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
01/01/2023 to 09/30/2023	7
01/01/2022 to 09/30/2022	8
Statement of Value Added	9
Consolidated Financial Statements
Balance Sheet – Assets	10
Balance Sheet - Liabilities	11
Statement of Income	12
Statement of Comprehensive Income	13
Statement of Cash Flows	14
Statement of Changes in Shareholders’ Equity
01/01/2023 to 09/30/2023	15
01/01/2022 to 09/30/2022	16
Statement of Value Added	17
Comments on the Company’s Consolidated Performance	18
Notes to the financial information	39
Comments on the Performance of Business Projections	86
Reports and Statements
Unqualified Independent Auditors’ Review Report	90
Officers Statement on the Financial Statements	91
Officers Statement on Auditor’s Report	92

 

 

 

Company Information / Capital Breakdown

 

Number of Shares (Units)	Current Period 9/30/2023
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
(R$ thousand)

 

 

 

 

 

 

Parent Company Financial Statements / Balance Sheet – Liabilities
(R$ thousand)

 

 

 

 

 

 

Parent Company Financial Statements / Statement of Income
(R$ thousand)

 

 

 

Parent Company Financial Statements / Statement of Comprehensive Income

(R$ thousand)

 

 

 

Parent Company Financial Statements / Statements of Cash Flows – Indirect Method

(R$ thousand)

 

 

 

Parent Company Financial Statements / Statement of Changes in Equity - 01/01/2023 to 09/30/2023
(R$ thousand)

 

 

 

 

 

 

Parent Company Financial Statements / Statement of Changes in Equity - 01/01/2022 to 09/30/2022
(R$ thousand)

 

 

 

Parent Company Financial Statements / Statement of Value Added

(R$ thousand)

 

 

 

Consolidated Financial Statements / Balance Sheet - Assets
(R$ thousand)

 

 

 

 

 

 

 

Consolidated Financial Statements / Balance Sheet – Liabilities
(R$ thousand)

 

 

Consolidated Financial Statements / Statement of Comprehensive Income

(R$ thousand)

 

 

Consolidated Financial Statements / Statements of Cash Flows – Indirect Method

(R$ thousand)

 

 

 

 

Consolidated Financial Statements / Statements of Changes in Equity - 01/01/2023 to 09/30/2023
(R$ thousand)

 

 

 

 

 

Consolidated Financial Statements / Statements of Changes in Equity - 01/01/2022 to 09/30/2022
(R$ thousand)

 

 

 

Consolidated Financial Statements / Statements of Value Added

(R$ thousand)

 

 

  

 

  

Consolidated Table - Highlights

 

¹ Adjusted EBITDA is calculated from net income (loss), plus depreciation and amortization, taxes on profit, net financial result, investment participation result, other operating income/expenses result and includes the proportional share 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 Drawn Risk operations.

 

Consolidated Results

 

·

Net Revenue totaled R$ 11,125 million in 3Q23, which represents an increase of 1.2% when compared to 2Q23, mainly as a result of the strong performance in the mining segment, which combined a new sales record with an increase in realized price. In addition, the logistics and cement segments also contributed positively to the higher revenues recorded in the period.

 

·

Cost of Goods Sold (COGS) totaled R$ 8,320 million in 3Q23, down 4.9% from the previous quarter, reflecting the normalization of production in the steel industry.

 

·

In 3Q23, CSN recorded Gross Profit of R$ 2,805 million, with a Gross Margin of 25.2% or 4.8 p.p. higher than in the previous quarter. This growth in profitability reflects the strong operational performance seen in the period, in addition to the positive effect of the increase in the exchange rate on sales to the foreign market.

 

·

Selling, General and Administrative Expenses totaled R$ 1,175 million in 3Q23, 8.6% higher than in 2Q23, as a result of the higher volume sold in mining, resulting in higher freight expenses.

 

·

The group of Other Revenues and Operating Expenses was negative by R$ 113 million in 3Q23, which represents a reduction of 11.5% compared to 2Q23, explained by the positive effect of iron ore hedging operations, which generated a gain of R$ 31 million in the period.

 

·

In 3Q23, the Financial Result was negative by R$ 1,223 million, in line with the previous quarter, as a consequence of the maintenance of the cost of debt and a lesser impact of Usiminas' shares.

 

 

·

Equity Result was positive by R$ 131 million in 3Q23, an increase of 22.4% compared to the previous quarter, as a result of the strong performance achieved by MRS.

 

 

·

CSN recorded Net Income of R$ 91 million in 3Q23, which represents a reduction of 67.8% compared to the previous quarter, as 2Q23 was positively impacted by a reversal of the provision with IR/CSLL. This situation ended up offsetting the operational improvement seen in this quarter.

 

Adjusted EBITDA

 

*The Company discloses its Adjusted EBITDA excluding participation in investments and other operating income (expenses) because it understands that they should not be considered in the calculation of recurring operating cash generation.

 

·

In 3Q23, Adjusted EBITDA was R$ 2,815 million, with an Adjusted EBITDA Margin of 24.3% or 4.7 p.p. above that seen in the last quarter. This increase in profitability is a direct consequence of the improvement in prices in the mining segment, which, combined with a higher sales volume, ended up offsetting the more challenging situation in the steel segment. Additionally, the stronger performance achieved in the logistics segment and the positive dynamics seen in the cement segment, with price increases and capture of synergies, also contributed favorably to the EBITDA improvement.

 

Adjusted EBITDA (R$ MM) and Adjusted EBITDA Margin¹ (%)

 

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

 

Adjusted Cash Flow

 

Adjusted Cash Flow in 3Q23 was positive by R$ 1,022 million, as a result of the combination of strong operating performance and efficient working capital management, yet with another reduction in inventory observed during the period.

 

Adjusted cash flow¹ in 3Q23 (R$ MM)

 

¹ The concept of Adjusted cash flow is calculated from Adjusted EBITDA, subtracting Ebitda from Joint Subsidiaries, CAPEX, IR, Financial Result and changes in Assets and Liabilities², excluding the effect of the Glencore advance.

² The Adjusted Working Capital is composed of the variation of the Net Working Capital, plus the variation of accounts of long-term assets and liabilities and disregarding the net variation of IR and CS.

 

Indebtedness

 

On 09/30/2023, consolidated net debt reached R$ 29,939 million, with the leverage indicator measured by the LTM Net Debt/EBITDA ratio reaching 2.63x, which represents a reduction of 150 basis points compared to the previous quarter. With the peak leverage of the year behind us, the Company remains firm in its path of reducing its debt ratio and is on track to deliver an increasingly solid capital structure, even more so when considering the normalization of the steel operation and the growth potential of the cement segment, after synergy captures are complete. In addition, CSN maintained its policy of carrying a high cash position, which reached R$ 16 billion in this quarter.

 

 

 

Indebtedness (R$ Billion) and Net Debt / Adjusted EBITDA (x)		Net Debt Build-Up (R$ Billions)

 

¹ Net Debt / EBITDA: For debt calculation considers 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 the amortization period, focusing on long-term operations and the local capital market. Among the main transactions in 3Q23, CSN's 14^th issuance of simple debentures stands out, in the total amount of R$ 700 million, with the objective of investing in railway infrastructure, in the logistics and transportation segment.

 

Amortization Schedule (R$ Bi)

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

² Management Gross / Net Debt considers participation in MRS (37.27%), without accrued interest.

³ Average Term after completion of the Liability Management Plan.

 

Foreign Exchange Exposure

 

The accumulated net foreign exchange exposure in the consolidated balance sheet up to 3Q23 was US$ 456 million, as shown in the table below, in line with the company's policy of minimizing the impacts of exchange rate volatility on the result. The Hedge Accounting adopted by CSN correlates the projected flow of dollar exports in dollars with the future maturities of the debt in the same currency. As a result, the exchange variation of the dollar debt is temporarily recorded in the shareholders' equity and is taken to the result when the dollar revenues from such exports occur.

 

 

Investments

 

A total of R$ 1,191 million were invested in 3Q23, 20.2% higher than the amount invested in 2Q23, with emphasis on repairs to coke batteries at UPV and general repairs to steel operations. In the mining segment, we highlight the current investments to maintain operational capacity and progress in expansion projects (mainly related to P15, recovery of tailings from dams and expansion of the Itaguaí port), accompanied by current investments in cement operations.

 

 

Net Working Capital

 

Net Working Capital applied to the business totaled R$ 1,922 million in 3Q23, a reduction of 36.1% compared to 2Q23, due to (i) the Company's lower inventory volume, in line with the increase in sales recorded in the period, and (ii) an increase in the number of CSN suppliers.

 

The calculation of the Net Working Capital applied to the business disregards the advance on the sales of ore, as shown in the following table:

 

 

¹ Other CCL Assets: Considers employee 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/inventory losses. For the calculation of the SME, the balances of warehouse stocks are not considered.

 

 

 

 

Results by Business Segments

Net Revenue by Segment – 3Q23 (R$ million-before eliminations)

 

 

 

 

Adjusted EBITDA by Segment – 3Q23 (R$ million - before eliminations)

 

 

 

 

3Q23 Results (R$ million)	Steel	Mining	Logistics (Port)	Logistics (Rail)	Energy	Cement	Corporate Expenses/ Eliminations	Consolidated
Net Revenue	5,344	4,335	75	730	122	1,159	(640)	11,125
Internal Market	4,130	567	75	730	122	1,159	(1,170)	5,613
Foreign Market	1,214	3,768	-	-	-	-	530	5,512
COGS	(5,209)	(2,567)	(65)	(367)	(106)	(915)	909	(8,320)
Gross profit	135	1,768	10	363	16	244	270	2,805
DGA/DVE	(299)	(71)	(3)	(57)	(16)	(145)	(588)	(1,175)
Depreciation	346	269	12	100	25	167	(77)	842
Proportional EBITDA of jointly controlled Companies	-	-	-	-		-	343	343
Adjusted EBITDA	183	1,966	19	406	25	266	(50)	2,815
2Q23 Results (R$ million)	Steel	Mining	Logistics (Port)	Logistics (Rail)	Energy	Cement	Corporate Expenses/ Eliminations	Consolidated
Net Revenue	5,943	3,631	54	668	159	1,142	(609)	10,989
Internal Market	4,368	372	54	668	159	1,142	(1,012)	5,752
Foreign Market	1,574	3,260	-	-	-	-	403	5,237
COGS	(5,419)	(2,626)	(61)	(352)	(100)	(952)	765	(8,746)
Gross profit	523	1,006	(7)	316	59	191	156	2,243
DGA/DVE	(288)	(147)	(3)	(51)	(15)	(123)	(455)	(1,082)
Depreciation	318	254	13	98	24	156	(75)	788
Proportional EBITDA of jointly controlled Companies	-		-	-	-	-	313	313
Adjusted EBITDA	553	1,112	3	362	69	224	(60)	2,263
3Q22 Results (R$ million)	Steel	Mining	Logistics (Port)	Logistics (Rail)	Energy	Cement	Corporate Expenses/ Eliminations	Consolidated
Net Revenue	7,698	2,527	69	653	48	778	(875)	10,897
Internal Market	5,655	438	69	653	48	778	(1,091)	6,549
Foreign Market	2,044	2,089	-	-	-	-	215	4,348
COGS	(6,426)	(1,800)	(54)	(397)	(53)	(501)	873	(8,359)
Gross profit	1,272	727	14	256	(5)	276	(3)	2,538
DGA/DVE	(334)	(63)	(7)	(37)	(10)	(100)	(248)	(798)
Depreciation	313	253	9	108	4	82	(78)	689
Proportional EBITDA of jointly controlled Companies	-	-	-	-	-	-	285	285
Adjusted EBITDA	1,251	916	16	327	(10)	257	(44)	2,713

