as a reference.

 

The currencies used in the sensitivity analysis and their respective scenarios are shown below:

 

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								06/30/2022
Currency		Exchange rate		Probable scenario		Scenario 1		Scenario 2
USD		5.2380		5.3608		6.5475		7.8570
EUR		5.4842		5.4241		6.8553		8.2263
USD x EUR		1.0470		1.0118		1.3088		1.5705

 

The effects on the result, considering scenarios 1 and 2 are shown below:

 

										06/30/2022
Instruments		Notional		Risk		Probable scenario (*) R$		Scenario 1 R$		Scenario 2 R$
Gross exchange position		(3,477,384)		Dollar		(427,023)		(4,553,634)		(9,107,269)
Cash flow hedge accounting		4,262,190		Dollar		523,397		5,581,338		11,162,676
Dollar - to - real NDF		(100,000)		Dollar		(12,280)		(130,950)		(261,900)
Exchange rate swap CDI x Dollar		(67,000)		Dollar		(8,228)		(87,737)		(175,473)
Exchange rate swap Real x Dollar		(115,000)		Dollar		(14,122)		(150,593)		(301,185)
Net exchange position		502,806		Dollar		61,744		658,424		1,316,849
Net exchange position		2,392		Euro		(144)		3,280		6,559

 

(*) The probable scenarios were calculated considering the following variations for risks: Real x Dollar – devaluation of the Real by 2.34% / Real x Euro - valuation of the Real by 1.10% / Euro x Dollar - devaluation of Euro by 3.36%. Source: Central Bank of Brazil and European Central Bank quotations on July 26,2022.

 

 

·

Interest rate risk:

 

This risk arises from financial investments, borrowings and financing and debentures linked to the fixed and floating interest rates of the CDI, TJLP and LIBOR, exposing these financial assets and liabilities to interest rate fluctuations as shown in the sensitivity analysis table below.

 

With the modification of the global financial market in recent years and in line with the recommendations of international regulatory agencies, the market has transitioned from the Libor rate (London Interbank Offered Rate) to the SOFR (Secured Overnight Financing Rate) as of 2022. Therefore, the Company is now exposed to some foreign currency borrowings by SOFR.

 

Sensitivity analysis of changes in interest rates

 

We present below the sensitivity analysis for interest rate risks. The Company considered scenarios 1 and 2 to be 25% and 50% deterioration for interest rate volatility using the closing rate as of June 30, 2022, as a reference.

 

The interest rates used in the sensitivity analysis and their respective scenarios are shown below:

 

						06/30/2022
Interest		Interest rate		Scenario 1		Scenario 2
CDI		13.15%		16.44%		19.73%
TJLP		6.82%		8.53%		10.23%
LIBOR		2.94%		3.67%		4.40%

 

The effects on profit and loss, considering scenarios 1 and 2 are shown below:

 

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												Consolidated
Changes in interest rates		% p.a		Assets		Liabilities		Probable scenario (*)		Scenario 1		Scenario 2
CDI		13.15		7,079,351		(9,297,102)		(2,509,385)		(2,582,294)		(2,655,202)
TJLP		6.82				(833,312)		(890,144)		(904,352)		(918,560)
Libor		2.94				(7,224,197)		(7,436,238)		(7,489,248)		(7,542,258)

(*) The sensitivity analysis is based on the premise of maintaining the market values as of June 30, 2022, as a probable scenario recorded in the company’s assets and liabilities.

 

·

Market price risk:

 

The Company is also exposed to market risks related to the volatility of commodity and input prices. In line with its risk management policy, risk mitigation strategies involving commodities can be used to reduce cash flow volatility. These mitigation strategies may incorporate derivative instruments, predominantly forward transactions, futures, and options.

 

Below are the instruments for price risk protection:

 

a) Cash flow hedge accounting - "Platts" index

 

The Company had derivative operations for iron ore, contracted by the subsidiary CSN Mineração, with the objective of reducing the volatility of its exposure to the commodity. In 2022, derivative operations were contracted and fully settled on May 31, 2022.

 

In order to better reflect the accounting effects of the Platts hedge strategy in the result, CSN Mineração opted to make the formal designation of the hedge and consequently adopted hedge accounting of the iron ore derivative as a hedge accounting instrument of its highly probable future iron ore sales. With this, the mark-to-market resulting from the volatility of Platts will be temporarily recorded in shareholders' equity and will be taken to the result when the referred sales occur according to the contracted period of assessment, thus allowing the recognition of the volatility of Platts on the sales of iron ore to be recognized at the same moment.

 

The table below shows the result of the derivative instrument until June 30, 2022:

 

			06/30/2022		06/30/2021		06/30/2022		06/30/2021
			Other income and expenses (note 25)				Exchange variation
Maturity		Notional
02/02/2021 to 07/02/2021 (Settled)		Platts			(337,478)				12,726
05/31/2022 (Settled)		Platts	23,374				(1,087)
			23,374		(337,478)		(1,087)		12,726

 

The cash flow hedge accounting - Platts index - has been fully effective since the derivative instruments were contracted.

 

To support the above-mentioned designations, the Company prepared formal documentation indicating how the designation of cash flow hedge accounting - Platts index is aligned with CSN's risk management objective and strategy, identifying the hedge instruments used, the hedge object, the nature of the risk to be protected and demonstrating the expectation of high effectiveness of the relations designated. Iron ore derivative instruments ("Platts" index) were designated in amounts equivalent to the portion of future sales, comparing the amounts designated with the amounts expected and approved in the Management and Board budgets.

 

b) Cash flow hedge accounting - Foreign Exchange

 

The Company and its subsidiary CSN Mineração formally designates relations of hedge of cash flows to protect highly probable future flows exposed to the dollar related to sales made in dollars.

 

With the objective of better reflecting the accounting effects of the hedge exchange rate in the result, CSN designated part of its dollar liabilities as an instrument of hedge future exports. As a result, the exchange rate variation resulting from the designated liabilities will be transiently recorded in shareholders’ equity and will be reflected in the income statement when said exports occur, thus allowing the recognition of dollar fluctuations on liabilities and on exports to be recorded at the same time. It is noteworthy that the adoption of this accounting hedge it does not imply the contracting of any financial instrument.

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The table below presents a summary of the relations of hedge as of June 30, 2022:

 

																		06/30/2022
Designation Date		Hedging Instrument		Hedged item		Type of hedged risk		Hedged period		Exchange rate on designation		Designated amounts (US$’000)		Amortizated part (USD'000)		Effect on Result (*) (R$'000)		Impact on Shareholders' equity (R$'000)
07/23/2015		Export prepayments in US$ to third parties		Part of the highly probable future monthly iron ore exports		Foreign exchange - R$ vs. US$ spot rate		August 2018 - October 2022		3.2850		30,000		(24,000)				(11,718)
07/24/2015		Export prepayments in US$ to third parties		Part of the highly probable future monthly iron ore exports		Foreign exchange - R$ vs. US$ spot rate		August 2018 - October 2022		3.3254		100,000		(100,000)				(39,382)
07/27/2015		Export prepayments in US$ to third parties		Part of the highly probable future monthly iron ore exports		Foreign exchange - R$ vs. US$ spot rate		August 2018 - October 2022		3.3557		25,000		(24,150)				(1,600)
07/27/2015		Export prepayments in US$ to third parties		Part of the highly probable future monthly iron ore exports		Foreign exchange - R$ vs. US$ spot rate		August 2018 - October 2022		3.3557		70,000		(56,000)				(26,352)
07/27/2015		Export prepayments in US$ to third parties		Part of the highly probable future monthly iron ore exports		Foreign exchange - R$ vs. US$ spot rate		August 2018 - October 2022		3.3557		30,000		(24,000)				(19,340)
07/28/2015		Export prepayments in US$ to third parties		Part of the highly probable future monthly iron ore exports		Foreign exchange - R$ vs. US$ spot rate		August 2018 - October 2022		3.3815		30,000		(24,000)				(11,139)
08/03/2015		Export prepayments in US$ to third parties		Part of the highly probable future monthly iron ore exports		Foreign exchange - R$ vs. US$ spot rate		July 2018 - October 2022		3.3940		355,000		(343,000)				(22,128)
04/02/2018		Bonds		Part of the highly probable future monthly iron ore exports		Foreign exchange - R$ vs. US$ spot rate		July 2018 - February 2023		3.3104		1,170,045		(895,045)				(673,603)
07/31/2019		Bonds and Export prepayments in US$ to third parties		Part of the highly probable future monthly iron ore exports		Foreign exchange - R$ vs. US$ spot rate		January 2020 - April 2026		3.7649		1,342,761		(553,361)		(353,263)		(1,162,865)
01/10/2020		Bonds with no maturity date and Export prepayments in US$ to third parties		Part of the highly probable future monthly iron ore exports		Foreign exchange - R$ vs. US$ spot rate		March 2020 - December 2050		4.0745		1,416,000		(1,287,000)		(67,767)		(1,364,692)
01/28/2020		Bonds		Part of the highly probable future monthly iron ore exports		Foreign exchange - R$ vs. US$ spot rate		March 2027 - January 2028		4.2064		1,000,000						(1,031,600)
06/01/2022		Bonds and Export prepayments in US$ to third parties		Part of the highly probable future monthly iron ore exports		Foreign exchange - R$ vs. US$ spot rate		June 2022 - April 2032		4.7289		1,145,300						(583,072)
06/01/2022		Export prepayments in US$ to third parties		Part of the highly probable future monthly iron ore exports		Foreign exchange - R$ vs. US$ spot rate		June 2022 - May 2033		4.7289		878,640						(447,313)
Total												7,592,746		(3,330,556)		(421,030)		(5,394,804)

 

(*) On June 30, 2022, the amount of (BRL421,030) was recorded in Other Operating Expenses. As of June 30, 2021, (BRL252,250).

 

In the hedging relationships described above, the amounts of the debt instruments were fully designated for equivalent iron ore export portions.

 

The realization of Hedge accounting cash flow is recognized in Other operating income and expenses, note 25.

 

As of June 30, 2022, the hedging relationships established by the Company were effective according to the retrospective and prospective tests performed. Thus, no reversal for hedge accounting ineffectiveness was recognized.

 

c)Net investment hedge in foreign subsidiaries

 

The information related to the net investment hedge did not change in relation to that disclosed in the Company's accounts as of December 31, 2021. The balance recorded on June 30, 2022, and December 31, 2021, is BRL6,293.

 

d) Hedge Accounting Movements

 

The changes in the amounts related to cash flow hedge accounting recorded in equity on June 30, 2022 are shown as follows:

 

							Consolidated
	12/31/2021		Movement		Realization		06/30/2022
Cash flow hedge accounting	5,763,401		29,062		(397,659)		5,394,804
Income tax and social contribution on cash flow hedge accounting	(1,959,556)		(9,881)		135,204		(1,834,233)
Fair Value of cash flow accounting, net taxes	3,803,845		19,181		(262,455)		3,560,571
							Parent Company
	12/31/2021		Movement		Realization		06/30/2022
Cash flow hedge accounting	5,763,401		(394,882)		(421,030)		4,947,489
Income tax and social contribution on cash flow hedge accounting	(1,959,556)		134,260		143,150		(1,682,146)
Fair Value of cash flow accounting, net taxes	3,803,845		(260,622)		(277,880)		3,265,343

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·

Credit risk

 

The exposure to credit risks of financial institutions complies with the parameters established in the financial policy. The Company practices a detailed analysis of the financial position of its customers and suppliers, the determination of a credit limit and the permanent monitoring of its outstanding balance.

 

With respect to financial investments, the Company only invests in institutions with low credit risk assessed by credit rating agencies. Since part of the funds is invested in repo operations that are backed by Brazilian government bonds, there is also exposure to the credit risk of the country.

 

As for the exposure to credit risk in accounts receivable and other receivables, the Company has a credit risk committee, in which each new customer is analyzed individually regarding their financial condition, before granting the credit limit and payment terms, and periodically reviewed based on procedures and circumstances of each business area.

 

·

Liquidity risk

 

It is the risk that the Company may not have sufficient net funds to settle its financial commitments, as a result of the mismatch of term or volume between expected receipts and payments.