 

Results of the Steel Industry

 

According to the World Steel Association (WSA), global crude steel production totaled 460.4 million tons (Mt) in the third quarter of 2023, which represents a decrease of 4.5% compared to the previous quarter as a consequence of the seasonality of the period, but an increase of 1.9% compared to the same period in 2022, reflecting the higher level of activity in the Chinese market. The European Union reduced its production by 9.9% compared to the previous quarter and 6.5% compared to the same period last year, impacted by the environment of high interest rates, inflation and still high energy costs. In turn, China produced 56.3% of the global volume (259.3 Mt) in 3Q23, which corresponds to a quarterly reduction of 5.3 p.p., but an increase of 2.8 p.p. compared to the same period of the previous year. The expectations for 2023 remain positive as Chinese government incentives indicate a prospect of a 1.8% increase in global steel production, after a 3.3% contraction in 2022. Brazil, on the other hand, produced 8.0 Mt in 3Q23, which corresponds to a decrease of 2.4% in relation to the previous quarter and 3.6% when compared to the same period of the previous year, mainly impacted by the increase in imports. The outlook for local market activity in 2023 is less encouraging, even after the normalization of production by relevant players, but with intense competition with imported material and with demand still responding slowly to the cycle of cuts in the Selic rate and government stimulus through programs such as PAC, Minha Casa, Minha Vida, Plano Safra and etc.

 

 

Steel Production (thousand tons)

 

In the case of CSN, Slab Production in 3Q23 totaled 922 thousand tons, a performance 25.9% higher than in the previous quarter, which reflects the normalization of the operation after a series of bottlenecks faced in the first semester. In turn, the production of flat rolled products, our main market, reached 835 Kton, which represents an increase of 7.8% compared to 2Q23, reflecting the resumption of the production process and bringing the volume produced to numbers closer to previous periods.

 

Sales Volume (Kton) – Steel

 

 

Total sales reached 1,018 thousand tons in the third quarter of 2023, a volume 3.1% lower than in 2Q23. When analyzing the behavior in different markets, it can be seen that the domestic market showed growth even with all the pressure faced with imported products, with emphasis on the hot rolled products performance. Domestic sales totaled 747 thousand tons of steel products in 3Q23, which represents an increase of 1.1% compared to 2Q23 and reinforces the normalization of the operation and the Company's resilience in managing to maintain an assertive commercial strategy even with all the pressure seen in the period. In the foreign market, sales totaled 271 thousand tons in 3Q23 and were 13.0% lower than in 2Q23, as a result of seasonality and weaker dynamics in the European market. During the quarter, 5,000 tons were exported directly, and 267,000 tons were sold by subsidiaries abroad, of which, 67,000 tons were sold by LLC, 132,000 tons by SWT and 68,000 tons by Lusosider.

 

Regarding total Sales Volume in 3Q23, the main highlight was the flat steel segment for construction, with a 24.1% increase compared to the previous quarter. On the other hand, Automotive (-11.9%) and Home Appliances (-4.2%) appear among the main negative highlights after a stronger start to the year. In the year-on-year comparison, there was a significant recovery in Home Appliances and flat steel for construction, but with decreases in the other segments.

 

 

According to ANFAVEA (National Association of Automotive Vehicle Manufacturers), production in 3Q23 registered 619 thousand units, an increase of 3.8% over the previous quarter. According to the Association, the volume of vehicle registrations increased by 19.8% in the third quarter.   When looking at data from the Brazil Steel Institute (IABr), Crude Steel production in 3Q23 reached 7.96 Mton, a performance 6.6% lower than in the same period of 2022 and 1.6% below 2Q23. Apparent Consumption was 6.34 Mton, an increase of 2.8% year-on-year and 7.9% compared to 2Q23. In turn, the Steel Industry Confidence Indicator (ICIA) for September was 37.7 points, which represents a reduction of 4.9 p.p. compared to December 2022, a performance that reflects all the dissatisfaction and insecurity with the greater entry of imported products into the Brazilian market.   According to IBGE data, the production of home appliances for the month of September 2023 registered an increase of 6.8% compared to the previous year, reinforcing the continuous improvement of the home appliances segment after the weak performance observed last year.

Sales by Market Segment

  

·

Net Revenue in the Steel Industry reached R$ 5,344 million in 3Q23, a performance 10.1% lower than in 2Q23, as a result of the adjustment in prices in the domestic market and the lower dynamism in the foreign market. In this sense, the Average Price in 3Q23 in the domestic market was 6.7% lower than in 2Q23, which shows the pressure exerted by imported material. On the other hand, the price in the foreign market was even lower, with a drop of 11.5% compared to the previous quarter, impacted both by lower commercial activity and by a greater penetration of external material at more competitive prices.

 

·

In turn, the Slab Cost in 3Q23 reached R$ 3,563/t, a reduction of 13.4% compared to the previous quarter, as a direct consequence of the normalization of production, helping to dilute fixed costs, in addition to the lower volume of plates purchased.

 

 

Slab Cost with deprec. (R$/t)		3Q23 Production Cost

·

The steel industry's Adjusted EBITDA reached R$ 183 million in 3Q23 and was 67.0% lower than in 2Q23, with an Adjusted EBITDA Margin of 3.4% (-5.9 p.p.). This result reflects the combination of a weaker foreign market and a domestic performance marked by operational normalization and price adjustments in order to make the local product more competitive. On the other hand, it is worth highlighting the transient effect of this lower profitability, as all necessary adjustments have already been made, while a gradual recovery of the Brazilian market is becoming evident.

 

Adjusted EBITDA and Steel Margin (R$ MM and %)

 

Mining Result

 

In the mining sector, the quarter was marked by high demand for iron ore in China and an improvement in price levels, with the appreciation of Platts that closed 3Q23 US$ 3.06 above the average observed in the previous quarter. Steel production in China remains at high levels, leading to increases in capacity utilization at Chinese steel mills and low levels of ore inventories at both Chinese mills and ports. This situation ended up weighing favorably on the price of ore and has been driven by the Chinese government's stimulus packages, in an attempt to inject liquidity into the economy and ensure low financing costs for the consumer, manufacturing, infrastructure and real estate segments. Such moves have boosted demand for iron ore, including for lower-quality products as margins at Chinese steel mills remain quite tight. In this scenario, the iron ore price closed 3Q23 with an average of US$ 114.04/dmt (Platts, Fe62%, N. China), 2.8% higher than in 2Q23 (US$ 110.98/dmt) and 10.4% higher than in 3Q22 (US$ 103.31 /dmt). 

 

Regarding Sea Freight, the BCI-C3 Route (Tubarão-Qingdao) presented an average of US$ 20.3/wmt in 3Q23, which represents a reduction of 3.6% compared to the freight cost of the previous quarter, as a reflection of the increase in spot supply in the Atlantic Ocean. In addition, the rainy season in Africa and the large amount of cargo negotiated within contracts supported this scenario, helping to offset the increase in fuel prices in the period.

 

Total Production – Mining (Thousand tons)		Sales Volume – Mining (Thousand tons)

 

 

·

Iron Ore Production added yet another record volume of 11,589 thousand tons in 3Q23, which represents an increase of 3.9% compared to the volume recorded in 2Q23 and an increase of 20.4% compared to the same period last year. This is the second consecutive production record achieved by the Company and confirms the excellent operational momentum seen this year, even more so when it is observed that there was a significant improvement in the mix of own production and consequent reduction in the volume of purchases from third parties when compared to the previous period. Additionally, the performance achieved in 9M23 places CSN in a comfortable position to revise its production and purchase guidance to 42.0 - 42.5 Mton stipulated for 2023.

 

·

Sales Volume, in turn, also reached a record result of 11,641 thousand tons in 3Q23, surpassing by 3.4% the record set in the previous quarter and 28.0% above the same period of the previous year. The company was able to take advantage of the favorable scenario with strong Chinese demand and the dryer period to deliver a quarterly sales record.

 

·

In 3Q23, Adjusted Net Revenue totaled R$ 4,335 million and was 19.4% higher than in 2Q23, a performance that reflects not only the higher volume of shipments, but also the higher price realization seen in the period. As a result, Net Unitary Revenue was US$ 75.23 per wet ton, which represents an increase of 14.5% compared to 2Q23, following the upward trajectory of the price of Platts and open cargoes that offset the 5.1% appreciation of the exchange rate.

 

·

In turn, the Cost of Goods Sold from mining totaled R$ 2,567 million in 3Q23, a reduction of 2.2% compared to the previous quarter, even with higher commercial activity, which is justified by the lower volume of third-party purchases and lower use of third-party ports. On the other hand, the C1 cost reached US$ 21.3/t in 3Q23, 1.4% lower than in the previous quarter, reflecting the higher dilution of fixed costs and lower SG&A unit costs that ended up offsetting the increase in diesel in the period.

 

·

Adjusted EBITDA reached R$ 1,966 million in 3Q23, with a significant quarterly Adjusted EBITDA Margin, reaching 45.4% or 14.7 p.p. higher than in the previous quarter. This increase in profitability is the result of a very favorable situation that combined record sales volume with better ore prices.

 

 

Cement Result

 

According to the National Union of the Cement Industry (SNIC), cement sales in Brazil from January to September 2023 had a slight decrease of 2.0% when compared to the same period of the previous year. This scenario reflects a normalization of the market after the boom experienced during the pandemic, plus the effects of a still high interest rate, the maturation of the new public policies of a government in its first year in office and a volume of rainfall above the historical average, especially in some regions such as the South of the country. On the other hand, even considering all these effects, the market remains quite resilient and already shows some signs of recovery. For example, cement sales in Brazil grew 8.3% in 3Q23 compared to the previous quarter and the consumer confidence index reached the highest level since 2014. In addition, job recovery scenario and GDP, in addition to the cooling of inflation and the beginning of the downward trajectory of interest rates are other indications that should boost sales in the coming months. Finally, the announcement of the new modality of the Growth Acceleration Program (PAC) and the reformulation of Minha Casa, Minha Vida are new evidence that should provide even more support for a new growth cycle in the sector.

 

In terms of commercial performance, CSN's sales in 3Q23 totaled 3,263 Kton, which represents a small decrease of 2.1% compared to the previous quarter, but 4% above the same period of the previous year.

Sales Volume - Cement (thousand tons)

* LafargeHolcim's operations were integrated in September 2022.

 

·

Net Revenue, in turn, reached R$ 1,159 million in 3Q23 and was 1.5% higher than in the previous quarter, reinforcing the more assertive commercial strategy and the better price level practiced in the period, especially for the structured cement and bulk market. This eventually compensated for the lower sales volume in the period.

 

·

In 3Q23, cement Unitary Cost fell 1.8% compared to the previous quarter, as a result of lower costs with raw materials.

 

·

In turn, the segment’s Adjusted EBITDA increased by 19.1% compared to the previous quarter, reaching R$ 266 million in 3Q23 and with an Adjusted EBITDA Margin of 23.0%, or 3.4 p.p. higher than in 2Q23, reinforcing all the synergy capture achieved in the period. In addition, the environment remains favorable for margin expansion as there is room for further recovery in prices and sales in the coming months.

 

Energy Result

 

In 3Q23, energy prices remained at a level still below the average of recent years, due to the high level of water that has been recorded in the reservoirs. As a result, the volume of energy traded in the quarter generated Net Revenue of R$ 122 million, which represents a reduction of 23.5% compared to the previous quarter. Adjusted EBITDA also decreased in the period, reaching R$ 25 million and generating an Adjusted EBITDA Margin of 20.3%, which represents a reduction of 23.1 p.p. compared to the previous quarter, when the recognition of tax credits favored profitability.

 

Logistics Result

 

Railway Logistics: In 3Q23, Net Revenue reached RR$ 730 million, with an Adjusted EBITDA of R$ 406 million and Adjusted EBITDA Margin of 55.7%. Compared to 2Q23, revenue increased 9.2% due to the seasonality of the period and a higher volume of goods transported. In the same line of comparison, Adjusted EBITDA was 12.2% higher.

 

Port Logistics: In 3Q23, 292 thousand tons of steel products were shipped by Sepetiba Tecon, in addition to 14 thousand containers, 4 thousand tons of general cargo and 239 thousand tons of bulk. Compared to the previous quarter, the Company

significantly increased its shipments, with the increase in the volume of steel products and in the volume of bulk. As a result, Net Revenue from the port segment was 37.3% higher than in the previous quarter, reaching R$ 75 million in 3Q23, with a positive impact on Adjusted EBITDA for the period, which was R$ 19 million in the quarter and Adjusted EBITDA Margin of 25.2%, or 20.2 p.p. higher than in 2Q23.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

ESG – Environmental, Social & Governance

 

ESG PERFORMANCE – CSN GROUP

Since the beginning of 2023, CSN has adopted a new format for disclosing its ESG actions and performance, providing its performance in ESG indicators on an individual basis. The new model allows stakeholders to have access to the main results and indicators on a quarterly basis and to monitor them effectively and even more quickly. Access can be made through the results center on CSN's IR website: https://ri.csn.com.br/informacoes-financeiras/central-de-resultados/

The information included in this release was selected based on relevance and materiality to the company. Quantitative indicators are presented compared to the period that best represents the metric for monitoring them. Thus, some are compared to the same quarter of the previous year, and others will be compared to the average of the previous period, ensuring a comparison based on seasonality and periodicity. Additionally, it is important to highlight that the ESG Performance Report also incorporates the performance indicators of the new assets of CSN Cimentos, acquired in 2022, so that some absolute indicators will change significantly when compared to the previous period.

More detailed historical data on CSN's performance and initiatives can be found in the 2022 Integrated Report, released in April 2023 (https://esg.csn.com.br/nossa-empresa/relatorio-integrado-gri ). ESG indicator assurance occurs annually for the Integrated Report's closing, so the information contained in quarterly releases is subject to adjustments resulting from this process.

It is also possible to track CSN's ESG performance in an agile and transparent manner on our website through the following electronic address: https://esg.csn.com.br .

 

 

 

 

 

 

Capital Markets

 

In the third quarter of 2023, CSN's shares were practically stable (+0.1%), while the Ibovespa index fell 1.3%. The average daily volume (CSNA3) traded on B3, in turn, was R$ 100.8 million in 3Q23. On the New York Stock Exchange (NYSE), the Company's American Depositary Receipts (ADRs) depreciated 7.7% in dollar terms, while the Dow Jones index decreased 2.6%. The average daily trading of ADRs (SIDs) on the NYSE in 3Q23 was US$ 5.9 million.

 

		3Q23
No. of shares in thousands			1,326,094
Market Cap
Closing Quote (R$/share)			12.14
Closing Quote (US$/ADR)			2.39
Market Value (R$ million)			16,099
Market Value (US$ million)			3,169
Change in the period
CSNA3 (R$)			-0.08%
SID (US$)			-7.72%
Ibovespa (R$)			-1.29%
Dow Jones (US$)			-2.62%
Volume
Daily average (thousand shares)			8,013
Daily average (R$ thousands)			100,786
Daily average (thousand ADRs)			2,316
Daily Average (US$ thousand)			5,995
Source: Bloomberg

 

Earnings Conference Call:

 

3Q23 Earnings Presentation Webcast Investor Relations Team

Conference Call in Portuguese with Simultaneous Translation into English November 14, 2023 11:30 a.m. (Brasilia time) 09:30 a.m. (New York time) +55 11 3181-8565 / +55 11 4090-1621 Code: CSN Replay Phone: +55 11 4118-5151 Replay Code: 219011# Webcast: click here

Marcelo Cunha Ribeiro – CFO and Executive Director of IR Pedro Gomes de Souza (pedro.gs@csn.com.br) Rafael Costa Byrro (rafael.byrro@csn.com.br) Ricardo Reis (ricardo.reis.rr2@csn.com.br)

 

Some of the statements contained herein are forward-looking statements that express or imply expected results, performance or events. These perspectives include future results that may be influenced by historical results and the statements made in 'Outlook'. Current results, performance and events may differ materially from assumptions and prospects and involve risks such as: general and economic conditions in Brazil and other countries; interest and exchange rate levels, protectionist measures in the U.S., Brazil, and other countries, changes in laws and regulations, and general competitive factors (on a global, regional, or national basis).

 

 

 

INCOME STATEMENT

CONSOLIDATED – Corporate Law – In Thousands of Reais

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

BALANCE SHEET

CONSOLIDATED – Corporate Law – In Thousands of Reais

 

CASH FLOW STATEMENT

CONSOLIDATED – Corporate Law – In Thousands of Reais

 

EXPLANATORY NOTES TO THE FINANCIAL STATEMENTS
(In thousands of reais, unless otherwise noted)

 

1.

DESCRIPTION OF BUSINESS

 

Companhia Siderúrgica Nacional (“CSN”, also referred to as “Company” or “Parent 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”), reporting its information to the Brazilian Securities and Exchange Commission (“CVM”) and to the U.S. Securities and Exchange Commission (“SEC”).

 

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 in order to gain markets and provide excellent services to 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, Belo Vale and Ouro Preto, State of Minas Gerais, by its subsidiary CSN Mineração S.A. (“CSN Mineração”). The Company’s mining activities also include tin exploration in the state of Rondônia by CSN's subsidiary Estanho de Rondônia S.A. (“ERSA”), to supply the needs of the UPV. The surplus of this raw material is sold to subsidiaries and third parties.

 

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 is transported by rail to the Terminal de Carvão e Minérios from the Itaguaí Port (“TECAR”), a solid bulk terminal, one of the four terminals that comprise the Itaguai Port, located in the State of Rio de Janeiro and from TECAR to customers around the world. The imports of coal and coke are also carried out through this terminal by provision of services by CSN Mineração to CSN.

 

As a pioneer in the use of technologies that result in the possibility of stacking the tailings generated in the iron ore production process, CSN Mineração has its iron ore production, since January 2020, 100% independent of tailings dams. After significant investments in recent years to raise the level of reliability, disposal and dry stacking, CSN Mineração has advanced to a scenario in which 100% of our tailings goes through a dry filtering process and are stacked in piles, geotechnically controlled, in areas exclusively destined for stacking.

 

As a consequence of these measures, decommissioning of dams is the natural path for processing filtered tailings. All of our mining dams are positively certified and comply with the environmental legislation in force.

 

·

Cements:

 

CSN entered the cement market driven by the synergy between this activity and its existing businesses. The cement production unit located next to the UPV facilities, in Volta Redonda/RJ, produces CP-III type cement using slag produced by UPV's own blast furnaces. There is also the exploration of limestone and dolomite at the Arcos/MG unit to meet the needs of the steel industry and the cement factory, as well as the production of clinker at the same unit.

 

On August 31, 2021, the subsidiary CSN Cimentos S.A. (“CSN Cimentos”) concluded the acquisition of control of Elizabeth Cimentos S.A. and Elizabeth Mineração Ltda., operating in the Northeast region, especially in Paraíba and Pernambuco. On May 1, 2022, Elizabeth Mineração was merged into CSN Cimentos.

On September 9, 2021, CSN Cimentos entered into the Agreement for the Sale and Purchase of the Shares in LafargeHolcim (Brasil) S.A., for the acquisition of 100% of the shares issued by LafargeHolcim (Brasil) S.A. (“LafargeHolcim”). On September 6, 2022, the acquisition of all shares issued by LafargeHolcim S.A. was completed, with the corporate name of LafargeHolcim being changed to "CSN Cimentos Brasil S.A.", which became controlled by CSN Cimentos. The Company's main activities are: production, industry and general trade of cement, lime, mortar, minerals and metals in general and complementary products for civil construction, in natura with industrial plants, warehouses and branches across a large part of the national territory.

 

On August 31, 2023, the Extraordinary General Meeting approved the incorporation of CSN Cimentos by CSN Cimentos Brasil with the consequent transfer of all assets, properties (movable and immovable), rights and obligations, in accordance with the terms of the “Protocol and Justification of the Incorporation of CSN Cimentos S.A. by CSN Cimentos Brasil S.A.”. Thus, CSN Cimentos was extinguished, all its shares were canceled and, in replacement, its shareholders received shares in CSN Cimentos Brasil. All activities carried out by CSN Cimentos are now carried out by CSN Cimentos Brasil. The Valuation Report of CSN Cimentos' assets was prepared on June 30, 2023, serving as the basis for determining a capital increase in CSN Cimentos Brasil in the amount of R$2,383,276.

 

·

Logistics:

 

Railroads:

 

CSN has interests in three railroad companies: MRS Logística S.A. (“MRS”), 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 holds 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-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., 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 movement and storage of containers, vehicles, steel products, 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, petroleum coke, clinker, zinc concentrate, sulfur, iron ore and other bulk, intended for the seaborne market, for our own operation and for different customers.

 

·

Energy:

 

Since the energy supply is fundamental in CSN”s production process, the Company has electricity generation assets to mitigate costs, aiming at greater competitiveness.