 

Future receipt and payment premises are established to manage cash liquidity in domestic and foreign currencies, which are monitored on a day-to-day basis by the Treasury Department. The payment schedules for long-term installments of borrowings and financing and debentures are presented in note 12.

 

The following are the contractual maturities of financial liabilities including interest.

 

									Consolidated
At June 30, 2022	Less than one year		From one to two years		From two to five years		Over five years		Total
Borrowings, financing and debentures (note 12)	4,994,688		3,592,647		5,258,489		21,358,040		35,203,864
Lease Liabilities (note 14)	127,991		154,111		135,671		212,450		630,223
Derivative financial instruments (note 13 I)			80,615						80,615
Trade payables (note 15)	5,842,677		49,171		2,908				5,894,756
Trade payables - Drawee Risk (note 15)	4,170,914								4,170,914
Dividends and interest on equity (note 16)	454,089								454,089
	15,590,359		3,876,544		5,397,068		21,570,490		46,434,461

 

IV – Fair values of assets and liabilities in relation to the book value

 

Financial assets and liabilities measured at fair value through profit or loss are recorded in current and non-current assets and liabilities and gains and losses are recorded as financial income and expenses, respectively.

 

The amounts are recorded in the financial statements at their amortized cost, which are substantially similar to those that would be obtained if they were traded on the market. The fair values of other long-term assets and liabilities do not differ significantly from their book values, except for the amounts below.

 

The estimated fair value for certain consolidated long-term borrowings and financing was calculated at current market rates, considering the nature, term and risks similar to those of the registered contracts, as follows:

 

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			06/30/2022				12/31/2021
	Closing Balance		Fair value		Closing Balance		Fair value
Fixed Rate Notes	15,742,644		12,802,997		15,617,091		15,700,276

 

 

13.c)

Instruments protection: Derivatives and Hedge accounting cash flow and net investment hedge in foreign subsidiaries

 

· Derivative financial instruments portfolio position

 

Swap exchange rate Dollar x Euro

 

The subsidiary Lusosider has derivative transactions to hedge its dollar exposure against the euro. the operation was settled in 2021.

 

Swap exchange rate CDI x Dollar

 

The Company has derivative transactions with Banco Bradesco to protect its debt in NCE raised in September 2019 with maturity in October 2023 in the amount of US$67 million (equivalent to BRL278 million) at a cost compatible with that usually practiced by the Company.

 

Swap exchange rate Real x Dollar

 

The subsidiary CSN Cimentos, after borrowing in foreign currency, contracted derivative operations to protect its exposure to the dollar, maturing on June 10, 2027.

 

Swap exchange rate CDI x IPCA

 

The subsidiaries CSN Mineração and CSN Cimentos issued debentures during 2021 and 2022, respectively, and entered into derivative transactions to hedge their exposure to the IPCA. CSN Mineração's contracts mature on July 15, 2031, and 2036, while CSN Cimentos' contracts mature on February 12 and 16, 2032.

 

Below is the position of the derivatives:

 

														06/30/2022		06/30/2021
								Appreciation (R$)				Fair value (market)		Impact on financial income (expenses) (note 25)
Instrument		Maturity		Functional Currency		Notional amount		Asset position		Liability position		Amounts receivable / (payable)
Exchange rate swap
Exchange rate swap Dollar x Euro		Settled		Dollar												13,433
Exchange rate swap Dollar x Real		07/01/2022		Dollar		(100,000)		523,800		(478,638)		45,162		45,162		37,322
Exchange rate swap CDI x Dollar		10/02/2023		Dollar		(67,000)		300,770		(356,148)		(55,378)		46,444		18,594
Exchange rate swap Real x Dollar		06/10/2027		Dollar		(115,000)		623,148		(648,386)		(25,238)		(25,238)
Total Swap						(282,000)		1,447,718		(1,483,172)		(35,454)		66,368		69,349
Interest rate swap
Interest rate (Debentures) CDI x IPCA		07/15/2031		Real		576,448		623,504		(644,556)		(21,052)		(3,564)
Interest rate (Debentures) CDI x IPCA		07/15/2036		Real		423,552		460,273		(487,583)		(27,310)		(9,878)
Interest rate (Debentures) CDI x IPCA		02/16/2032		Real		600,000		676,100		(663,030)		13,070		13,070
Interest rate (Debentures) CDI x IPCA		12/2/2032		Real		600,713		668,723		(658,732)		9,991		9,991
Total interest rate (Debentures) CDI x IPCA						2,200,713		2,428,600		(2,453,901)		(25,301)		9,619
								3,876,318		(3,937,073)		(60,755)		75,987		69,349

  

 

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·

Classification of derivatives in the balance sheet and income

 

											06/30/2022		06/30/2021
Instruments		Assets					Liabilities				Financial income (expenses), net (note 26)
		Current			Total		Non-current		Total
Exchange rate swap Dollar x Real		45,162			45,162						45,162		37,322
Exchange rate swap Dollar x Euro (Settled)													13,433
Exchange rate swap Real x Dollar							(25,238)		(25,238)		(25,238)
Exchange rate swap CDI x Dollar							(55,378)		(55,378)		46,444		18,594
Iron ore derivative											(1,087)		12,726
Interest rate swap CDI x IPCA							(25,301)		(25,301)		9,619
		45,162			45,162		(105,917)		(105,917)		74,900		82,075

 

13.d)

- Investments in securities valued at fair value through profit or loss

 

The Company has common shares (USIM3), preferred shares (USIM5) of Siderúrgica de Minas Gerais (“Usiminas”) and shares of Panatlântica SA (PATI3), which are designated as fair value through profit or loss.

 

Usiminas shares are classified as current assets in financial investments and Panatlântica shares are classified as non-current assets under the investment item. They are recorded at fair value, based on the market price quote in B3.

 

In accordance with the Company’s policy, the gains and losses arising from the variation in the share price are recorded directly in the income statement as financial result in the case of financial investments, or as other operating income and expenses in the case of long-term investments.

 

Class of shares		06/30/2022								12/31/2021								06/30/2022		06/30/2021
		Quantity		Equity interest (%)		Share price		Closing Balance		Quantity		Equity interest (%)		Share price		Closing Balance		Profit or loss (notes 25 and 26)
USIM3		106,620,851		15.12%		8.21		875,357		106,620,851		15.12%		14.51		1,547,069		(671,712)		437,100
USIM5		55,144,456		10.07%		8.65		477,000		55,144,456		10.07%		15.16		835,990		(358,990)		724,159
								1,352,357								2,383,059		(1,030,702)		1,161,259
PATI3		2,705,726		11.31%		69.47		187,967		2,705,726		11.31%		70.34		190,321		(2,354)		160,100
								1,540,324								2,573,380		(1,033,056)		1,321,359

 

13.e)

- Capital management

 

The Company seeks to optimize its capital structure in order to reduce its financial costs and maximize the return to its shareholders. The table below shows the evolution of the Company’s consolidated capital structure, with financing by equity and third-party capital:

 

Thousands of reais		06/30/2022		12/31/2021
Shareholder's equity (equity)		23,857,741		23,374,389
Borrowings and Financing (Third-party capital)		34,751,498		32,507,522
Gross Debit/Shareholder's equity		1.46		1.39

 

14.

LEASE LIABILITIES

 

Lease liabilities are shown below:

 

			Consolidated				Parent Company
	06/30/2022		12/31/2021		06/30/2022		12/31/2021
Leases	1,802,853		1,790,193		18,812		20,113
Present value adjustment - Leases	(1,172,630)		(1,178,642)		(1,855)		(2,172)
	630,223		611,551		16,957		17,941
Classified:
Current	127,991		119,047		8,553		7,602
Non-current	502,232		492,504		8,404		10,339
	630,223		611,551		16,957		17,941

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The Company has lease agreements for port terminals in Itaguaí, the Solid Bulk Terminal - TECAR, used for loading and unloading coal and iron ores and the Container Terminal - TECON, with remaining terms of 25 and 29 years, respectively, and lease agreement for railway operation using the Northeast network with a remaining term of 7 years.

 

Additionally, the Company has operating equipment lease agreements, used mainly in the mining and steel operations, and real estate, used as operating facilities and administrative and sales offices, in several locations where the Company operates, with remaining terms of 1 to 13 years.

 

The present value of the future obligations was measured using the implicit rate observed in the contracts and for the contracts that did not have a rate, the Company applied the incremental borrowing rate - IBR, both in nominal terms.

 

The movement of lease liabilities is shown in the table below:

 

			Consolidated				Parent Company
	06/30/2022		12/31/2021		06/30/2022		12/31/2021
Opening balance	611,551		530,131		17,941		67,107
New leases	22,065		69,379		2,808		1,216
Present Value Adjustments - New leases	(2,117)		(7,273)		(508)		(104)
Contract review	31,337		109,860		201		(1,331)
Write-off			(38,626)				(17,073)
Payments	(66,137)		(114,303)		(4,331)		(9,502)
Interest appropriated	34,124		62,470		846		2,058
Drop down of Cements (note 9.c)							(24,430)
Acquisition of Topázio Energética, Santa Ana and Brasil Central (note 9.c)	259
Exchange variation	(859)		(87)
Net balance	630,223		611,551		16,957		17,941

 

The estimated future minimum payments for the lease agreements include determinable variable payments, which are certain to occur, based on minimum performance and contractually fixed rates.

 

As of June 30, 2022, the expected minimum payments are the following:

 

							Consolidated
	Less than one year		Between one and five years		Over five years		Total
Leases	135,071		410,644		1,257,138		1,802,853
Present value adjustment - Leases	(7,080)		(120,862)		(1,044,688)		(1,172,630)
	127,991		289,782		212,450		630,223

 

·

Recoverable PIS / COFINS

 

Lease liabilities were measured at the amount of consideration with suppliers, that is, without considering the tax credits incurred after payment. The potential right of PIS and COFINS embedded in the lease liability is shown below.

 

			Consolidated				Parent Company
	06/30/2022		12/31/2021		06/30/2022		12/31/2021
Leases	1,777,255		1,777,209		17,725		18,847
Present value adjustment - Leases	(1,170,946)		(1,177,668)		(1,757)		(2,036)
Potencial PIS and COFINS credit	164,396		164,392		1,640		1,743
Present value adjustment – Potential PIS and COFINS credit	(108,313)		(108,934)		(163)		(188)

 

·

Lease payments not recognized as a liability:

 

The Company chose not to recognize lease liabilities in contracts with a term of less than 12 months and for low value assets. Payments made for these contracts are recognized as expenses when incurred.

 

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The Company has contracts for the right to use ports (TECAR) and railways (FTL) which, even if they establish minimum performance, it is not possible to determine its cash flow since these payments are fully variable and will only be known when they occur. In such cases, payments will be recognized as expenses when incurred.

 

The expenses related to payments not included in the measurement of the lease liability during the year are:

 

							Consolidated
	Six months ended				Three months ended
	06/30/2022		06/30/2021		06/30/2022		06/30/2021
Contract less than 12 months	839				373
Lower Assets value	1,904		1,178		1,024		718
Variable lease payments	178,702		280,146		96,866		161,893
	181,445		281,324		98,263		162,611
							Parent Company
	Six months ended				Three months ended
	06/30/2022		06/30/2021		06/30/2022		06/30/2021
Lower Assets value	511		125		256		85
Variable lease payments	808		4,550		495		3,250
	1,319		4,675		751		3,335

 

In accordance with the guidelines of CPC 06 (R2) / IFRS 16, the Company uses the discounted cash flow technique to measure and remeasure liabilities and use rights, without considering the projected inflation in the flows to be discounted.

 

15.

TRADE PAYABLES

 

			Consolidated				Parent Company
	06/30/2022		12/31/2021		06/30/2022		12/31/2021
Trade payables	5,998,588		6,657,702		4,289,915		4,842,146
(-) Adjustment present value	(103,832)		(112,078)		(85,857)		(87,939)
	5,894,756		6,545,624		4,204,058		4,754,207
Classified:
Current	5,842,677		6,446,999		4,180,474		4,710,811
Non-current	52,079		98,625		23,584		43,396
	5,894,756		6,545,624		4,204,058		4,754,207

 

The Company classifies drawee risk operations with suppliers in other liabilities as per note 16 – other payables. As of June 30, 2022, Consolidated and Parent Company had, respectively, a balance of BRL4,170,914 and BRL3,904,132 (as of December 31, 2021, in Consolidated and Parent Company BRL4,439,967). These are negotiated with financial institutions, by which suppliers anticipate receivables and, on the other hand, extend our payment terms. The effective prepayment of receivables depends on acceptance by the suppliers, given that their participation is not mandatory. The Company is not reimbursed and / or benefited by the financial institution for discounts for payment executed before the maturity date agreed with the supplier, there is no change in the degree of subordination of the security in the event of judicial execution, nor changes in the existing commercial conditions between Company and its suppliers.