 

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. (“Santa Ana”), 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, managed by Brookfield Brasil Asset Management Investimentos Ltda. On October 7, 2022, subsidiaries CSN Mineração and CSN Energia S.A. concluded the acquisition of 100% of the shares of Companhia Energética Chapecó – CEC, holder of the grant of Quebra-Queixo Hydroelectric Power Plant (“Chapecó”), as provided for in the Agreement for the Purchase and Sale of Shares and Other Covenants and in the Private Instrument of Assignment of Rights and Obligations entered into on July 1, 2022 and July 25, 2022, respectively.

 

In July 2022, The Company won the auction held by the State of Rio Grande do Sul, for the sale of 100% of the shares in its possession, 6,381,908 equivalent to 66.23% of the share capital, of Companhia Estadual de Energia Elétrica - CEEE-G, as part of the CEEE Group privatization program, in accordance with State Law 15.298/19.On October 21, 2022, the transaction was completed with payment by the company of the auction winning price. On December 22, 2022, the acquisition of Eletrobras' 32.74% interest in CEEE-G was concluded, and the Company currently holds 99% of the share capital of CEEE-G.

 

·

Going Concern:

 

Management understands that the Company has adequate resources to continue its operations. Accordingly, the Company's interim financial information for the period ended September 30, 2023, have been prepared on a going concern basis.

 

2.

BASIS OF PREPARATION AND STATEMENT OF COMPLIANCE

 

2.a)

Statement of compliance

 

The parent company and consolidated interim financial information (“interim financial information”) have been prepared and are being presented in accordance with the accounting practices adopted in Brazil issued by the Brazilian Accounting Pronouncements Committee (“CPC”), approved by the Brazilian Securities and Exchange Commission (“CVM”) and by the Brazilian Federal Accounting Council (“CFC”), and in accordance with the International Financial Reporting Standards (“IFRS”) issued by the International Accounting Standard Board (“IASB”) and disclose all the relevant information of the interim financial information, and only this information, which corresponds to that used by the Company's management in its activities. The consolidated interim financial information are identified as “Consolidated” and the parent company's individual interim financial information are 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 the 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, 2022.

 

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 29 - Information by business segment

Note 30 - Employee benefits

Note 31 - Commitments

 

The consolidated financial statements were approved by Board of Directors on November 13, 2023.

 

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 converted using the exchange rate on the balance sheet date. As of September 30, 2023, US$1.00 was equivalent to BRL5.0076 (BRL5.2177 on December 31, 2022) and €1.00 was equivalent to BRL5.3000 (BRL5.5694 on December 31, 2022), according to the rates obtained from Central Bank of Brazil website.

 

2.d)

Statement of value added

 

Pursuant to Law 11,638/07, the presentation of the statement of added value is required for all publicly held companies. These statements were prepared in accordance with CPC 09 - Added Value Statement, 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.

3.

CASH AND CASH EQUIVALENTS

 

			Consolidated				Parent Company
	09/30/2023		12/31/2022		09/30/2023		12/31/2022
Cash and banks
In Brazil	66,387		85,120		29,600		49,794
Abroad	10,744,016		6,310,338		121,776		136,756
	10,810,403		6,395,458		151,376		186,550
Investments
In Brazil	4,426,577		5,110,749		1,810,687		2,652,855
Abroad	65,640		485,149		1,404
	4,492,217		5,595,898		1,812,091		2,652,855
	15,302,620		11,991,356		1,963,467		2,839,405

 

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 this interim financial information.

 

Our investments 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
		09/30/2023		12/31/2022		09/30/2023		12/31/2022		09/30/2023		12/31/2022		09/30/2023		12/31/2022
Investments (1)		38,491		271,590		16,731		15,675		30,371		22,715
Usiminas shares (2)		1,106,108		1,184,895						1,106,108		1,184,895
Bonds (3)						115,175		140,510						115,175		140,510
		1,144,599		1,456,485		131,906		156,185		1,136,479		1,207,610		115,175		140,510

(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)

A guarantee (fiduciary alienation) was constituted over a portion of the shares of Usiminas Siderúrgica de Minas Gerais S.A. held by the Company.

(3)

Bonds with Banco Fibra maturing in February 2028 (see note 20.a).

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

5.      TRADE RECEIVABLES

 

			Consolidated				Parent Company
	09/30/2023		12/31/2022		09/30/2023		12/31/2022
Trade receivables
Third parties
Domestic market	1,690,718		1,636,804		1,089,062		860,942
Foreign market	1,612,720		1,720,056		38,940		92,679
	3,303,438		3,356,860		1,128,002		953,621
Expected credit losses	(220,460)		(232,830)		(116,806)		(122,872)
	3,082,978		3,124,030		1,011,196		830,749
Related parties (Note 20 a)	96,070		109,134		993,776		1,125,782
	3,179,048		3,233,164		2,004,972		1,956,531

 

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

 

				Consolidated				Parent Company
		09/30/2023		12/31/2022		09/30/2023		12/31/2022
Current		2,994,055		2,934,057		953,331		781,406
Past-due up to 30 days		38,009		163,959		16,291		37,036
Past-due up to 180 days		83,801		54,452		62,404		28,526
Past-due over 180 days		187,573		204,392		95,976		106,653
		3,303,438		3,356,860		1,128,002		953,621

 

The changes in estimated credit losses are as follows:

 

				Consolidated				Parent Company
		09/30/2023		12/31/2022		09/30/2023		12/31/2022
Opening balance		(232,830)		(236,927)		(122,872)		(133,227)
(Loss)/Reversal estimated		3,968		(87)		3,475		1,623
Recovery and write-offs of receivables		8,402		13,197		2,591		8,732
Consolidation in the acquisition of companies				(9,013)
Closing balance		(220,460)		(232,830)		(116,806)		(122,872)

 

6.

INVENTORIES

 

			Consolidated				Parent Company
	09/30/2023		12/31/2022		09/30/2023		12/31/2022
Finished goods	3,524,674		4,421,166		1,977,693		2,308,211
Work in progress	2,994,954		3,501,145		1,372,784		2,123,539
Raw materials	2,665,375		3,297,213		1,780,210		2,492,779
Storeroom supplies	1,439,984		1,174,244		610,810		474,846
Advances to suppliers	59,700		37,619		29,984		30,170
Provision for losses	(89,745)		(96,493)		(22,542)		(16,124)
	10,594,942		12,334,894		5,748,939		7,413,421
Classified:
Current	9,283,122		11,289,229		5,748,939		7,413,421
Non-current (1)	1,311,820		1,045,665
	10,594,942		12,334,894		5,748,939		7,413,421

(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
		09/30/2023		12/31/2022		09/30/2023		12/31/2022
Opening balance		(96,493)		(98,730)		(16,124)		(14,426)
Reversal/(Estimated losses)  of inventories with low turnover and obsolescence		6,748		3,621		(6,418)		(1,698)
Consolidation in the acquisition of companies				(1,384)
Closing balance		(89,745)		(96,493)		(22,542)		(16,124)

 

7.

RECOVERABLE TAXES

 

			Consolidated				Parent Company
	09/30/2023		12/31/2022		09/30/2023		12/31/2022
State Value-Added Tax	1,286,785		1,130,843		860,122		793,761
Brazilian federal contributions (1)	2,051,405		1,862,828		1,058,179		1,094,392
Other taxes	156,800		189,087		126,670		129,002
	3,494,990		3,182,758		2,044,971		2,017,155
Classified:
Current	2,045,442		1,865,626		1,057,116		1,137,460
Non-current	1,449,548		1,317,132		987,855		879,695
	3,494,990		3,182,758		2,044,971		2,017,155

(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 ICPC 22/IFRIC 23 and recorded a credit in the amount of R$229,000. After the final and unappealable court decision of the Company's legal action, these amounts will be considered in the tax assessments, in accordance with Federal Tax Authorities of Brazil.

 

Credits arise mainly from ICMS, PIS and COFINS on purchases of raw materials and fixed assets, in accordance with current legislation. These credits are naturally realized through offsetting with debts of the same nature or with other federal taxes, in the cases authorized by law. Based on analyses and projections made by Management, the Company does not expect risks of non-realization of these tax credits.

 

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
	09/30/2023		12/31/2022		09/30/2023		12/31/2022		09/30/2023		12/31/2022		09/30/2023		12/31/2022
Judicial deposits (note 18)					506,817		533,664						210,796		231,627
Dividends receivables (note 20 a)	155,809		77,377						235,782		295,480
Prepaid expenses	386,098		347,870		72,736		82,586		226,736		244,416		54,686		58,950
Prepaid expenses	301,720		311,087		37,259		47,109		226,736		244,416		26,614		30,878
Prepaid expenses with sea freight	84,378		36,783
Actuarial asset (note 20 a)					35,477		35,477						28,072		28,072
Receivables from related parties	7,165		7,241		3,323,245		2,869,532		239,931		107,078		3,827,904		3,377,049
Loans with related parties (note 20 a )	5,335		5,383		1,617,913		1,384,773		5,335		5,383		2,020,000		1,668,382
Other receivables from related parties (note 20 a)	1,830		1,858		1,705,332		1,484,759		234,596		101,695		1,807,904		1,708,667
Other assets	208,579		344,012		1,255,579		1,263,936		39,336		63,216		1,222,201		1,222,894
Trading securities	8,096		9,596						7,981		9,488
Compulsory loans from Eletrobrás					54,254		58,030						51,624		55,336
Employee debts	64,602		59,578						31,333		28,101
Receivables by indemnity (1)	22,209				1,169,494		1,166,353						1,169,494		1,166,353
Term of Agreement GSF DFESA	14,264		14,264		20,208		30,906
Advances from Suppliers	13,233		12,335
Others	86,175		248,239		11,623		8,647		22		25,627		1,083		1,205
	757,651		776,500		5,158,377		4,749,718		741,785		710,190		5,315,587		4,890,520

(1)

In April 2023, the subsidiary CEEE-G recognized the amount of R$ 37,486, referring to the Taxes and Contributions Amounts (VIC) of the Hydroelectric Plants committed to Physical Guarantee Quota Contracts (CCGFs).In the 3rd quarter of 2022, the uncontroversial amount of R$422,254 was recognized in the same account, as a refund of the amounts overpaid for railroad freight from April 1994 to March 1994 and March 1996 to the company RFFSA, and that after its extinction, the Federal Government became a defendant. Additionally, in 2020, a credit was recognized, which is a net, certain and payable amount, arising from the final and unappealable decision of a court in favor of the Company, due to losses and damages arising from voltage sinking in the energy supply in the periods from January/1991 to June/2002, in the amount of R$ 561,466.

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, 2022. Therefore, Management decided not to repeat them in the accounting information interim of September 30, 2023.

 

		Equity interests (%)
Companies		09/30/2023		12/31/2022		Core business
Direct interest in subsidiaries: full consolidation
CSN Islands VII Corp.		100.00		100.00		Financial transactions
CSN Inova Ventures		100.00		100.00		Equity interests and Financial transactions
CSN Islands XII Corp.		100.00		100.00		Financial transactions
CSN Steel S.L.U.		100.00		100.00		Equity interests and Financial transactions
TdBB S.A (*)		100.00		100.00		Equity interests
Sepetiba Tecon S.A.		99.99		99.99		Port services
Minérios Nacional  S.A.		99.99		99.99		Mining and Equity interests
Companhia Florestal do Brasil		99.99		99.99		Reforestation
Estanho de Rondônia S.A.		99.99		99.99		Tin Mining
Companhia Metalúrgica Prada		99.89		99.89		Manufacture of containers and distribution of steel products
CSN Mineração S.A.		79.75		79.75		Mining
CSN Energia S.A.		99.99		99.99		Sale of electric power
FTL - Ferrovia Transnordestina Logística S.A.		92.71		92.71		Railroad logistics
Nordeste Logística S.A.		99.99		99.99		Port services
CSN Inova Ltd.		100.00		100.00		Advisory and implementation of new development projec
CBSI - Companhia Brasileira de Serviços de Infraestrutura		99.99		99.99		Equity interests and product sales and iron ore
CSN Cimentos Brasil S.A.		99.99		99.99		Manufacturing and sale of cement
Berkeley Participações e Empreendimentos S.A.		100.00		100.00		Electric power generation and equity interests
CSN Inova Soluções S.A.		99.90		99.99		Equity interests
CSN Participações I		99.90		99.99		Equity interests
Circula Mais Serviços de Intermediação Comercial S.A.		0.10		0.01		Commercial intermediation for the purchase and sale of assets and materials in general
CSN Participações III		99.90		99.99		Equity interests
CSN Participações IV		99.90		99.99		Equity interests
CSN Participações V		99.90		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		99.88		99.88		Sale of cans and containers in general and Equity interests
Companhia de Embalagens Metálicas MMSA		99.87		99.87		Production and sale of cans and related activities
Companhia de Embalagens Metálicas - MTM		99.87		99.87		Production and sale of cans and related activities
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.U.		79.75		79.75		Financial transactions, product sales and Equity interests
CSN Mining GmbH		79.75		79.75		Financial transactions, product sales and Equity interests
CSN Mining Asia Limited		79.75		79.75		Commercial representation
Lusosider Ibérica S.A.		100.00		100.00		Steel, commercial and industrial activities and equity interests
CSN Mining Portugal, Unipessoal Lda.		79.75		79.75		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
Santa Ana Energética S.A.		99.98		99.99		Electric power generation
Topázio Energética S.A.		99.98		99.99		Electric power generation
Brasil Central Energia Ltda.		99.98		99.99		Electric power generation
Circula Mais Serviços de Intermediação Comercial S.A.		99.99		99.99		Commercial intermediation for the purchase and sale of assets and materials in general
Metalgráfica Iguaçu S.A		99.89		99.89		Metal packaging manufacturing
Companhia Energética Chapecó		79.75		79.75		Electric power generation
Companhia Estadual de Geração de Energia Elétrica - CEEE-G		98.95		98.96		Electric power generation
Ventos de Vera Cruz S.A.		98.95		98.95		Electric power generation
Ventos de Curupira S.A		98.95		98.95		Electric power generation
Ventos de Povo Novo S.A.		98.95		98.95		Electric power generation
MAZET - Maschinenbau Zerspanungstechnik GmbH (1)		100.00				Production and sale of long steel and related activities
Direct interest in joint operations: proportionate consolidation
Itá Energética S.A.		48.75		48.75		Electric power generation
Consórcio da Usina Hidrelétrica de Igarapava		17.92		17.92		Electric power consortium
Consórcio Itaúba(2)		36.60		36.60		Electric power generation
Consórcio Passo Real (2)		46.97				Electric power generation
Direct interest in joint ventures: equity method
MRS Logística S.A.		18.64		18.64		Railroad transportation
Aceros Del Orinoco S.A. (*)		31.82		31.82		Dormant company
Transnordestina Logística S.A.		48.03		48.03		Railroad logistics
Equimac S.A		50.00		50.00		Rental of commercial and industrial machinery and equipment
Consórcio Itaúba(2)		63.40		63.40		Electric power generation
Consórcio Passo Real (2)		53.03				Electric power generation
Indirect interest in joint ventures: equity method
MRS Logística S.A.		14.86		14.86		Railroad transportation
Direct interest in associates: equity method
Arvedi Metalfer do Brasil S.A.		20.00		20.00		Metallurgy and Equity interests
Indirect interest in affiliates: equity method
Ventos da Lagoa Energia S.A.  (3)				10.00		Electric power generation
Jaguari Energética S.A.		10.39		10.39		Electric power generation
Chapecoense Geração S.A.		8.91		8.91		Electric power generation
Parques Eólicos Palmares S.A. (3)				10.00		Electric power generation
Ventos do Litoral Energia S.A. (3)				10.00		Electric power generation
Ventos dos índios Energia S.A. (3)				10.00		Electric power generation
Companhia Energética Rio das Antas - Ceran		29.69		29.69		Electric power generation
Ventos do Sul Energia S.A.		9.90		10.00		Electric power generation
Foz Chapecó Energia S.A.		8.91		8.91		Electric power generation
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 June 1, 2023, MAZET - Maschinenbau Zerspanungstechnik GmbH was acquired by the indirect subsidiary Stalhwerk Thüringen GmbH.

 

(2) On December 26, 2022, the Itaúba Consortium was formed, with Companhia Siderúrgica Nacional S.A., with a 63.4% stake, and CSN Cimentos Brasil S.A., with a 36.6% stake. Additionally, on January 17, 2023, the Passo Real Consortium was formed, with the consortium members Companhia Siderúrgica Nacional S.A., Elizabeth Cimentos S.A., CSN Mineração S.A. and Minérios Nacional S.A., with stakes of 46.97%, 28.18%, 23.29% and 1.56%, respectively.

 

(3) CEEE-G sold its ownership interest in affiliated companies Ventos Lagoa Energia S.A., Parques Eólicos Palmares S.A., Ventos do Litoral Energia S.A. and Ventos dos Índios Energia S.A.

 

9.a)

Changes in investments in subsidiaries, joint ventures, joint operations, associates and other investments

 

The positions presented as of September 30, 2023 and the changes refer to the interest held by CSN in these companies:

 

														Consolidated
Companies		Final balance on 12/31/2022		Capital increase		Dividends		Equity Income (2)		Comprehensive income		Others		Final balance on 09/30/2023
Investments under the equity method
Joint-venture, Joint-operation and Affiliate
MRS Logistica		2,054,898						337,534		12		(16,181)		2,376,263
Fair Value MRS		480,622												480,622
Fair Value MRS amortization		(82,225)						(8,809)						(91,034)
Transnordestina Logística S.A.		1,184,514						(17,898)						1,166,616
Fair Value -Transnordestina		659,106												659,106
Arvedi Metalfer do Brasil (affiliate)		25,782		11,037				(918)						35,901
Equimac S.A		18,482						3,782						22,264
Indirect interest in affiliates - CEEE-G (1)		216,307				(33,608)		34,680				(47,313)		170,066
Fair Value indirect participation CEEE-G (2)		359,024						(39,315)						319,709
Fair Value amortization indirect participation CEEE-G		(25,889)						6,648						(19,241)
		4,890,621		11,037		(33,608)		315,704		12		(63,494)		5,120,272
Equity interests evaluated by the cost method (3)		41,093		9,000										50,093
Investments at fair value through profit or loss (note 13)		94,700										(26,651)		68,049
Other		33,588										(24,282)		9,306
		169,381		9,000								(50,933)		127,448
Total shareholdings		5,060,002		20,037		(33,608)		315,704		12		(114,427)		5,247,720
Classification of investments in the balance sheet
Equity interests		5,060,002												5,247,720
Investment Property		159,080												212,079
Total investments in the asset		5,219,082												5,459,799

(1) Refers mainly to the alienation by CEEE-G in the first quarter of its equity interest in affiliates Ventos Lagoa Energia S.A., Parques Eólicos Palmares S.A., Ventos do Litoral Energia S.A. and Ventos dos Índios Energia S.A., consequently, there was a write-off of these investments in the amount of (R$47,611), the effect of the operation was classified under the category of other operating expenses and revenues;

 

(2) The balance of R$359,024 refers to the Fair Value generated in the acquisition of the company CEEE-G, with the disposals mentioned in the item above, the Fair Value was written off in the amount of (R$39,314) referring to the capital gains of the companies sold, the effect of the write-off was classified under the equity method category;

 

(3) These are strategic investments in startups made by the subsidiary CSN Inova Ventures, which are valued using the cost method, in the following companies: Alinea Health Holdings Ltda. I.Systems Aut. Ind., 2D Materials, H2Pro Ltda, 1S1 Energy, Traive INC., OICO Holdings, Clarke Software and Global Dot, the latter acquired on June 5, 2023;

 

(4) The reconciliation of equity income from companies with shared control classified as joint ventures and associates with 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:

 

 

 

 

			Consolidated
	09/30/2023		09/30/2022
Equity in results of affiliated companies
MRS Logística S.A.	337,534		233,735
Transnordestina	(17,898)		(23,333)
Arvedi Metalfer do Brasil	(918)		3,466
Equimac S.A	3,782		2,590
Indirect interest in affiliates - CEEE-G	34,680		-
Fair Value Amortization	(41,476)		(3,025)
	315,704		213,433
Other adjustments
Cost of sales	(89,983)		(56,965)
To taxes	30,594		19,368
Others	3,267		(8,810)
Equity in results	259,582		167,026

(1) The operating margin of intercompany transactions with group companies classified as joint ventures, which are not consolidated, are reclassified in the Statement of Income from the Investment group to the costs and income tax and social contribution groups.