 

16.

OTHER PAYABLES

 

The other obligations classified in current and non-current liabilities have the following composition:

 

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							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
Payables to related parties (note 20 a)	119,470		50,624		49,784		66,607		377,152		314,260		88,075		128,849
Derivative financial instruments (note 13 I)					80,615		101,822						55,378		101,822
Dividends and interest on capital	454,089		1,206,870						455,002		1,125,359
Advances from customers	1,052,495		2,140,783		913,565		947,896		138,983		148,822
Taxes in installments	52,623		51,999		130,895		152,420		9,173		9,173
Profit sharing - employees	151,080		223,885						77,113		138,860
Taxes payable					10,888		10,378						35,963		35,453
Provision for consumption and services	227,983		216,692						98,655		100,735
Third party materials in our possession	44,758		418,084						28,764		402,071
Trade payables - Drawee Risk and forfaiting (note 15)	4,170,914		4,439,967						3,904,132		4,439,967
Trade payables (note 15)					52,079		98,625						23,584		43,396
Lease Liabilities (note 14)	127,991		119,047		502,232		492,504		8,553		7,602		8,404		10,339
Other payables	50,361		36,703		190,706		77,912		10,434		9,308
	6,451,764		8,904,654		1,930,764		1,948,164		5,107,961		6,696,157		211,404		319,859

 

Advances from customers: Refers to iron ore supply contracts signed by the subsidiary CSN Mineração with an important international player. As of June 30, 2022, the balance in advance refers to the supply of 15.5 million tons of iron ore, to be delivered over the next three years. In June 2022, the Company, through its subsidiary CSN Cimentos, received in advance the total amount of BRL372 million related to a power supply contract signed with an important national player, to be executed within a period of 7 years.

 

17.

INCOME TAX AND SOCIAL CONTRIBUTIONS

 

17.a)Tax of income and social contribution recognized in profit or loss:

 

The income tax and social contribution recognized in net income for the period are as follows:

 

							Consolidated
	Six months ended				Three months ended
	06/30/2022		06/30/2021		06/30/2022		06/30/2021
Income tax and social contribution income (expense)
Current	(1,270,201)		(2,954,743)		(692,486)		(1,595,645)
Deferred	(307,888)		419,632		180,551		338,774
	(1,578,089)		(2,535,111)		(511,935)		(1,256,871)
							Parent Company
	Six months ended				Three months ended
	06/30/2022		06/30/2021		06/30/2022		06/30/2021
Income tax and social contribution income (expense)
Current	(237,397)		(243,367)		(125,014)		(101,510)
Deferred	(305,085)		345,812		200,100		359,728
	(542,482)		102,445		75,086		258,218

 

The reconciliation of income and social contribution expenses and income of the consolidated and parent company and the product of the current tax rate on income before income tax and social contribution are shown below:

 

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							Consolidated
	Six months ended				Three months ended
	06/30/2022		06/30/2021		06/30/2022		06/30/2021
Profit before income tax and social contribution	3,311,363		13,745,084		881,266		6,769,531
Tax rate	34%		34%		34%		34%
Income tax and social contribution at combined statutory rate	(1,125,863)		(4,673,329)		(299,630)		(2,301,641)
Adjustment to reflect the effective rate:
Equity in results of affiliated companies	35,150		25,312		23,265		19,740
Difference Tax Rate in companies abroad	6,811		(114,512)		(243,683)		91,486
Tax loss carryforwards without recognizing deferred taxes	(13,954)		1,621		(7,972)		5,396
Indebtdness limit	(4,324)		(5,623)		(966)		(1,354)
Unrecorded deferred taxes on temporary differences	458		4,388		(2,568)		2,041
Reversal of provision for deferred income tax and social contribution losses			2,214,721				1,002,376
Tax incentives	20,732		30,020		11,196		24,303
Recognition/(reversal) of tax credits	(516,675)				(14,380)
Other permanent deductios (add-backs)	19,576		(17,709)		22,803		(99,218)
Income tax and social contribution in net income for the period	(1,578,089)		(2,535,111)		(511,935)		(1,256,871)
Effective tax rate	48%		18%		58%		19%
							Parent Company
	Six months ended				Three months ended
	06/30/2022		06/30/2021		06/30/2022		06/30/2021
Profit before income tax and social contribution	1,946,210		10,103,341		122,240		4,707,553
Tax rate	34%		34%		34%		34%
Income tax and social contribution at combined statutory rate	(661,711)		(3,435,136)		(41,562)		(1,600,568)
Adjustment to reflect the effective rate:
Equity in results of affiliated companies	619,074		1,346,997		108,814		874,430
Indebtdness limit	(4,324)		(5,623)		(966)		(1,354)
Reversal of provision for deferred income tax and social contribution losses			2,214,721				1,002,376
Tax incentives	6,029		5,775		3,270		2,091
Recognition/(reversal) of tax credits	(516,675)				(14,380)
Other permanent deductios (add-backs)	15,125		(24,289)		19,910		(18,757)
Income tax and social contribution in net income for the period	(542,482)		102,445		75,086		258,218
Effective tax rate	28%		-1%		-61%		-5.5%

 

17.b)

Deferred income tax and social contribution

 

Deferred income tax and social contribution balances are as follows:

 

										Consolidated
		Opening balance		Movement						Closing balance
		12/31/2021		Shareholders' Equity		P&L		Others		06/30/2022
Deferred
Income tax losses		1,537,623				(48,310)				1,489,313
Social contribution tax losses		583,845				(26,269)				557,576
Temporary differences		2,447,543		(93,565)		(233,309)		(12,040)		2,108,629
- Provision for tax. social security, labor, civil and environmental risks		265,328				(14,487)				250,841
- Asset impairment losses		283,266				(17,324)				265,942
- (Gains)/losses on financial instruments		6,484				355,107				361,591
- Actuarial liability (pension and healthcare plan)		210,009								210,009
- Accrued supplies and services		163,620				37,695				201,315
- Unrealized exchange variation (1)		1,026,302				(564,140)				462,162
- Gain upon loss of control in Transnordestina		(92,180)								(92,180)
- Cash flow hedge accounting		1,959,557		(125,321)						1,834,236
- Acquisition at fair value of SWT and CBL		(178,160)		7,929		11,292				(158,939)
- Deferred taxes not computed		(248,605)				22,947				(225,658)
- Business Combination		(1,338,674)				7,846				(1,330,828)
- Others		390,596		23,827		(72,245)		(12,040)		330,138
Total		4,569,011		(93,565)		(307,888)		(12,040)		4,155,518
Total Deferred Assets		5,072,092								4,456,818
Total Deferred Liabilities		(503,081)								(301,300)
Total Deferred		4,569,011								4,155,518

 

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								Parent Company
		Opening balance		Movement				Closing balance
		12/31/2021		Shareholders' Equity		P&L		06/30/2022
Deferred tax assets
Income tax losses		1,419,151				(64,471)		1,354,680
Social contribution tax losses		531,472				(22,481)		508,991
Temporary differences		2,893,030		(277,409)		(218,133)		2,397,488
- Provision for tax. social security, labor, civil and environmental risks		184,336				(633)		183,703
- Asset impairment losses		113,506				1,373		114,879
- (Gains)/losses on financial instruments		6,483				353,667		360,150
- Actuarial liability (pension and healthcare plan)		211,019						211,019
- Accrued supplies and services		149,486				17,574		167,060
- Unrealized exchange variation (1)		1,031,889				(569,057)		462,832
- (Gain) in control loss on Transnorderstina		(92,180)						(92,180)
- Cash flow hedge accounting		1,959,556		(277,409)				1,682,147
- Business Combination		(721,992)						(721,992)
- Others		50,927				(21,057)		29,870
Total		4,843,653		(277,409)		(305,085)		4,261,159
Total Deferred Assets		5,710,808						5,710,808
Total Deferred Liabilities		(867,155)						(1,449,649)
Total Deferred		4,843,653						4,261,159

 

(1) The Company taxes exchange variations on a cash basis to calculate income tax and social contribution on net income.

 

The Company has in its corporate structure subsidiaries abroad, whose income are taxed by the income tax in the respective countries where they were constituted at rates lower than those in force in Brazil. In the period between 2018 and 2022, these subsidiaries generated income in the amount of BRL471,514. If the Brazilian tax authorities understand that these profits are subject to additional taxation in Brazil for income tax and social contribution, these, if due, would reach approximately BRL163,960. The Company, based on the position of its legal advisors, assessed only the likelihood of loss as possible in the event of possible tax questioning and, therefore, no provision was recognized in the financial statements.

 

In addition, management evaluated the precepts of IFRIC 23 - “Uncertainty Over Income Tax Treatments” and recognized in 2021 the credit for the unconstitutionality of the incidence of the IRPJ and CSLL on the amounts of default interest referring to the SELIC rate received due to the repetition of tax undue payment.

 

A sensitivity analysis of consumption of tax credits was carried out considering a variation in macroeconomic assumptions, operating performance, and liquidity events. Thus, considering the results of the study carried out, which indicates that it is probable the existence of taxable profit to use the balance of deferred income tax and social contribution.

 

17.c)

Income tax and social contribution recognized in equity:

 

Income tax and social contribution recognized directly in equity are shown below:

 

			Consolidated				Parent Company
	06/30/2022		12/31/2021		06/30/2022		12/31/2021
Income tax and social contribution
Actuarial gains on defined benefit pension plan	104,588		104,532		105,688		105,688
Exchange differences on translating foreign operations	(325,350)		(325,350)		(325,350)		(325,350)
Cash flow hedge accounting	1,803,443		1,959,556		1,682,147		1,959,556
	1,582,681		1,738,738		1,462,485		1,739,894

 

18.

PROVISIONS FOR TAX, SOCIAL SECURITY, LABOR, CIVIL, ENVIRONMENTAL RISKS AND JUDICIAL DEPOSITS

 

Claims of different nature are being challenged at the appropriate courts. Details of the accrued amounts and related judicial deposits are as follows:

 

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								Consolidated								Parent Company
		Accrued liabilities				Judicial deposits				Accrued liabilities				Judicial deposits
		06/30/2022		12/31/2021		06/30/2022		12/31/2021		06/30/2022		12/31/2021		06/30/2022		12/31/2021
Tax		117,290		111,572		79,516		78,260		40,273		38,857		54,263		54,633
Social security		1,298		1,270						1,298		1,270
Labor		291,089		304,744		236,105		218,200		197,271		210,670		171,211		154,827
Civil		148,733		139,824		18,672		17,869		108,100		104,340		12,075		12,017
Environmental		18,488		16,942		2,764		2,739		15,039		13,719		1,010		1,004
Deposit of a guarantee						19,808		22,737
		576,898		574,352		356,865		339,805		361,981		368,856		238,559		222,481
Classified:
Current		65,126		66,047						33,156		35,571
Non-current		511,772		508,305		356,865		339,805		328,825		333,285		238,559		222,481
		576,898		574,352		356,865		339,805		361,981		368,856		238,559		222,481

 

The changes in tax, social security, labor, civil and environmental provisions in the period ended on June 30, 2022, can be summarized as follows:

 

										Consolidated
										Current + Non-current
Nature		12/31/2021		Additions		Accrued charges		Net utilization of reversal		06/30/2022
Tax		111,572		34		7,069		(1,385)		117,290
Social security		1,270		3		25				1,298
Labor		304,744		18,128		25,192		(56,975)		291,089
Civil		139,824		1,414		17,614		(10,119)		148,733
Environmental		16,942		5,668		410		(4,532)		18,488
		574,352		25,247		50,310		(73,011)		576,898

 

										Parent Company
										Current + Non-current
Nature		12/31/2021		Additions		Accrued charges		Net utilization of reversal		06/30/2022
Tax		38,857		34		1,825		(443)		40,273
Social security		1,270		3		25				1,298
Labor		210,670		11,775		16,530		(41,704)		197,271
Civil		104,340		302		12,473		(9,015)		108,100
Environmental		13,719		5,603		233		(4,516)		15,039
		368,856		17,717		31,086		(55,678)		361,981

 

The provision for tax, social security, labor, civil and environmental risks was estimated by Management and is mainly based on the legal counsel’s assessment. Only lawsuits for which the risk is classified as probable loss are provisioned. Additionally, tax liability from actions initiated by the Company is included in this provision and is subject to SELIC (Central Bank’s policy rate).