 

The changes in the Parent Company's investment are presented below:

 

														Parent Company
Companies		Final balance on 12/31/2022		Increase (Decrease) of capital		Dividends		Equity Income		Comprehensive income		Others		Final balance on 09/30/2023
Investments under the equity method
Subsidiaries
CSN Steel S.L.U.		5,028,262						(98,317)		(173,714)				4,756,231
Sepetiba Tecon S.A.		294,460						(17,317)						277,143
Minérios Nacional  S.A.		121,242				6,390		24,100						151,732
Fair Value - Minérios Nacional		2,123,507												2,123,507
Companhia Metalúrgica Prada		424,317						(62,557)						361,760
Goodwill - Companhia Metalúrgica Prada		63,509												63,509
CSN Mineração S.A.		9,086,716				(1,963,023)		1,762,488		241,047				9,127,228
CSN Energia S.A.		56,736						(18,734)						38,002
FTL - Ferrovia Transnordestina Logística S.A.		163,740						(17,918)						145,822
Companhia Florestal do Brasil		1,300,726				(4,270)		56,782		5,251				1,358,489
CBSI - Companhia Brasileira de Serviços de Infraestrutura		29,057				(933)		6,684						34,808
Goodwill - CBSI - Companhia Brasileira de Serviços de Infraestrutura		15,225												15,225
CSN Cimentos S.A. (1)		6,938,822						(163,710)				(6,775,112)
CSN Cimentos Brasil S.A.				6,775,112				(38,021)		2,301				6,739,392
Others		120		2,560				(2,152)						528
		25,646,439		6,777,672		(1,961,836)		1,431,328		74,885		(6,775,112)		25,193,376
Joint-venture, Joint-operation and Affiliate
Itá Energética S.A.		189,513						5,743						195,256
MRS Logística S.A.		1,027,709						168,810		6		(8,094)		1,188,431
Transnordestina Logística S.A.		1,184,512						(17,898)						1,166,614
Fair Value -Transnordestina		659,106												659,106
Equimac S.A		18,482						3,782						22,264
Arvedi Metalfer do Brasil (affiliate)		25,783		11,037				(918)						35,902
		3,105,105		11,037				159,519		6		(8,094)		3,267,573
Other participations
Investments at fair value through profit or loss (note 13)		94,700										(26,651)		68,049
Profits on subsidiaries' inventories		(67,640)						76,807						9,167
Other investments		28						1						29
		27,088						76,808				(26,651)		77,245
Total shareholdings		28,778,632		6,788,709		(1,961,836)		1,667,655		74,891		(6,809,857)		28,538,194
Subsidiaries with unsecured liabilities
CSN Islands VII Corp.		(2,661,734)						75,495						(2,586,239)
CSN Inova Ventures		(1,755,949)						(305,826)						(2,061,775)
CSN Islands XII Corp.		(3,340,129)						1,606						(3,338,523)
Estanho de Rondônia S.A.		(76,295)						(32,603)						(108,898)
Total subsidiaries with unsecured liabilities		(7,834,107)						(261,328)						(8,095,435)
Equity Income								1,406,327
Classification of investments in the balance sheet
Equity interests		28,778,632												28,538,194
Investment Property		140,143												138,344
Total active investments		28,918,775												28,676,538
Provision for Investments with Unsecured Liabilities (liabilities)		(7,834,107)												(8,095,435)
Total active and passive investments		21,084,668												20,581,103

(1) On August 31, 2023, the reverse incorporation of CSN Cimentos into CSN Cimentos Brasil and the transfer of all assets, properties (movable and immovable), rights and obligations were approved.

 

9.b)

Joint ventures and joint operations financial information

 

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

 

 

 

								09/30/2023								12/31/2022
		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%		48.03%		50.00%		48.75%		37.27%		48.03%		50.00%		48.75%
Balance sheet
Current Assets
Cash and cash equivalents		1,744,910		1,543		9,103		98,880		867,937		1,164		8,983		46,946
Advances to suppliers		104,385		3,633		36		1,389		29,500		21,036		1,384		1,273
Other current assets		1,019,836		67,175		17,842		27,113		1,351,335		78,777		11,648		30,735
Total current assets		2,869,131		72,351		26,981		127,382		2,248,772		100,977		22,015		78,954
Non-current Assets
Other non-current assets		571,073		99,335		599		18,397		887,987		255,367		1,643		19,007
Investments, PP&E and intangible assets		12,102,558		11,815,712		42,765		303,388		11,541,779		11,029,525		41,709		325,911
Total non-current assets		12,673,631		11,915,047		43,364		321,785		12,429,766		11,284,892		43,352		344,918
Total Assets		15,542,762		11,987,398		70,345		449,167		14,678,538		11,385,869		65,367		423,872
Current Liabilities
Borrowings and financing		870,439		137,819		6,766				735,231		142,073		5,497
Lease liabilities		538,290				863				472,129				701
Other current liabilities		1,608,480		78,724		6,692		26,915		1,682,928		150,268		5,777		14,326
Total current liabilities		3,017,209		216,543		14,321		26,915		2,890,288		292,341		11,975		14,326
Non-current Liabilities
Borrowings and financing		3,781,516		7,557,342		9,417				3,604,793		7,142,895		14,446
Lease liabilities		1,625,443				253				1,928,931				630
Other non-current liabilities		742,684		1,785,025		1,827		21,727		740,892		1,484,884		1,353		18,914
Total non-current liabilities		6,149,643		9,342,367		11,497		21,727		6,274,616		8,627,779		16,429		18,914
Shareholders’ equity		6,375,910		2,428,488		44,527		400,525		5,513,634		2,465,749		36,963		390,632
Total liabilities and shareholders’ equity		15,542,762		11,987,398		70,345		449,167		14,678,538		11,385,869		65,367		423,872

 

								01/01/2023 a 09/30/2023								01/01/2022 a 09/30/2022
		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%		48.03%		50.00%		48.75%		37.27%		48.03%		50.00%		48.75%
Statements of Income
Net revenue		4,655,746		562		37,948		145,136		4,118,869		309		28,351		140,165
Cost of sales and services		(2,429,094)				(20,782)		(69,762)		(2,585,717)				(17,480)		(73,053)
Gross profit		2,226,652		562		17,166		75,374		1,533,152		309		10,871		67,112
Operating (expenses) income		(375,268)		(30,859)		(3,406)		(62,265)		(182,821)		(30,798)		(2,535)		(56,903)
Financial income (expenses), net		(483,120)		(6,961)		(2,196)		4,425		(489,263)		(18,881)		(2,256)		1,162
Income before income tax and social contribution		1,368,264		(37,258)		11,564		17,534		861,068		(49,370)		6,080		11,371
Current and deferred income tax and social contribution		(462,604)				(848)		(5,753)		(233,918)				(900)		(4,111)
Profit / (loss) for the period		905,660		(37,258)		10,716		11,781		627,150		(49,370)		5,180		7,260

 

9.c)

TRANSNORDESTINA LOGÍSTICA S.A. (“TLSA”)

 

TSA is primarily engaged in the public service operation and development of a railroad network in the Northeast of Brazil, comprising the rail links Velha-Salgueiro, Salgueiro-Trindade, Trindade-Eliseu Martins, Salgueiro- Porto de Suape, and Missão Velha-Porto de Pecém (“Malha II”). On December 23, 2022, after extensive negotiations involving ANTT, TCU and the then Ministry of Infrastructure, signed first amendment to the Concession Agreement , which redefined the scope and deadlines for completion of the TLSA sections, notably to provide for the return of the section Salgueiro-Porto de Suape, which results in a project with the current 1,206 km of rail network and completion deadline up to December 2029.

 

Management relies on resources from its shareholders and third parties to complete the work, which is expected to be available, based on previously conducted 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 information was considered appropriate.

 

9.d)

Incorporation of CSN Cimentos S.A. by CSN Cimentos Brasil S.A.

 

On August 31, 2023, the reverse incorporation of CSN Cimentos into CSN Cimentos Brasil and the transfer of all assets, properties (movable and immovable), rights and obligations were approved. The Valuation Report of CSN Cimentos' net equity was prepared based on a specific balance sheet as of June 30, 2023.

 

As a result of the incorporation, the net equity of CSN Cimentos Brasil was increased by R$2,383,275,916.52 (two billion, three hundred and eighty-three million, two hundred and seventy-five thousand, nine hundred and sixteen reais and fifty-two cents), of which R$2,300,489,487.22 (two billion, three hundred million, four hundred and eighty-nine thousand, four hundred and eighty-seven reais and twenty-two cents) were allocated to the share capital and R$82,786,429.30 (eighty-two million, seven hundred and eighty-six thousand, four hundred and twenty-nine reais and thirty cents) to the capital reserve account.

 

 

Balance Sheet (R$ 000)		Accounting collection as of June 30, 2023
Cash and cash equivalents		111,937
Trade receivables		95,506
Inventories		245,701
Other assets		229,560
Corporate investments		1,198,743
Property, plant and equipment		3,573,944
Intangíible assets		889,979
Investment properties		631
Total Assets		6,346,001
Trade payables		375,049
Borrowings and financing		2,678,625
Salaries and social charges		15,432
Taxes payable		42,383
Lease liabilities		15,392
Tax, social security, labor and civil		11,489
Provisions for environmental liabilities and asset decommissioning		83,076
Other payables		741,279
Total Liabilities		3,962,725
Net assets		2,383,276

 

9.e)

Sale of shareholding – Consórcio Machadinho

 

The Machadinho Consortium is responsible for the exploration of HPP Machadinho, located on the Uruguay River, on the border of the states of Santa Catarina and Rio Grande do Sul, with an installed capacity of 1,140 MW and a physical guarantee of 519.8 average MW. CEEE-G's share in the Consortium was 5.53%, which implied the same percentage of costs and charges for the project under its responsibility.

 

As provided for in item 5.54 of the Privatization Notice of Auction Notice No. 01/2022 and under the terms of the contract establishing the Machadinho Consortium, the other consortium members exercised their right of preference to acquire the entire stake in CEEE-G. The sale of CEEE-G's stake in Consórcio Machadinho occurred after the parties agreed to all the terms and conditions of the definitive transaction documents and the usual conditions for closing.

 

Under the terms and conditions of the agreed contract, the completion of the transaction was subject to compliance with the Precedent Condition, with the closure subject to the parties obtaining prior approval from the National Electric Energy Agency – ANEEL to carry out the Transaction, the which was granted in August 2023. The Closing of the transaction was carried out on 09/29/2023, for the amount of R$ 114,763,385.98 (one hundred and fourteen million, seven hundred and sixty-three thousand, three hundred and eighty-five reais and ninety-eight cents).

 

9.f)

Investment properties

 

The balance of investment properties is shown below:

 

						Consolidated						Parent Company
		Land		Buildings		Total		Land		Buildings		Total
Balance at December 31, 2022		101,513		57,567		159,080		94,257		45,886		140,143
Cost		101,513		87,977		189,490		94,257		74,392		168,649
Accumulated depreciation				(30,410)		(30,410)				(28,506)		(28,506)
Balance at December 31, 2022		101,513		57,567		159,080		94,257		45,886		140,143
Acquisitions		48,000				48,000						-
Depreciation (note 24)				(2,299)		(2,299)				(1,799)		(1,799)
Transfer between groups - fixed assets and investment property		7,298				7,298						-
Balance at September 30, 2023		156,811		55,268		212,079		94,257		44,087		138,344
Cost		156,811		88,112		244,923		94,257		74,391		168,648
Accumulated depreciation				(32,844)		(32,844)				(30,304)		(30,304)
Balance at September 30, 2023		156,811		55,268		212,079		94,257		44,087		138,344

 

The Company’s estimate of the fair value of investment properties was made for December 31, 2022. The fair value of investment property in the consolidated balance as of September 30, 2023, and December 31, 2022 is R$2,163,610 and in the parent company R$2,097,290.

 

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

 

			Consolidated				Parent Company
	09/30/2023		12/31/2022		09/30/2023		12/31/2022
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, 2022	485,107		4,451,114		16,525,293		40,882		4,025,550		644,880		197,619		26,370,445
Cost	485,107		8,741,911		36,373,386		284,863		4,025,550		1,057,566		643,304		51,611,687
Accumulated depreciation			(4,290,797)		(19,848,093)		(243,981)				(412,686)		(445,685)		(25,241,242)
Balance at December 31, 2022	485,107		4,451,114		16,525,293		40,882		4,025,550		644,880		197,619		26,370,445
Effect of foreign exchange differences	(4,586)		(5,859)		(20,930)		(335)		(2,973)		(2,134)		(104)		(36,921)
Acquisitions	46,495		41,397		202,304		1,439		2,572,342		70,397		14,453		2,948,827
Capitalized interest (1) (notes 26)									133,864						133,864
Write-offs (note 25) (2)	(1,627)		(12,021)		(13,642)		(28)						(47)		(27,365)
Depreciation (note 24)			(218,318)		(1,910,034)		(7,501)				(113,531)		(44,445)		(2,293,829)
Transfers to other asset categories	2,304		171,690		1,952,991		354		(2,410,621)				283,282
Transfer between groups - intangible assets and investment property	(6,637)		(21,528)		3,420		101		(6,951)						(31,595)
Right of use - Remesurement											80,481				80,481
Mazet Acquisition			380		5,040		390						814		6,624
Others			175		730				13,352						14,257
Balance at September 30, 2023	521,056		4,407,030		16,745,172		35,302		4,324,563		680,093		451,572		27,164,788
Cost	521,056		8,887,061		37,408,300		284,600		4,324,563		1,162,831		1,856,401		54,444,812
Accumulated depreciation			(4,480,031)		(20,663,128)		(249,298)				(482,738)		(1,404,829)		(27,280,024)
Balance at September 30, 2023	521,056		4,407,030		16,745,172		35,302		4,324,563		680,093		451,572		27,164,788

 

																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, 2022		25,618		287,746		6,533,142		10,201		900,421		11,433		17,924		7,786,485
Cost		25,618		520,372		15,233,464		100,323		900,421		38,133		132,073		16,950,404
Accumulated depreciation				(232,626)		(8,700,322)		(90,122)				(26,700)		(114,149)		(9,163,919)
Balance at December 31, 2022		25,618		287,746		6,533,142		10,201		900,421		11,433		17,924		7,786,485
Acquisitions						87,944				1,040,122		3,990		176		1,132,232
Capitalized interest (1) (note 26)										46,503						46,503
Write-offs (note 25)						(659)										(659)
Depreciation (note 24)				(13,187)		(833,431)		(1,352)				(6,866)		(5,428)		(860,264)
Transfers to other asset categories				393		1,166,963				(1,190,218)				22,862
Transfer between groups - intangible assets and investment property										(4,623)						(4,623)
Others						(68)										(68)
Balance at September 30, 2023		25,618		274,952		6,953,891		8,849		792,205		8,557		35,534		8,099,606
Cost		25,618		520,766		16,487,592		100,323		792,205		41,583		155,220		18,123,307
Accumulated depreciation				(245,814)		(9,533,701)		(91,474)				(33,026)		(119,686)		(10,023,701)
Balance at September 30, 2023		25,618		274,952		6,953,891		8,849		792,205		8,557		35,534		8,099,606

(*) 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 costs of capitalized borrowing are basically determined for the projects in Steelmaking and Mining and 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).

 

(2) In September 2023, CEEE-G sold its stake in Consórcio Machadinho, where it recognized the write-off of assets related to this stake in the amount of R$22,326, an amount recognized in other operating expenses (see note 25).

 

(i)

Right of use

 

Below are the movements of the right of use:

 

									Consolidated
	Land		Buildings and Infrastructure		Machinery, equipment and facilities		Others		Total
Balance at December 31, 2022	465,048		62,431		83,161		34,240		644,880
Cost	548,756		107,782		277,865		123,164		1,057,567
Accumulated depreciation	(83,708)		(45,351)		(194,704)		(88,924)		(412,687)
Balance at December 31, 2022	465,048		62,431		83,161		34,240		644,880
Effect of foreign exchange differences	-		(1,315)		133		(952)		(2,134)
Addition	65,081		4,400		-		917		70,398
Remesurement	16,704		37,485		20,948		5,343		80,480
Depreciation	(25,380)		(13,993)		(56,906)		(17,252)		(113,531)
Transfers to other asset categories	(2,702)		2,340		2,296		(1,934)
Balance at September 30, 2023	518,751		91,348		49,632		20,362		680,093
Cost	630,169		143,888		291,573		97,201		1,162,831
Accumulated depreciation	(111,418)		(52,540)		(241,941)		(76,839)		(482,738)
Balance at September 30, 2023	518,751		91,348		49,632		20,362		680,093

 

								Parent Company
		Land		Machinery, equipment and facilities		Others		Total
Balance at December 31, 2022		9,400		1,870		163		11,433
Cost		33,307		2,639		2,187		38,133
Accumulated depreciation		(23,907)		(769)		(2,024)		(26,700)
Balance at December 31, 2022		9,400		1,870		163		11,433
Remesurement		3,906		84		-		3,990
Depreciation		(6,112)		(589)		(165)		(6,866)
Transfers to other asset categories		201		(203)		2
Balance at September 30, 2023		7,395		1,162		-		8,557
Cost		37,415		2,477		1,691		41,583
Accumulated depreciation		(30,020)		(1,315)		(1,691)		(33,026)
Balance at September 30, 2023		7,395		1,162		-		8,557

 

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

 

			Consolidated				Parent Company
	09/30/2023		12/31/2022		09/30/2023		12/31/2022
Buildings and Infrastructure	34		34		31		31
Machinery, equipment and facilities	18		18		19		20
Furniture and fixtures	11		12		13		13
Others	11		9		11		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, 2022	4,131,483		152,484		87,846		225,187		6,188,654		2,400		10,788,054		59,499		59,499
Cost	4,371,890		753,307		296,456		226,581		6,400,593		2,400		12,051,227		178,747		178,747
Accumulated amortization	(131,077)		(600,823)		(208,610)		(1,394)		(211,939)				(1,153,843)		(119,248)		(119,248)
Adjustment for accumulated recoverable value	(109,330)												(109,330)
Balance at December 31, 2022	4,131,483		152,484		87,846		225,187		6,188,654		2,400		10,788,054		59,499		59,499
Effect of foreign exchange differences			(4,983)		(163)		(9,104)				(116)		(14,366)
Acquisitions			349		1,063								1,412
Transfer between groups - fixed assets and investment property	(5,228)				9,180		83		20,262				24,297		4,623		4,623
Amortization (note 24)			(57,694)		(15,228)		(2,165)		(110,662)				(185,749)		(9,314)		(9,314)
Others					652								652
Balance at September 30, 2023	4,126,255		90,156		83,350		214,001		6,098,254		2,284		10,614,300		54,808		54,808
Cost	4,675,302		718,929		301,357		217,560		6,422,018		2,284		12,337,450		183,370		183,370
Accumulated amortization	(549,047)		(628,773)		(218,007)		(3,559)		(323,764)				(1,723,150)		(128,562)		(128,562)
Balance at September 30, 2023	4,126,255		90,156		83,350		214,001		6,098,254		2,284		10,614,300		54,808		54,808

(*) Composed mainly of: (i) mining rights whose amortization is based on production volume and (ii) Concession agreement for the use of water resources in the acquisition of control of Companhia Estadual de Geração de Energia Elétrica, amortized over the agreement term (note 3.c).

 

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

 

			Consolidated				Parent Company
	09/30/2023		12/31/2022		09/30/2023		12/31/2022
Software	10		10		10		10
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 NBC TG 01(R4)/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 2022 remain in place and there is no event that would justify recording impairment on September 30, 2023.

 

12.

BORROWINGS, FINANCING AND DEBENTURES

 

The balances of borrowings, 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
			09/30/2023		12/31/2022		09/30/2023		12/31/2022		09/30/2023		12/31/2022	09/30/2023		12/31/2022
Foreign Debt
Floating Rates:
Prepayment			587,584		1,571,208		6,916,730		5,474,359		197,206		956,219	1,869,079		1,147,894
Fixed Rates:
Bonds, Perpetual bonds, Facility, CCE and ACC			2,672,443		1,189,717		16,102,336		16,790,284		2,061,884		616,954	751,140		782,655
Intercompany											624,413		43,196	6,756,884		8,216,508
Fixed interest in EUR
Intercompany											1,065,513		858	662,047		1,767,536
Facility			378,102		62,187		126,139		166,302
			3,638,129		2,823,112		23,145,205		22,430,945		3,949,016		1,617,227	10,039,150		11,914,593
Debt agreements in Brazil
Floating Rate Securities in R$:
BNDES/FINAME/FINEP, Debentures, NCE and CCB			2,502,516		2,446,840		14,910,155		13,740,051		2,230,637		1,827,077	7,282,210		6,110,174
			2,502,516		2,446,840		14,910,155		13,740,051		2,230,637		1,827,077	7,282,210		6,110,174
Total Borrowings and Financing			6,140,645		5,269,952		38,055,360		36,170,996		6,179,653		3,444,304	17,321,360		18,024,767
Transaction Costs and Issue Premiums			(89,624)		(76,316)		(532,160)		(445,890)		(23,210)		(25,285)	(60,690)		(30,518)
Total Borrowings and Financing + Transaction cost			6,051,021		5,193,636		37,523,200		35,725,106		6,156,443		3,419,019	17,260,670		17,994,249

 

12.a)

Borrowing and amortization, financing, and debentures

 

The following table shows amortization and funding during the period:

 

				Consolidated				Parent Company
		09/30/2023		12/31/2022		09/30/2023		12/31/2022
Opening balance		40,918,742		32,507,522		21,413,268		20,432,844
New debts		9,994,046		20,248,223		6,327,750		9,922,074
Repayment		(6,401,408)		(10,782,858)		(4,119,008)		(8,270,606)
Payments of charges		(2,376,367)		(2,315,586)		(1,002,965)		(1,128,874)
Accrued charges (note 26)		2,744,583		2,595,011		1,350,256		1,270,946
Consolidation of companies				81,978
Others (1)		(1,305,375)		(1,415,548)		(552,188)		(813,116)
Closing balance		43,574,221		40,918,742		23,417,113		21,413,268

(1)

Including unrealized exchange and monetary variations and funding cost.

 

The Company raised and amortized borrowings, financing and debentures during 2023, as shown below:

 

								Consolidated
								09/30/2023
Nature		New debts		Maturities		Repayment		Interest payment
Pre-Payment		1,890,333		2023 to 2028		(1,111,083)		(301,860)
Bonds, ACC, CCE and Facility		3,732,296		2023 to 2024		(2,050,568)		(692,384)
BNDES/FINAME/FINEP, Debentures, NCE, Facility and CCB		4,371,417		2023 to 2025		(3,239,757)		(1,382,123)
		9,994,046				(6,401,408)		(2,376,367)

 

 

 

 

 

 

 

 

 

 

12.b)

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

 

						Consolidated						Parent Company
						09/30/2023						09/30/2023
		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
Average rate		in Dollar 6.81% in Euro 5.49%		in Real 14.32%				in Dollar 4.56% in Euro 3.41%		in Real 14.43%
2023		1,545,426		1,182,382		2,727,808		1,218,433		963,229		2,181,662
2024		2,302,924		3,887,860		6,190,784		2,812,398		1,788,626		4,601,024
2025		3,165,621		1,789,986		4,955,607		3,030,141		1,320,598		4,350,739
2026		2,874,253		2,368,226		5,242,479		769,663		1,812,598		2,582,261
2027		937,703		2,360,969		3,298,672		91,138		1,832,098		1,923,236
2028 to 2031		12,830,896		3,007,220		15,838,116		3,321,163		1,383,320		4,704,483
After 2031		3,126,511		2,816,028		5,942,539		2,745,230		412,378		3,157,608
		26,783,334		17,412,671		44,196,005		13,988,166		9,512,847		23,501,013

 

·      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 interim financial information 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.