 

§

Administrative and judicial proceedings

 

The Company does not make provisions for lawsuits, which Management’s expectation, based on the opinion of legal counsel, is a possible loss. The following table shows a summary of the balance of the main matters classified as possible risk compared to the balance on June 30, 2022, and December 31,2021.

 

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				Consolidated
		06/30/2022		12/31/2021
Assessment Notice and imposition of fine (AIIM) / Tax Enforcement - Income tax and social contribution - Capital gain on sale of NAMISA's shares		13,532,026		13,015,938
Assessment Notice and Imposition of fine (AIIM) / Tax Enforcement - Income tax and Social contribution - Disallowance of deductions of goodwill generated in the reverse incorporation of Big Jump by NAMISA.		4,681,998		4,242,051
Assessment Notice and Imposition of fine (AIIM) / Tax Enforcement  - Income tax and Social contribution - Disallowance of interest on prepayment arising from supply contracts of iron ore and port services		2,114,921		2,017,602
Assessment Notice and imposition of fine (AIIM) - Income tax and social contribution due to profits from foreign subsidiaries for years 2008, 2010, 2011, 2012, 2014, 2015 and 2016.		4,265,225		4,137,519
ICMS - SEFAZ/RJ - Electricity Credits		909,396		867,521
Offset of taxes that were not approved by the Federal Revenue Service - IRPJ/CSLL, PIS/COFINS and IPI		1,721,512		1,660,888
ICMS - SEFAZ/RJ  - Disallowance of the ICMS credits - Transfer of iron ore		637,814		614,528
ICMS - Refers to the transfer of imported raw material at an amount lower than the price disclosed in the import documentation		340,008		326,361
Disallowance of the tax loss and negative basis of social contribution arising from the adjustments in the SAPLI		628,817		600,895
Assessment Notice and imposition of fine (AIIM)/ Action for annulment - IRRF- Capital Gain of CFM vendors located abroad		276,783		266,649
CFEM – difference of understanding between CSN and ANM on the calculation basis		1,083,872		1,079,951
ICMS - SEFAZ/RJ - Assessment Notice -  questions about sales for incentive area		1,192,648		1,142,386
Other tax lawsuits (federal, state, and municipal)		4,062,865		3,877,976
Assessment Notice and imposition of fine (AIIM) -  Charge of IRRF- RFB  - Business Combinations of CSN Mineração held in 2015.		932,231		889,179
ICMS - SEFAZ/RJ - Disallowance of credits on acquisitions of Intermediate Products		589,572		562,307
Assessment Notice and imposition of fine (AIIM) - RFB -  Disallowance of credits PIS/COFINS of inputs and freight		1,170,274		1,116,228
Social security lawsuits		221,965		214,323
Action to discuss the balance of the construction contract – Tebas		560,638		507,719
Action related to power supply payment’s charge - Light		372,507		324,371
Enforcement action applied by Brazilian antitrust authorities (CADE)		103,401		98,740
Civil Public Action - Districts / School / Nursery relocation-CdP Dam		16,495		14,876
Other civil lawsuits		924,690		845,043
Labor and social security lawsuits		1,613,362		1,536,967
Tax foreclosures – Fine – Volta Redonda IV		118,960		104,400
ACP landfill Márcia		306,389		306,389
Other environmental lawsuits		456,425		424,143
		42,834,794		40,794,950

 

In the first quarter of 2021, the Group was notified of an arbitration procedure based on an alleged unfulfillment of iron ore supply contracts. The counterparty asks for approximately US$1 billion, and the Company has no knowledge of the bases used in the allegations presented, as well as has no knowledge of the basis for the estimates of the amount asked. As opposed, the Company understands to be a creditor in the contracts. Finally, the Company informs that has responded the arbitration requirements in conjunction with its legal counselors and is currently at the initial stage of its defense. The Company expects the arbitration will be concluded in 2 to 3 years. The relevance of the arbitration to the Company is related to the amount attributed to the cause and its eventual financial impact. The discussion involves arbitration disputes initiated by both parties.

 

 

 

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The Company has been offering judicial guarantees (Guarantee Insurance / Letter of Guarantee) in the total amount updated to June 30, 2022, of BRL4,837,122 (December 31,2021 BRL4,732,009), as determined by the procedural legislation in force.

 

The assessments made by legal advisors define these administrative and judicial proceedings as a possible risk of loss and, consequently, no loss provisions have been recognized in accordance with Management’s judgment and with the Accounting Practices adopted in Brazil.

 

19.

PROVISION FOR ENVIRONMENTAL LIABILITIES AND ASSET RETIREMMENT OBLIGATIONS

 

The calculation information and assumptions remain the same as disclosed in the December 31, 2021, financial statements. The balance of provisions for environmental liabilities and deactivation of assets can be shown as follows:

 

			Consolidated				Parent Company
	06/30/2022		12/31/2021		06/30/2022		12/31/2021
Environmental liabilities	179,758		173,647		164,670		159,254
Asset retirement obligations	757,332		724,950
	937,090		898,597		164,670		159,254

 

20.

RELATED-PARTY BALANCES AND TRANSACTIONS

 

20.a)Transactions with subsidiaries, joint ventures, associates, exclusive founds and other related parties

 

·

Consolidated

 

		Consolidated
		06/30/2022								12/31/2021
		Subsidiaries and associates		Joint-ventures and Joint Operation		Other related parties		Total		Subsidiaries and associates		Joint-ventures and Joint Operation		Other related parties		Total
Assets
Current Assets
Investments	(1)					1,491,002		1,491,002						2,579,990		2,579,990
Trade receivables (note 5)	(2)	31,588		961		71,632		104,181		8,159		1,667		134,570		144,396
Dividends (note 8)	(3)			61,924				61,924				61,898		14,980		76,878
Loans (note 8)	(4)			5,375				5,375				4,511				4,511
Other receivables from related parties (note 8)						1,828		1,828						1,828		1,828
		31,588		68,260		1,564,462		1,664,310		8,159		68,076		2,731,368		2,807,603
Non-current Assets
Investments	(1)					129,121		129,121						132,523		132,523
Loans (note 8)	(4)	124,781		1,182,561				1,307,342		3,626		1,139,602				1,143,228
Actuarial asset (note 8)						59,111		59,111						59,111		59,111
Other receivables from related parties (note 8)	(5)			1,199,316				1,199,316				927,077				927,077
		124,781		2,381,877		188,232		2,694,890		3,626		2,066,679		191,634		2,261,939
		156,369		2,450,137		1,752,694		4,359,200		11,785		2,134,755		2,923,002		5,069,542
Liabilities
Current Liabilities
Trade payables		12		65,893		17,010		82,915		21		62,730		14,712		77,463
Accounts payable				21,979				21,979				28,442				28,442
Provision for consumption				97,491				97,491				22,182				22,182
		12		185,363		17,010		202,385		21		113,354		14,712		128,087
Non-current Liabilities
Accounts payable				49,784				49,784				66,607				66,607
				49,784				49,784				66,607				66,607
		12		235,147		17,010		252,169		21		179,961		14,712		194,694
		Consolidated
		06/30/2022								06/30/2021
		Subsidiaries and associates		Joint-ventures and Joint Operation		Other related parties		Total		Subsidiaries and associates		Joint-ventures and Joint Operation		Other related parties		Total
P&L
Sales		118,975		9,931		1,368,032		1,496,938		133,536		519		1,701,673		1,835,728
Cost and expenses				(632,606)		(50,069)		(682,675)		(121)		(625,805)		(53,057)		(678,983)
Financial income (expenses)
Interest (note 26)				64,564		11,261		75,825				12,477		12,355		24,832
Financial investments (1)						(1,030,702)		(1,030,702)						655,415		655,415
		118,975		(558,111)		298,522		(140,614)		133,415		(612,809)		2,316,386		1,836,992

 

 

 

83

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

Parent Company

 

		Parent Company
		06/30/2022								12/31/2021
		Subsidiaries and associates		Joint-ventures and Joint Operation		Other related parties and exclusive funds		Total		Subsidiaries and associates		Joint-ventures and Joint Operation		Other related parties and exclusive funds		Total
Assets
Current Assets
Investments	(1)					1,590,863		1,590,863						2,674,193		2,674,193
Trade receivables (note 5)	(2)	976,492				71,334		1,047,826		1,385,970				134,271		1,520,241
Loans (note 8)	(4)			5,375				5,375				4,511				4,511
Dividends (note 8)	(3)	114,559		36,430				150,989		435,504		36,022		14,980		486,506
Other receivables from related parties (note 8)		51,459				1,829		53,288		45,467				1,829		47,296
		1,142,510		41,805		1,664,026		2,848,341		1,866,941		40,533		2,825,273		4,732,747
Non-current Assets
Investments	(1)					129,121		129,121						132,523		132,523
Loans (note 8)	(4)	305,042		1,212,733				1,517,775		243,131		1,047,164				1,290,295
Actuarial asset (note 8)						47,350		47,350						47,350		47,350
Other receivables from related parties (note 8)	(5)	225,908		1,199,316				1,425,224		224,827		927,076				1,151,903
		530,950		2,412,049		176,471		3,119,470		467,958		1,974,240		179,873		2,622,071
		1,673,460		2,453,854		1,840,497		5,967,811		2,334,899		2,014,773		3,005,146		7,354,818
Liabilities
Current Liabilities
Intercompany Loans (note 12)	(6)	482,971						482,971		61,618						61,618
Trade payables		319,206		33,524		16,350		369,080		331,074		26,111		13,849		371,034
Accounts payable		99,454						99,454		101,588						101,588
Provision for consumption		241,295		36,403				277,698		196,490		16,182				212,672
		1,142,926		69,927		16,350		1,229,203		690,770		42,293		13,849		746,912
Non-current Liabilities
Intercompany Loans (note 12)	(6)	9,435,503						9,435,503		9,530,250						9,530,250
Accounts payable		88,075						88,075		128,849						128,849
		9,523,578						9,523,578		9,659,099						9,659,099
		10,666,504		69,927		16,350		10,752,781		10,349,869		42,293		13,849		10,406,011
		Parent Company
		06/30/2022								06/30/2021
		Subsidiaries and associates		Joint-ventures and Joint Operation		Other related parties and exclusive funds		Total		Subsidiaries and associates		Joint-ventures and Joint Operation		Other related parties and exclusive funds		Total
Net revenue and cost
Sales		2,364,250		70		1,367,842		3,732,162		1,348,749				1,693,002		3,041,751
Cost and expenses		(1,213,824)		(234,829)		(55,828)		(1,504,481)		(2,358,309)		(201,693)		(51,318)		(2,611,320)
Financial income (expenses)
Interest (note 26)		(24,216)		64,346		10,300		50,430		(171,061)		17,249		11,708		(142,104)
Exclusive funds (note 26)						6,492		6,492						38,231		38,231
Financial investments (1)						(1,030,702)		(1,030,702)						655,415		655,415
Exchange rate variations and  monetary, net		608,608						608,608		363,167						363,167
		1,734,818		(170,413)		298,104		1,862,509		(817,454)		(184,444)		2,347,038		1,345,140

 

Consolidated and Parent Company Information:

 

1) Financial Investments: Refers mainly to investments in Usiminas shares, cash and cash equivalents with and Bonds with Banco Fibra and government bonds and CDBs with the exclusive funds.

 

(2) Accounts receivable: refers mainly to sales transactions of steel products from the Parent Company to related parties.

 

(3) Dividends receivable: In Consolidated, dividends from MRS Logística S.A. amounting to BRL61,924 (BRL61,898 on December 31, 2021).

 

(4) Loans (Assets):

 

Long-term: In Consolidated refers mainly to loan agreements with Transnordestina Logística BRL1,165,368 (BRL1,123,375 on December 31, 2021) with an average rate of 125.0% to 130.0% of CDI.

 

(5) Others (Assets): In Consolidated, advance for future capital increase with Transnordestina Logística S.A. of BRL1,199,316 on June 30, 2022 (BRL927,076 on December 31, 2021).

 

(6) Borrowings (Liabilities):

84

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Foreign currency: In the Parent Company these are intercompany contracts amounting to BRL9,918,474 as of June 30, 2022 (BRL9,591,868 as of December 31, 2021).

 

 

20.b)

Key management personal

 

The key management personnel with authority and responsibility for planning, directing, and controlling the Company’s activities include members of the Board of Directors and statutory officers. The following is information on the compensation of such personnel and the related balances as of June 30, 2022, and 2021.

 

		06/30/2022		06/30/2021
		P&L
Short-term benefits for employees and officers		37,608		24,031
Post-employment benefits		128		28
		37,736		24,059

 

20.c)

Guarantees

 

The Company is liable for guarantees of its subsidiaries and joint ventures as follows:

 

	Currency		Maturities		Borrowings				Tax foreclosure				Others				Total
					06/30/2022		12/31/2021		06/30/2022		12/31/2021		06/30/2022		12/31/2021		06/30/2022		12/31/2021
Transnordestina Logísitca	R$		Up to 09/19/2056 and Indefinite		2,167,150		2,486,926		9,053		12,627		3,511		3,384		2,179,714		2,502,937
CSN Cimentos	R$		Up to 11/26/2023 and indefinite										33		33		33		33
Cia Siderurgica Nacional	R$		05/31/2025										536		536		536		536
Cia Metalurgica Prada	R$		Indefinite						197		197		244		244		441		441
CSN Energia	R$		Up to 11/26/2023 and indefinite										1,920		1,920		1,920		1,920
CSN Mineração	R$		Up to 12/21/2024		846,284		846,284										846,284		846,284
CBS	R$		06/30/2024										21		21		21		21
Estanho de Rondônia	R$		7/15/2022		771		771										771		771
Total in R$					3,014,205		3,333,981		9,250		12,824		6,265		6,138		3,029,720		3,352,943
CSN Inova Ventures	US$		01/28/2028		1,300,000		1,300,000										1,300,000		1,300,000
CSN Resources	US$		Up to 04/17/2026		1,450,000		1,450,000										1,450,000		1,450,000
CSN Cimentos	US$		Indefinite		115,000								1,025,000		1,025,000		1,140,000		1,025,000
Total in US$					2,865,000		2,750,000						1,025,000		1,025,000		3,890,000		3,775,000
Lusosider Aços Planos	EUR		Indefinite										75,000		75,000		75,000		75,000
Total in EUR													75,000		75,000		75,000		75,000
Total in R$					15,006,870		15,346,375						5,780,265		479,795		20,787,135		21,540,463
					18,021,075		18,680,356		9,250		12,824		5,786,530		485,933		23,816,855		24,893,406

 

21.

SHAREHOLDERS´ EQUITY

 

21.a)

Paid-in capital

 

The fully subscribed and paid-in capital on June 30, 2022, was BRL10,240 million is divided into 1,326,093,947 common and book-entry shares ( in December 2021 BRL10,240 million is divided into 1,387,524,047 common and book-entry shares), with no par value. Each common share entitles its holder to one vote in the resolutions of the General Meetings.

 

21.b) Authorized

capital

 

The Company’s bylaws in effect on June 30, 2022, define that the share capital may be increased to up to 2,400,000,000 shares, independently of statutory reform.

 

 

21.c)

Legal Reserve

 

It will be applied 5% of the net profit calculated in each fiscal year , before any other allocation, in accordance with art. 193 of Law nº 6404/76, which will not exceed 20% of the capital stock.

85

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

Ownership structure

 

As of June 30, 2022, and December 31, 2021, the Company’s ownership structure was as follows:

 

						06/30/2022						12/31/2021
		Number of common shares		% of total shares		% of voting capital		Number of common shares		% of total shares		% of voting capital
Vicunha Aços S.A. (*)		679,522,254		51.00%		51.24%		679,522,254		48.97%		50.65%
Rio Iaco Participações S.A. (*)		45,706,242		3.00%		3.45%		45,706,242		3.29%		3.41%
NYSE (ADRs)		246,322,596		19.00%		18.58%		250,564,538		18.06%		18.67%
Other shareholders		354,542,855		27.00%		26.74%		365,941,013		26.38%		27.27%
Outstanding shares		1,326,093,947		100.00%		100.00%		1,341,734,047		96.70%		100.00%
Treasury shares								45,790,000		3.30%
Total shares		1,326,093,947		100.00%				1,387,524,047		100.00%

(*) Controlling group companies.

 

21.e)

Treasury shares

 

As of June 30, 2022, the position of treasury shares was as follows:

 

Program

Board’s Authorization

Authorized quantity

Program period

Average buyback price

Minimum and maximum buyback price

Number bought back

Share cancelation

Sale of shares

Balance in treasury

04/20/2018

30,391,000

From 4/20/2018 to 4/30/2018

Not applicable

Not applicable

22,981,500

7,409,500

1º

06/21/2021

24,154,500

From 06/22/2021 to 12/22/2021

R$ 21.82

R$20.06 and R$23.22

24,082,000

31,491,500

2º

6/12/2021

30,000,000

From 12/07/2021 to 6/30/2022

R$ 25.00

R$17.20 and R$26.76

29,938,600

61,430,100

05/18/2022

Not applicable

Not applicable

61,430,100

3º

05/18/2022

58,000,000

From 05/19/2022 to 05/18/2023

 

At a meeting held on May 18, 2022, the Company approved the cancellation of 61,430,100 common shares held in treasury with no change in the Company's capital stock, which is now represented by 1,326,093,947 (one billion, three hundred and twenty-six million, ninety-three thousand, nine hundred and forty-seven) common book-entry shares without nominal value

 

21.f)

Earnings per share

 

The earnings per share are shown below:

 

							Parent Company
	Six months ended				Three months ended
	06/30/2022		06/30/2021		06/30/2022		06/30/2021
	Common Shares				Common Shares
Profit for the period	1,403,728		10,205,786		197,326		4,965,771
Weighted average number of shares	1,327,901,762		1,380,114,547		1,326,412,628		1,380,114,547
Basic and diluted earnings per share	1.05710		7.39488		0.14877		3.59809

 

 

22.

COMPENSATION TO SHAREHOLDERS

 

At the Annual General Meeting held on April 29, 2022, the Company approved the distribution of BRL2,911,424 and that of the total amount of dividends declared by the AGO:(i) BRL1,750,000 have already been distributed to shareholders, as resolved by the Board of Directors in a meeting held on July 27, 2021; (ii) BRL256,952 have already been paid on May 20, 2022, as interest on equity, as deliberated by the Board of Directors in a meeting held on December 29, 2021; and (iii) BRL904,472, corresponding to the amount of BRL0.681594305290377 per share, to be paid in local currency, by the Company, without monetary restatement, in 2 (two) equal installments, in the amount of BRL452,236 each, corresponding to BRL0.340797152645188 per share, based on the shareholders' positions as of April 29, 2022, with the first installment already paid to shareholders residing in Brazil as of May 20, 2022, and the second installment will be available on a date to be defined in due course by the Management.

 

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23.

NET REVENUE FROM SALES

 

Net sales revenue is as follows:

 

								Consolidated
		Six months ended				Three months ended
		06/30/2022		06/30/2021		06/30/2022		06/30/2021
Gross revenue
Domestic market		14,569,774		15,012,676		7,352,587		8,287,061
Foreign market		11,011,254		15,739,560		4,808,001		9,000,879
		25,581,028		30,752,236		12,160,588		17,287,940
Deductions
Sales returns, discounts and rebates		(121,425)		(66,266)		(47,419)		(27,030)
Taxes on sales		(3,123,815)		(3,381,069)		(1,547,247)		(1,869,337)
		(3,245,240)		(3,447,335)		(1,594,666)		(1,896,367)
Net revenue		22,335,788		27,304,901		10,565,922		15,391,573
								Parent Company
		Six months ended				Three months ended
		06/30/2022		06/30/2021		06/30/2022		06/30/2021
Gross revenue
Domestic market		13,077,910		13,896,903		6,524,208		7,616,035
Foreign market		2,189,565		860,409		955,727		290,618
		15,267,475		14,757,312		7,479,935		7,906,653
Deductions
Sales returns, discounts and rebates		(131,412)		(166,779)		(70,974)		(20,141)
Taxes on sales		(2,598,474)		(2,939,235)		(1,269,874)		(1,608,493)
		(2,729,886)		(3,106,014)		(1,340,848)		(1,628,634)
Net revenue		12,537,589		11,651,298		6,139,087		6,278,019

 

24.

EXPENSES BY NATURE

 

								Consolidated
		Six months ended				Three months ended
		06/30/2022		06/30/2021		06/30/2022		06/30/2021
Raw materials and inputs		(7,170,325)		(5,440,935)		(3,471,864)		(2,896,102)
Outsourcing material		(1,636,020)		(2,608,784)		(946,187)		(1,498,605)
Labor cost		(1,492,006)		(1,349,879)		(807,745)		(684,342)
Supplies		(1,510,099)		(1,077,038)		(826,767)		(554,188)
Maintenance cost (services and materials)		(576,794)		(584,764)		(277,516)		(293,429)
Outsourcing services		(974,819)		(976,176)		(499,360)		(515,557)
Freight		(530,881)		(120,704)		(246,876)		(108,833)
Distribution freight		(470,188)		(739,859)		(259,760)		(405,017)
Depreciation, amortization and depletion		(1,278,361)		(958,161)		(642,891)		(502,488)
Others		(446,413)		(816,259)		(232,329)		(478,165)
		(16,085,906)		(14,672,559)		(8,211,295)		(7,936,726)
Classified as:
Cost of sales		(14,847,726)		(13,289,876)		(7,560,441)		(7,111,092)
Selling expenses		(947,928)		(1,102,780)		(503,932)		(680,194)
General and administrative expenses		(290,252)		(279,903)		(146,922)		(145,440)
		(16,085,906)		(14,672,559)		(8,211,295)		(7,936,726)

87

(CONVENIENCE TRANSLATION INTO ENGLISH FROM THE ORIGINAL PREVIOUSLY ISSUED IN PORTUGUESE)
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								Parent Company
		Six months ended				Three months ended
		06/30/2022		06/30/2021		06/30/2022		06/30/2021
Raw materials and inputs		(6,683,951)		(5,395,563)		(3,296,556)		(2,869,939)
Labor cost		(702,023)		(601,376)		(362,092)		(304,389)
Supplies		(1,061,181)		(750,124)		(579,565)		(376,517)
Maintenance cost (services and materials)		(252,996)		(290,020)		(102,201)		(141,279)
Outsourcing services		(567,699)		(395,138)		(281,918)		(189,998)
Freight		(110,592)		(12,805)		(56,024)		(6,653)
Distribution freight		(285,466)		(193,577)		(148,040)		(90,844)
Depreciation, amortization and depletion		(513,079)		(410,834)		(262,279)		(210,851)
Others		(159,310)		(108,827)		(87,893)		(52,982)
		(10,336,297)		(8,158,264)		(5,176,568)		(4,243,452)
Classified as:
Cost of sales		(9,762,356)		(7,734,001)		(4,894,623)		(4,044,092)
Selling expenses		(463,615)		(306,788)		(221,285)		(139,576)
General and administrative expenses		(110,326)		(117,475)		(60,660)		(59,784)
		(10,336,297)		(8,158,264)		(5,176,568)		(4,243,452)

 

The depreciation, amortization and depletion additions for the period were distributed as follows.

 

							Consolidated
	Six months ended				Three months ended
	06/30/2022		06/30/2021		06/30/2022		06/30/2021
Production costs (1)	(1,257,473)		(939,284)		(632,619)		(493,626)
Selling expenses	(6,440)		(5,732)		(3,230)		(2,423)
General and administrative expenses	(14,448)		(13,145)		(7,042)		(6,439)
	(1,278,361)		(958,161)		(642,891)		(502,488)
Other operational (2)	(38,236)		(51,344)		(17,569)		(24,500)
	(1,316,597)		(1,009,505)		(660,460)		(526,988)
							Parent Company
	Six months ended				Three months ended
	06/30/2022		06/30/2021		06/30/2022		06/30/2021
Production costs (1)	(502,187)		(400,964)		(256,811)		(206,224)
Selling expenses	(4,121)		(3,417)		(2,084)		(1,443)
General and administrative expenses	(6,771)		(6,453)		(3,384)		(3,184)
	(513,079)		(410,834)		(262,279)		(210,851)
Other operational	(3,240)		(3,416)		(1,551)		(1,674)
	(516,319)		(414,250)		(263,830)		(212,525)

(1)The cost of production includes PIS and COFINS credits on lease agreements on June 30, 2022, in the amount of BRL3,453 (BRL2,752 on June 30, 2021) in the consolidated and BRL302 (BRL401 on June 30, 2021) in the parent company.

 

(2)They mainly refer to the depreciation of investment properties, paralyzed equipment and amortization of the SWT Client Portfolio, see note 25.

 

 

 

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25.

OTHER OPERATING INCOME AND EXPENSES

								Consolidated
		Six months ended				Three months ended
		06/30/2022		06/30/2021		06/30/2022		06/30/2021
Other operating income
Receivables by indemnity		9,031		1,716		3,671		951
Rentals and leases		4,522		6,606		2,847		3,323
Dividends received				2				2
Contractual fines		2,019		905		1,631		140
Updated shares – Fair value through profit or loss (Note 13)		(2,354)		160,100		(14,962)		129,096
Net gain in shares sale (note 9.c) (1)				2,472,497
Other revenues		36,398		54,371		33,028		2,453
		49,616		2,696,197		26,215		135,965
Other operating expenses
Taxes and fees		(59,156)		(41,714)		(45,619)		(5,603)
Expenses/reversal with environmental liabilities, net		740		(660)		225		(818)
Write-off/(Provision) of judicial lawsuits		(44,643)		7,299		(16,098)		(1,324)
Depreciation and amortization (note 24)		(38,236)		(51,344)		(17,569)		(24,500)
Write-offs and estimated losses of PPE, intangible assets and investment properties, net of reversal (notes 10 and 11)		(6,612)		(42,442)		1,351		259
Estimated (Loss)/reversal in inventories		(118,222)		(93,818)		(88,955)		(30,340)
Idleness in stocks and paralyzed equipment (2)		(94,628)
Studies and project engineering expenses		(25,885)		(31,850)		(12,123)		(19,749)
Research and development expenses		(207)		(160)		(91)		(106)
Healthcare plan expenses		(51,159)		(64,212)		(24,977)		(35,296)
Cash flow hedge accounting realized (note 13) (3)		(397,656)		(589,728)		(318,360)		(278,918)
Other expenses		(210,887)		(202,834)		(141,754)		(140,956)
		(1,046,551)		(1,111,463)		(663,970)		(537,351)
Other operating income (expenses), net		(996,935)		1,584,734		(637,755)		(401,386)

 

								Parent Company
		Six months ended				Three months ended
		06/30/2022		06/30/2021		06/30/2022		06/30/2021
Other operating income
Receivables by indemnity		7,379		1,710		2,020		954
Rentals and leases		4,176		6,379		2,661		3,209
Contractual fines		1,312		462		1,304		2
Updated shares – Fair value through profit or loss (Note 13)		(2,354)		160,100		(14,962)		129,096
Net gain in shares sale (note 9.c) (1)				2,472,497
Other revenues		27,079		23,954		26,999		264
		37,592		2,665,102		18,022		133,525
Other operating expenses
Taxes and fees		(33,924)		(36,355)		(26,525)		(2,006)
Expenses with environmental liabilities, net		1,514		(490)		469		(583)
Write-off/(Provision) of judicial lawsuits		(26,714)		11,625		(7,707)		1,003
Depreciation of investment property, equipment paralyzed and amortization of intangible assets (note 24)		(3,240)		(3,416)		(1,551)		(1,674)
Write-offs and estimated losses of PPE, intangible assets and investment properties, net of reversal (notes 10 and 11)		(282)		(17,072)		(126)
Estimated (Loss)/reversal in inventories		(77,455)		(46,029)		(65,219)		(11,271)
Studies and project engineering expenses		(9,481)		(8,259)		(5,400)		(4,681)
Research and development expenses		(207)		(160)		(91)		(106)
Healthcare plan expenses		(50,653)		(63,747)		(24,703)		(35,136)
Cash flow hedge accounting realized (note 13) (3)		(421,030)		(252,250)		(341,734)
Other expenses		(130,357)		(138,645)		(99,788)		(106,697)
		(751,829)		(554,798)		(572,375)		(161,151)
Other operating income (expenses), net		(714,237)		2,110,304		(554,353)		(27,626)

1.

Refers to the initial public offering of shares of CSN Mineração. (see note 9.c).

 

2.

In 2022, it is the operational idleness due to lower-than-normal production volume, due to the intense rains registered in the ore extraction operation.

 

3.

These are the effects of Foreign Exchange Cash Flow Hedge (BRL421,031) and Cash Flow Hedge of the "Platts" index BRL23,375, totaling in Consolidated (BRL397,656) and (BRL421,031) in the Parent Company. On June 30, 2021 (BRL589,728) in Consolidated and (BRL252,250) in the Parent Company, the effects are from the Foreign Exchange Cash Flow Hedge (BRL337,478) and the Cash Flow Hedge of the "Platts" index (BRL252,250).

  

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26.

FINANCIAL INCOME (EXPENSES)

 

								Consolidated
		Six months ended				Three months ended
		06/30/2022		06/30/2021		06/30/2022		06/30/2021
Financial income
Related parties (Note 20 a)		80,701		30,867		52,223		19,130
Income from financial investments		315,046		105,288		188,523		70,643
Updated shares – Fair value through profit or loss (Note 13.d)		(1,030,702)		1,161,259		(808,347)		648,765
Gain from derivative (*)		45,161				45,161
Other income		90,979		79,926		59,484		53,217
		(498,815)		1,377,340		(462,956)		791,755
Financial expenses
Borrowings and financing - foreign currency (note 12)		(600,218)		(807,939)		(306,640)		(386,927)
Borrowings and financing - local currency (note 12)		(585,791)		(154,919)		(313,089)		(89,651)
Related parties (note 12)		(4,876)		(6,035)		(2,302)		(3,018)
Lease liabilities		(31,584)		(27,339)		(16,621)		(13,545)
Capitalised interest (note 10)		62,863		36,833		34,786		21,700
Interest and fines		(247,260)		(63,049)		(125,776)		(27,266)
(-) Adjustment present value of trade payables		(222,409)		(116,080)		(125,674)		(57,490)
Commission, bank fees, Guarantee and bank fees		(104,819)		(77,381)		(54,917)		(33,136)
PIS/COFINS over financial income		(56,972)		(35,799)		(49,839)		(28,728)
Other financial expenses		(187,791)		(279,832)		(50,731)		(182,715)
		(1,978,857)		(1,531,540)		(1,010,803)		(800,776)
Others financial items, net
Foreign exchange and monetary variation, net		431,597		(455,707)		580,437		(402,441)
Gains and (losses) on exchange derivatives (*)		30,826		69,349		3,310		72,411
		462,423		(386,358)		583,747		(330,030)
		(1,516,434)		(1,917,898)		(427,056)		(1,130,806)
Financial income (expenses), net		(2,015,249)		(540,558)		(890,012)		(339,051)
(*) Statement of gains and (losses) on derivative transactions (note 13)
Dollar - to - real NDF		45,162		37,322		45,162		30,564
Exchange rate swap Real x Dollar		(25,238)				55,510
Exchange rate swap Dollar x Euro				13,433				(4,191)
Interest rate swap CDI x IPCA		9,619				(33,249)
Exchange rate swap CDI x Dollar		46,444		18,594		(18,952)		46,038
		75,987		69,349		48,471		72,411

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								Parent Company
		Six months ended				Three months ended
		06/30/2022		06/30/2021		06/30/2022		06/30/2021
Financial income
Related parties (Note 20 a)		98,802		71,113		53,537		51,671
Income from financial investments		97,309		70,124		72,325		43,733
Updated shares – Fair value through profit or loss (Note 13.d)		(1,030,702)		1,161,259		(808,347)		648,765
Other income		112,714		73,607		85,370		52,596
		(721,877)		1,376,103		(597,115)		796,765
Financial expenses
Borrowings and financing - foreign currency (note 12)		(68,899)		(59,548)		(19,795)		(23,405)
Borrowings and financing - local currency (note 12)		(473,931)		(138,641)		(247,090)		(79,873)
Related parties (note 12)		(41,880)		(174,986)		(25,357)		(72,156)
Lease liabilities		(768)		(1,103)		(412)		(443)
Capitalised interest (note 10)		17,527		13,917		9,920		7,053
Interest and fines		(200,278)		(38,125)		(109,297)		(22,900)
(-) Adjustment present value of trade payables		(191,741)		(86,631)		(111,936)		(44,188)
Commission, bank fees, Guarantee and bank fees		(50,110)		(64,071)		(21,156)		(26,533)
PIS/COFINS over financial income		(12,780)		(29,064)		(11,054)		(27,382)
Other financial expenses		(24,643)		(100,402)		(12,278)		(46,973)
		(1,047,503)		(678,654)		(548,455)		(336,800)
Others financial items, net
Foreign exchange and monetary variation, net		361,284		(177,795)		565,255		(377,243)
Gains and (losses) on exchange derivatives (*)		46,444		18,594		(25,652)		46,038
		407,728		(159,201)		539,603		(331,205)
Financial income (expenses), net		(1,361,652)		538,248		(605,967)		128,760
(*) Statement of gains and (losses) on derivative transactions (note 13)
Exchange rate swap CDI x Dollar		46,444		18,594		(25,652)		46,038
		46,444		18,594		(25,652)		46,038

 

27.

SEGMENT INFORMATION

 

Results by segment

 

For the purpose of preparing and presenting the information by business segment, Management decided to maintain the proportional consolidation of the joint ventures as historically presented. For purposes of reconciliation of the consolidated result, the amounts recorded by these companies are not included in the "Corporate expenses/elimination" column.

 

																Six months ended
																06/30/2022
P&L		Steel		Mining		Logistics				Energy		Cement		Corporate expenses/elimination		Consolidated
						Port		Railroads
Net revenues
Domestic market		10,432,496		926,572		153,189		1,050,682		91,457		860,977		(2,023,517)		11,491,856
Foreign market		5,155,563		5,542,431										145,938		10,843,932
Cost of sales and services (note 24)		(11,615,879)		(3,427,030)		(108,159)		(727,501)		(96,176)		(572,764)		1,699,783		(14,847,726)
Gross profit		3,972,180		3,041,973		45,030		323,181		(4,719)		288,213		(177,796)		7,488,062
General and administrative expenses (note 24)		(640,112)		(149,426)		(17,293)		(64,915)		(16,907)		(137,430)		(212,097)		(1,238,180)
Other operating (income) expenses, net (note 25)		(331,845)		(198,987)		(9,926)		24,160		(903)		(23,435)		(455,999)		(996,935)
Equity in results of affiliated companies (note 9)														73,665		73,665
Operating result before Financial Income and Taxes		3,000,223		2,693,560		17,811		282,426		(22,529)		127,348		(772,227)		5,326,612
Sales by geographic area
Asia				4,698,621										145,938		4,844,559
North America		1,191,869														1,191,869
Latin America		172,446														172,446
Europe		3,790,182		843,810												4,633,992
Others		1,066														1,066
Foreign market		5,155,563		5,542,431										145,938		10,843,932
Domestic market		10,432,496		926,572		153,189		1,050,682		91,457		860,977		(2,023,517)		11,491,856
Total		15,588,059		6,469,003		153,189		1,050,682		91,457		860,977		(1,877,579)		22,335,788

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																Three months ended
																06/30/2022
P&L		Steel		Mining		Logistics				Energy		Cement		Corporate expenses/elimination		Consolidated
						Port		Railroads
Net revenues
Domestic market		5,247,692		411,196		77,298		592,238		47,320		474,996		(1,032,156)		5,818,584
Foreign market		2,458,294		2,196,493										92,551		4,747,338
Cost of sales and services (note 24)		(5,789,150)		(1,831,888)		(53,379)		(385,864)		(49,139)		(300,518)		849,497		(7,560,441)
Gross profit		1,916,836		775,801		23,919		206,374		(1,819)		174,478		(90,108)		3,005,481
General and administrative expenses (note 24)		(312,832)		(87,027)		(7,585)		(34,172)		(8,354)		(68,509)		(132,375)		(650,854)
Other operating (income) expenses, net (note 25)		(230,017)		(48,729)		(8,896)		11,530		(454)		(3,462)		(357,727)		(637,755)
Equity in results of affiliated companies (note 9)														54,405		54,405
Operating result before Financial Income and Taxes		1,373,987		640,045		7,438		183,732		(10,627)		102,507		(525,805)		1,771,277
Sales by geographic area
Asia				1,615,360										92,551		1,707,911
North America		654,147														654,147
Latin America		67,874														67,874
Europe		1,736,273		581,133												2,317,406
Foreign market		2,458,294		2,196,493										92,551		4,747,338
Domestic market		5,247,692		411,196		77,298		592,238		47,320		474,996		(1,032,156)		5,818,584
Total		7,705,986		2,607,689		77,298		592,238		47,320		474,996		(939,605)		10,565,922

 

																Six months ended
																06/30/2021
P&L		Steel		Mining		Logistics				Energy		Cement		Corporate expenses/elimination		Consolidated
						Port		Railroads
Net revenues
Domestic market		10,926,008		1,695,650		155,538		887,313		109,688		620,201		(2,636,802)		11,757,596
Foreign market		3,891,005		11,142,634										513,666		15,547,305
Cost of sales and services (note 24)		(10,249,398)		(4,153,621)		(107,501)		(598,583)		(69,567)		(395,355)		2,284,149		(13,289,876)
Gross profit		4,567,615		8,684,663		48,037		288,730		40,121		224,846		161,013		14,015,025
General and administrative expenses (note 24)		(532,702)		(195,384)		(19,633)		(59,140)		(15,043)		(57,896)		(502,885)		(1,382,683)
Other operating (income) expenses, net (note 25)		(308,934)		(457,702)		(2,759)		(11,340)		(940)		(24,902)		2,391,311		1,584,734
Equity in results of affiliated companies (note 9)														68,566		68,566
Operating result before Financial Income and Taxes		3,725,979		8,031,577		25,645		218,250		24,138		142,048		2,118,005		14,285,642
Sales by geographic area
Asia				9,658,580										513,666		10,172,246
North America		712,647														712,647
Latin America		275,683														275,683
Europe		2,902,675		1,484,054												4,386,729
Foreign market		3,891,005		11,142,634										513,666		15,547,305
Domestic market		10,926,008		1,695,650		155,538		887,313		109,688		620,201		(2,636,802)		11,757,596
Total		14,817,013		12,838,284		155,538		887,313		109,688		620,201		(2,123,136)		27,304,901

 

																Three months ended
																06/30/2021
		Steel		Mining		Logistics				Energy		Cement		Corporate expenses/elimination		Consolidated
						Port		Railroads
Net revenues
Domestic market		6,049,789		903,904		72,022		486,723		55,407		342,778		(1,415,431)		6,495,192
Foreign market		2,094,350		6,453,413										348,618		8,896,381
Cost of sales and services (note 24)		(5,451,608)		(2,312,362)		(51,961)		(311,840)		(34,628)		(203,908)		1,255,215		(7,111,092)
Gross profit		2,692,531		5,044,955		20,061		174,883		20,779		138,870		188,402		8,280,481
General and administrative expenses (note 24)		(249,921)		(141,296)		(11,457)		(30,638)		(7,531)		(33,041)		(351,750)		(825,634)
Other operating (income) expenses, net (note 25)		(173,663)		(339,789)		(1,320)		8,336		(561)		(11,641)		117,252		(401,386)
Equity in results of affiliated companies (note 9)														55,121		55,121
Operating result before Financial Income and Taxes		2,268,947		4,563,870		7,284		152,581		12,687		94,188		9,025		7,108,582
Sales by geographic area
Asia				5,659,557										348,618		6,008,175
North America		406,417														406,417
Latin America		157,290														157,290
Europe		1,530,643		793,856												2,324,499
Foreign market		2,094,350		6,453,413										348,618		8,896,381
Domestic market		6,049,789		903,904		72,022		486,723		55,407		342,778		(1,415,431)		6,495,192
Total		8,144,139		7,357,317		72,022		486,723		55,407		342,778		(1,066,813)		15,391,573

 

28.

INSURANCE

 

In order to adequately mitigate risks and in view of the nature of its operations, the Company contract several different types of insurance policy. The policies are taken out in line with the Risk Management policy and are similar to the insurance taken out by other companies in the same industry in which CSN and its subsidiaries operate. The coverage of these policies includes National Transport, International Transport, Life and Personal Accident Insurance, Health, Vehicle Fleet, D&O (Administrators Liability Insurance), General Liability, Engineering Risks, Export Credit, Insurance Warranty and Civil Liability Port Operator.

 

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The Company's insurance is contracted together with the insurance of its subsidiaries, but there is no joint or subsidiary responsibility between the Company and companies of its economic group with CSN Mineração.

 

In 2022, after negotiations with insurers and reinsurers in Brazil and abroad, an Operational Risk Insurance Policy for Property Damage and Business Interruption was issued, effective from June 30, 2022, to June 30, 2023. Under the policy, the Maximum Indemnity Limit is US$475 million for the locations with Company activities combined for Property Damage and loss of profits, and the deductible is US$385 million for material damages and 45 days for loss of profits. The policy's maximum indemnity limit is shared with other insured establishments.

 

The risk assumptions adopted, given their nature, are not part of the scope of the review of the interim financial statements, and consequently, they have not been reviewed by our independent auditors.

 

29.

ADDITIONAL INFORMATION TO CASH FLOWS

 

The following table presents additional information on transactions related to the statement of cash flows:

 

			Consolidated				Parent Company
	06/30/2022		06/30/2021		06/30/2022		06/30/2021
Income tax and social contribution paid	2,338,584		1,651,414		126,103
Addition to PP&E with interest capitalization (notes 10 and 26)	62,863		36,833		17,527		13,917
Remeasurement and addition – Right of use (note 10 i)	51,614		63,546		2,501		(1,158)
Addition to PP&E without adding cash			61,863
	2,453,061		1,813,656		146,131		12,759

 

30.

COMPREHENSIVE INCOME STATEMENT

 

								Consolidated
		Six months ended				Three months ended
		06/30/2022		06/30/2021		06/30/2022		06/30/2021
Net income for the year		1,733,274		11,209,973		369,331		5,512,660
Other comprehensive income
Items that will not be subsequently reclassified to the statement of income
Actuarial gains/(losses) over pension plan of subsidiaries, net of taxes		56		55		(41)		32
		56		55		(41)		32
Items that could be subsequently reclassified to the statement of income
Cumulative translation adjustments for the year		(585,971)		(192,468)		155,081		(278,587)
(Loss)/gain cash flow hedge, net of taxes		117,472		696,150		(1,282,476)		2,615,279
Cash flow hedge reclassified to income upon realization		421,030		252,250		341,734
Cash flow hedge accounting - "Platts" reclassified to income upon realization, net of taxes		(15,427)		222,735		(15,427)		184,085
(Loss) cash flow hedge accounting		(279,801)		(195,613)		(282,269)
		(342,697)		783,054		(1,083,357)		2,520,777
		(342,641)		783,109		(1,083,398)		2,520,809
Comprehensive income for the year		1,390,633		11,993,082		(714,067)		8,033,469
Attributable to:
Controlling shareholders		1,120,859		10,983,039		(825,697)		5,670,168
Earnings attributable to the non-controlling interests		269,774		1,010,043		111,630		2,363,301
		1,390,633		11,993,082		(714,067)		8,033,469

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								Parent Company
		Six months ended				Three months ended
		06/30/2022		06/30/2021		06/30/2022		06/30/2021
Net income for the year		1,403,728		10,205,786		197,326		4,965,771
Other comprehensive income
Items that will not be subsequently reclassified to the statement of income
Actuarial gains/(losses) over pension plan of subsidiaries, net of taxes		56		49		25		29
		56		49		25		29
Items that could be subsequently reclassified to the statement of income
Cumulative translation adjustments for the year		(585,971)		(192,468)		155,081		(278,587)
(Loss)/gain cash flow hedge, net of taxes		117,472		696,150		(1,282,476)		2,615,279
Cash flow hedge reclassified to income upon realization		421,030		252,250		341,734
(Loss)/gain cash flow hedge accounting, net taxes,from investments in subsidiaries		(235,456)		21,272		(237,387)		20,795
		(282,925)		777,204		(1,023,048)		2,357,487
		(282,869)		777,253		(1,023,023)		2,357,516
Comprehensive income for the year		1,120,859		10,983,039		(825,697)		7,323,287

 

31.

SUBSEQUENT EVENTS

 

- Acquisition of Companhia Energética Chapecó - CEC

 

On July 25, 2022, the Company and its subsidiary CSN Mineração signed a Private Instrument of Assignment of Rights and Obligations, with the objective of supporting and strengthening the mining business expansion strategy, CSN assigned and transferred to CSN Mineração the rights and obligations arising from the Share Purchase and Sale Agreement ("Purchase and Sale Agreement") signed on July 1, 2022 between CSN, together with CSN Energia, Astra Infraestrutura I Fundo de Investimento em Participação Multiestratégia and BMPI Infra S. A. A. In this Purchase and Sale Agreement, CSN Energia and CSN committed to acquire 100% of the shares of Companhia Energética Chapecó - CEC, holder of the concession for the Quebra-Queixo Hydroelectric Plant, which has an installed capacity of 120MW, for the base price of BRL427,518, subject to adjustment in the terms and conditions provided for in the Purchase and Sale Agreement. The closing of the transaction, already considering CSN Mineração as the buyer, remains subject to approval by governmental, competition and regulatory authorities.

 

- Issuance of Debentures

 

On July 12, 2022, the subsidiary CSN Mineração signed a Private Instrument of Deed of the 2nd (Second) Issuance of Simple Debentures, not convertible into shares, unsecured, in up to two series, for public distribution, with firm distribution guarantee, of CSN Mineração. The base amount of the issue is BRL1.4 billion and 1,400,000 debentures will be issued initially. The issue will be carried out in two (2) series, with the first series debentures maturing on ten (10) years from the issue date, and therefore maturing on July 15, 2032, and the second series will mature fifteen (15) years from the issue date, and therefore maturing on July 15, 2037. The nominal value will be updated by the accumulated variation of the IPCA and with semi-annual interest.

 

- Acquisition of Companhia Estadual e Geração de Energia Elétrica ("CEEE-G")

 

On July 29, 2022, the Company, through its subsidiary Companhia Florestal do Brasil S.A., was the winner of the auction bidding procedure carried out in the form of Edital no. 01/2022, ("Edital") and promoted by the Government of the State of Rio Grande do Sul regarding the privatization process of CEEE-G, for the acquisition of shares representing 66.23% of the capital stock of CEEE-G, for the amount of BRL928,000. The effectiveness of the acquisition is still subject to certain conditions precedent, the approval of the operation by CADE and ANEEL and the signing of the respective share purchase and sale agreement.

 

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11.1 Projections

 

The Company clarifies that the information disclosed in this item represents a mere estimation, with hypothetical data and in no way constitute a promise of performance on behalf of the Company and/or its directors. The projections presented below involve market factors beyond the Company's control and, therefore, may change.

 

a)

Projection object.

The Company estimates the following variables below:

 

Projections	2022	2023E	2022-2026 E
Leverage (Net Debt / Adjusted EBITDA)	1.0x	-	-
Capex expansion (BRLmillion) - Mining	-	-	BRL12,000
Capex (BRLmillion) - Steel	-	-	BRL6,300
Capex (BRLmillion) - Consolidated	BRL4,100	-	-
Sales volume Steel (kton) - Steel	5,104	-	-
EBITDA/ton (USD/ton) - Steel	-	$165	-
Iron Ore Production Volume (kton) - Mining	36,000 – 38,000	-	-
Cash Cost Mining (USD/ton)	$ 20.0 - $22.00	-	-

 

b)

Projected period and the validity of the projection.

The projected period and expiration dates can be viewed in the table above in item 11.1 a), and the numbers are always presented at the end of the fiscal year and duly published in the Standardized Financial Statements (DFP) of each fiscal year.

 

c)

Assumptions of the projection, with the indication of which ones can be influenced by the administration of the issuer and which escape its control.

 

All the premises of the projections mentioned above are subject to external influence factors, which are outside the control of the Company's management. Therefore, in the event of any material change in these assumptions, the Company may revise its estimates, changing them compared to those originally presented.

 

The main premise that can be influenced by the Company's management would be its production and sales volumes, along with the associated costs.

 

The volume of ore production always considers our 2022 mining plan, with increased pellet feed production. However, key factors such as sales prices and raw material inputs are outside the Company's control.

 

d)

Values of the indicators that are the subject of the forecast.

The values can be found above in item 11.1 a).

11.2 In the event that the issuer has disclosed, during the last 3 fiscal years, projections on the evolution of its indicators:

 

a)

inform which ones are being replaced by new projections included and which are being repeated.

 

Estimates maintained:

 

Projections	2022	2023E	2022-2026 E
Leverage (Net Debt / Adjusted EBITDA)	1.0x	-	-
Capex expansion (BRLmillion) - Mining	-	-	BRL12,000
Capex (BRLmillion) - Steel	-	-	BRL6,300
Capex (BRLmillion) - Consolidated	BRL4,100	-	-
EBITDA/ton (USD/ton) - Steel	-	$165	-

 

Estimates replaced in the last 3 fiscal years:

 

CSN replaced in Aug/22 Mining Cash Cost in 2022 between $20.00 - $22.00, against a previous expectation of $18.00.

 

CSN replaced in Aug/22 estimated volume of iron ore production in 2022 to 36-38Mton, against previous expectation of 39-41Mton.

 

CSN replaced in Dec/21 the estimated volume of iron ore production in 2021 to 36-37Mton, against previous expectation of 38-40Mton.

 

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CSN replaced in Dec/21 Mining Cash Cost in 2021 to $19.00, against a previous expectation of $16.00.

CSN replaced in Dec/21 Mining Expansion Capex in 2021 to BRL560 million, against a previous expectation of BRL1,000 million.

 

CSN replaced in Dec/21 the estimated Mining Expansion Capex between 2022-2026 to BRL12,000 million, against a previous expectation of BRL14,000 million between 2021-2025.

 

CSN replaced in Dec/21 the Steel Capex estimates between 2022-2026 to BRL6,300 million, against a previous expectation of BRL6,100 million between 2021-2025.

 

CSN replaced in Dec/20 the projection of reaching 3.0 x to 2.5 x in the Net Debt/Adjusted EBITDA Indicator at the end of the 2020 annual Balance Sheet.

 

CSN replaced in Dec/20 the projection of reaching 2.5 x to 2.0 x the Net Debt/Adjusted EBITDA Indicator at the end of the annual Balance Sheet of 2021.

 

CSN replaced in Dec/20 the projection of reaching a Net Debt of BRL23 billion by BRL20 billion at the end of the 2020 annual Balance Sheet.

 

CSN replaced in Dec/20 the projection of achieving a Consolidated Adjusted EBITDA of BRL9.75 billion by BRL11.2 billion at the end of the 2020 annual Balance Sheet.

 

CSN replaced in Dec/20 the projection to achieve a Mining segment EBITDA of BRL7.3 billion by BRL7.65 billion at the end of the 2020 annual Balance Sheet.

 

CSN replaced in Dec/20 the projection of reaching a Steel segment EBITDA of BRL1.6 billion by BRL2.3 billion at the end of the 2020 annual Balance Sheet.

 

CSN replaced in Dec/20 the projection of reaching a Consolidated CAPEX of BRL1.5 billion for BRL1.6 billion at the end of the 2020 annual Balance Sheet.

 

CSN replaced in Dec/20 the estimated iron ore production volume in 2020 of 33Mton, against previous expectation of 33-36Mton.

 

b) regarding the projections related to periods already elapsed, compare the projected data with the effective performance of the indicators, clearly indicating the reasons that led to deviations in the projections.

 

2021

 

 

Regarding the major deviations above and below the expectation, our evaluations are as follows:

 

The increase in net debt, in millions of reais, compared to the guidance was mainly tied by the share repurchase programs, in addition to the exchange variation observed in the period. However, even with the increase in net debt, the company's leverage was still below the 1.0x Net Debt/EBITDA level.

 

The steel Sales Volume was impacted by the lower sales volume during the third quarter, which was marked by the commercial strategy of prioritizing price, without the application of discounts, to the detriment of the sold volume. This strategy proved to be assertive for the Company's financial results.

 

The company's dollarized Cash Cost annual average was $2.6/t, worse than the guidance presented due to a one-off pressure in November, impacted by the scheduled halts and heavy rainfall in the period, causing a lower dilution of the mine’s and port’s fixed cost. If we discount the month of November from the calculation of the average of the year, the average cash cost would be $19.00, which is in line with what was expected by The Company.

 

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2020

 

¹MINING EBITDA – the variation of BRL541 million above expected was due to the higher iron ore price during 4Q20.

²Production Volume – the negative variation of 2.3Mton was due to rainfall, pandemic impacts and lower availability of iron ore compared to expected.

 

Below is a summary table about the evolution of projections during the last exercises, in line with the clarifications provided above:

 

Net Revenue	2016	2017	2018	2019	2020
Estimated	n.a.	18,000	22,230	n.a.	n.a.
Hit	17,149	18,525	22,969	n.a.	n.a.
Change %	n.a.	3%	3%	-	-
Adjusted EBITDA	2016	2017	2018	2019	2020
Estimated	n.a.	5,000	5,574	7,500	BRL11,200
Hit	4,075	4,645	5,849	7,251	BRL11,473
Change %	n.a.	-7%	5%	-3%	BRL273
Leverage	2016	2017	2018	2019	2020
Estimated	n.a.	5.00x	n.a.	3.00x	2.5x
Hit	6.32x	5.66x	4.55x	3.74X	2.23x
Change %	n.a.	13%	n.a.	0.74x	- 0.27 x
Iron Ore Production Volume	2016	2017	2018	2019	2020
Estimated	n.a.	n.a.	28,500	33,000	33,000-36,000
Hit	32,174	29,921	27,875	32,090	30,666
Change %	n.a.	n.a.	-2%	-3%	-7.07%
Iron Ore Sales Volume	2016	2017	2018	2019	2020
Estimated	n.a.	n.a.	n.a.	40,000	n.a.
Hit	n.a.	n.a.	n.a.	38,545	n.a.
Change %	n.a.	n.a.	n.a.	-4%	n.a.
*E = estimated
**n.a. = not rated

 

c) as of projections for periods still in progress, to inform whether the projections remain valid on the date of delivery of the form and, where appropriate, to explain why they were abandoned or replaced.

 

Current and valid estimates:

 

Projections	2022	2023E	2022-2026 E
Leverage (Net Debt / Adjusted EBITDA)	1.0x	-	-
Capex expansion (BRLmillion) - Mining	-	-	BRL12,000
Capex (BRLmillion) - Steel	-	-	BRL6,300
Capex (BRLmillion) - Consolidated	BRL4,100	-	-
Sales volume Steel (kton) - Steel	5,104	-	-
EBITDA/ton (USD/ton) - Steel	-	$165	-
Iron Ore Production Volume (kton) - Mining	36,000 – 38,000	-	-
Cash Cost Mining (USD/ton)	$ 20.0 - $22.00	-	-

 

Monitoring and changes in projections disclosed

 

Replaced estimates:

CSN replaced in Aug/22 Mining Cash Cost in 2022 between $20.00 - $22.00, against a previous expectation of $18.00.

 

CSN replaced in Aug/22 estimated volume of iron ore production in 2022 to 36-38Mton, against previous expectation of 39-41Mton.

 

CSN replaced in Dec/21 the estimated volume of iron ore production in 2021 to 36-37Mton, against previous expectation of 38-40Mton.

 

CSN replaced in Dec/21 Mining Cash Cost in 2021 to $19.00, against a previous expectation of $16.00.

 

CSN replaced in Dec/21 Mining Expansion Capex in 2021 to BRL560 million, against a previous expectation of BRL1,000 million.

 

CSN replaced in Dec/21 the estimated Mining Expansion Capex between 2022-2026 to BRL12,000 million, against a previous expectation of BRL14,000 million between 2021-2025.

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CSN replaced in Dec/21 the Steel Capex estimates between 2022-2026 to BRL6,300 million, against a previous expectation of BRL6.100 million between 2021-2025.

 

Abandoned estimates in the last 3 exercises:

 

1Q20

 

CSN estimates production volume (old methodology adds only to own production) of iron ore at, 31.2 Mton in 2021, 36.6 Mton in 2022 and 38.0 Mton in 2023. The Company no longer demonstrates its own production volume in isolation, since the first quarter, own production has been consolidated with the purchase of ore from third parties.

 

 

 

 

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Independent Auditor’s Report on the Financial Information

 

 

 

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Opinions and Statements / Officers Statement on the Financial Statement

 

 

As Executive Officers of Companhia Siderúrgica Nacional, we declare pursuant to Article 27, paragraph 1º, item VI of CVM Instruction 80, of March 29, 2022, that we reviewed, discussed and agreed with the Company’s Financial Statements for the quarter ended June 30,2022.

 

 

 

 

São Paulo, May 15, 2022.

 

 

Benjamin Steinbruch

CEO

 

 

 

Marcelo Cunha Ribeiro

Executive Officer – CFO and Investors Relations

 

 

 

Luis Fernando Barbosa Martinez

Executive Officer

 

 

 

David Moise Salama

Executive Officer

 

 

 

Eduardo Guardiano Leme Gotilla

Executive Officer

 

 

 

Milton Picinini Filho

Executive Officer

 

 

 

Stephan Heinz Josef Victor Weber

Executive Officer

 

 

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Opinions and Statements / Officers Statement on Auditor’s Report

 

As Executive Officers of Companhia Siderúrgica Nacional, we declare pursuant to Article 27, paragraph 1º, item V of CVM Instruction 80, of March 29,2022, that we reviewed, discussed and agreed with the opinion expressed on the Independent Auditors’ Report related to the Company’s Financial Statements for the quarter ended June 30,2022.

 

 

 

 

São Paulo, May 15, 2022.

 

 

Benjamin Steinbruch

CEO

 

 

 

Marcelo Cunha Ribeiro

Executive Officer – CFO and Investors Relations

 

 

 

Luis Fernando Barbosa Martinez

Executive Officer

 

 

 

David Moise Salama

Executive Officer

 

 

 

Eduardo Guardiano Leme Gotilla

Executive Officer

 

 

 

Milton Picinini Filho

Executive Officer

 

 

 

Stephan Heinz Josef Victor Weber

Executive Officer

 

 

 

 

 

 

101

SIGNATURE

 

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Date: August 26, 2022

 

COMPANHIA SIDERÚRGICA NACIONAL
By:	/S/ Benjamin Steinbruch
	Benjamin Steinbruch Chief Executive Officer

 

By:	/S/ Marcelo Cunha Ribeiro
	Marcelo Cunha Ribeiro Chief Financial and Investor Relations Officer

 

 

 

 

FORWARD-LOOKING STATEMENTS

This press release may contain forward-looking statements. These statements are statements that are not historical facts, and are based on management's current view and estimates of future economic circumstances, industry conditions, company performance and financial results. The words "anticipates", "believes", "estimates", "expects", "plans" and similar expressions, as they relate to the company, are intended to identify forward-looking statements. Statements regarding the declaration or payment of dividends, the implementation of principal operating and financing strategies and capital expenditure plans, the direction of future operations and the factors or trends affecting financial condition, liquidity or results of operations are examples of forward-looking statements. Such statements reflect the current views of management and are subject to a number of risks and uncertainties. There is no guarantee that the expected events, trends or results will actually occur. The statements are based on many assumptions and factors, including general economic and market conditions, industry conditions, and operating factors. Any changes in such assumptions or factors could cause actual results to differ materially from current expectations.

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