 

To the moment, the Company is compliant with the financial and non-financial obligations (covenants) of its existing 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, swap interest and derivatives with commodities.

 

Considering the nature of these instruments, their 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 or maturity, mostly in the short term. Considering the terms and characteristics of these instruments, the carrying amounts approximate the fair values.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

·

Classification of financial instruments

 

																		Consolidated
Consolidated										09/30/2023								12/31/2022
		Notes		Fair value through other comprehensive income		Fair value through profit or loss		Measured at amortized cost		Balances		Fair value through other comprehensive income		Fair value through profit or loss		Measured at amortized cost		Balances
Assets
Current
Cash and cash equivalents		3						15,302,620		15,302,620						11,991,356		11,991,356
Short-term investments		4				1,106,108		38,491		1,144,599				1,184,895		271,590		1,456,485
Trade receivables		5						3,179,048		3,179,048						3,233,164		3,233,164
Dividends and interest on equity		8						155,808		155,808						77,377		77,377
Trading securities		8				8,096				8,096				9,596				9,596
Loans - related parties		8						5,335		5,335						5,383		5,383
Total						1,114,204		18,681,302		19,795,506				1,194,491		15,578,870		16,773,361
Non-current
Investments		4						131,906		131,906						156,185		156,185
Other trade receivables		8						10,406		10,406						8,059		8,059
Eletrobrás compulsory loan		8						54,254		54,254						58,030		58,030
Receivables by indemnity		8						988,148		988,148						974,863		974,863
Loans - related parties		8						1,617,913		1,617,913						1,384,773		1,384,773
Investments		9				68,049				68,049				94,700				94,700
Total						68,049		2,802,627		2,870,676				94,700		2,581,910		2,676,610
Total Assets						1,182,253		21,483,929		22,666,182				1,289,191		18,160,780		19,449,971
Liabilities
Current
Borrowings and financing		12						6,140,645		6,140,645						5,269,952		5,269,952
Leases		14						144,781		144,781						177,010		177,010
Trade payables		15						7,047,849		7,047,849						6,596,915		6,596,915
Trade payables -  drawee risk		16						2,993,574		2,993,574						5,709,069		5,709,069
Dividends and interest on capital		16						4,939		4,939						611,307		611,307
Derivative financial instruments (note 16)				87,099		43,421				130,520		416,935						416,935
Total				87,099		43,421		16,331,788		16,462,308		416,935				18,364,253		18,781,188
Non-current
Borrowings and financing		12						38,055,360		38,055,360						36,170,996		36,170,996
Leases		14						595,795		595,795						516,836		516,836
Trade payables		15						16,560		16,560						46,269		46,269
Derivative financial instruments (note 16)		16				50,520				50,520				69,472				69,472
Total						50,520		38,667,715		38,718,235				69,472		36,734,101		36,803,573
Total Liabilities				87,099		93,941		54,999,503		55,180,543		416,935		69,472		55,098,354		55,584,761

 

 

 

 

 

 

 

 

 

 

 

 

 

 

														Parent Company
Parent Company								09/30/2023						12/31/2022
		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				1,963,467		1,963,467				2,839,405		2,839,405
Short-term investments		4		1,106,108		30,371		1,136,479		1,184,895		22,715		1,207,610
Trade receivables		5				2,004,972		2,004,972				1,956,531		1,956,531
Dividends and interest on equity		8				235,782		235,782				295,480		295,480
Trading securities		8		7,981				7,981		9,488				9,488
Loans - related parties		8				5,335		5,335				5,383		5,383
Total				1,114,089		4,239,927		5,354,016		1,194,383		5,119,514		6,313,897
Non-current
Investments		4				115,175		115,175				140,510		140,510
Other trade receivables		8				1,003		1,003				1,003		1,003
Eletrobrás compulsory loan		8				51,624		51,624				55,336		55,336
Receivables by indemnity		8				988,148		988,148				974,863		974,863
Loans - related parties		8				2,020,000		2,020,000				1,668,382		1,668,382
Investments		9		68,049				68,049		94,700				94,700
Total				68,049		3,175,950		3,243,999		94,700		2,840,094		2,934,794
Total Assets				1,182,138		7,415,877		8,598,015		1,289,083		7,959,608		9,248,691
Liabilities
Current
Borrowings and financing		12				6,179,653		6,179,653				3,444,304		3,444,304
Leases		14				8,902		8,902				8,451		8,451
Trade payables		15				3,985,582		3,985,582				3,684,793		3,684,793
Trade payables -  drawee risk		16				2,691,691		2,691,691				5,318,425		5,318,425
Dividends and interest on capital		16				4,642		4,642				598,267		598,267
Derivative financial instruments (note 16)				43,421				43,421
Total				43,421		12,870,470		12,913,891				13,054,240		13,054,240
Non-current
Borrowings and financing		12				17,321,360		17,321,360				18,024,767		18,024,767
Derivative financial instruments (note 16)		16								58,005				58,005
Leases		14				865		865				4,729		4,729
Trade payables		15				7,524		7,524				14,352		14,352
Total						17,329,749		17,329,749		58,005		18,043,848		18,101,853
Total Liabilities				43,421		30,200,219		30,243,640		58,005		31,098,088		31,156,093

 

·

Fair value measurement

 

The following table shows the financial instruments recorded at fair value by classifying them according to the fair value hierarchy:

Consolidated						09/30/2023						12/31/2022
		Level 1		Level 2		Balances		Level 1		Level 2		Balances
Assets
Current
Financial investments		1,106,108				1,106,108		1,184,895				1,184,895
Trading securities		8,096				8,096		9,596				9,596
Non-current
Investments		68,049				68,049		94,700				94,700
Total Assets		1,182,253				1,182,253		1,289,191				1,289,191
Liabilities
Current
Derivative financial instruments				43,421		43,421				416,935		416,935
Non-current
Derivative financial instruments				50,520		50,520				69,472		69,472
Total Liabilities				93,941		93,941				486,407		486,407

 

Level 1 - Data prices are 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.

 

Level 3 - There are no assets and 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 referred to as 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 September 30, 2023, is shown below.

 

 

 

		09/30/2023		12/31/2022
Foreign Exchange Exposure		(Amounts in US$’000)		(Amounts in US$’000)
Cash and cash equivalents overseas		2,000,598		1,191,036
Trade receivables		294,906		315,920
Financial investments		15,079		26,930
Borrowings and financing		(5,355,872)		(4,594,471)
Trade payables		(342,828)		(366,149)
Others		(50,142)		(23,079)
Natural Gross Foreign Exchange Exposure (assets - liabilities)		(3,438,259)		(3,449,813)
Cash flow hedge accounting		4,175,190		4,409,760
Exchange rate swap CDI x Dollar		(67,000)		(67,000)
Exchange rate swap Real x Dollar		(115,000)		(115,000)
Net foreign exchange exposure		554,931		777,947

 

CSN uses Hedge Accounting strategy, 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 September 30, 2023, as a reference.

 

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

 

								09/30/2023
Currency		Exchange rate		Probable scenario		Scenario 1		Scenario 2
USD		5.0076		4.9219		6.2595		7.5114
EUR		5.3000		5.2517		6.6250		7.9500
USD x EUR		1.0584		1.0670		1.3230		1.5876

 

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

 

										09/30/2023
Instruments		Notional		Risk		Probable scenario (*) R$		Scenario 1 R$		Scenario 2 R$
Gross exchange position		(3,438,259)		Dollar		294,659		(4,304,356)		(8,608,713)
Cash flow hedge accounting		4,175,190		Dollar		(357,814)		5,226,920		10,453,841
Exchange rate swap CDI x Dollar		(67,000)		Dollar		5,742		(83,877)		(167,755)
Exchange rate swap Real x Dollar		(115,000)		Dollar		9,856		(143,969)		(287,937)
Net exchange position		554,931		Dollar		(47,557)		694,718		1,389,436

(*) The probable scenarios were calculated considering the following variations for the risks: Real x Dollar – valuation of the Real by 1.71% / Real x Euro - valuation of the Real by 0.91% / Euro x Dollar – devaluation of the dollar by 0.81%. Source: Central Bank of Brazil and European Central Bank quotations on November 10, 2023.

 

·

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, TLP, EURIBOR and SOFR, 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 bodies, the market began to transition from the Libor rate (London Interbank Offered Rate) to the SOFR (Secured Overnight Financing Rate) as of 2022. On September 30, all contracts were migrated to SOFR, as evidenced in the interest rate sensitivity analysis.

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 in interest rate volatility using the closing rate as of September 30, 2023, as a reference.

 

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

 

						Consolidated
						09/30/2023
Interest		Interest rate		Scenario 1		Scenario 2
CDI		12.65%		15.81%		18.98%
TJLP		7.00%		8.75%		10.50%
IPCA		4.61%		5.76%		6.92%
SOFR 6M		5.47%		6.84%		8.21%
SOFR		5.31%		6.64%		7.97%
EURIBOR 3M		3.95%		4.94%		5.93%
EURIBOR 6M		4.13%		5.16%		6.20%

 

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

 

												Impact on balances on 09/30/2023
Changes in interest rates		% p.a		Assets		Liabilities		Probable scenario (*)		Scenario 1		Scenario 2
CDI		12.65		4,541,580		(15,563,121)		(12,415,766)		(12,764,322)		(13,112,878)
TJLP		7.00				(864,409)		(924,918)		(940,045)		(955,172)
IPCA		4.61				(36,115)		(37,780)		(38,196)		(38,612)
SOFR 6M		5.47				(2,085,665)		(2,199,751)		(2,228,272)		(2,256,794)
SOFR		5.31				(5,830,376)		(6,139,969)		(6,217,367)		(6,294,765)
EURIBOR 3M		3.95				(474,592)		(493,338)		(498,025)		(502,712)
EURIBOR 6M		4.13				(28,977)		(30,174)		(30,473)		(30,772)

(*) The sensitivity analysis is based on the premise of maintaining the market values as of September 30, 2023 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, as shown in the following topics:

 

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 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 September 30, 2023:

 

 

 

								09/30/2023		09/30/2023		09/30/2022		09/30/2023		09/30/2022		09/30/2023		09/30/2022
				Appreciation (R$)				Fair value (market)		Other income and expenses (note 25)				Other comprehensive income				Exchange variation
Maturity		Notional		Asset position		Liability position		Amounts receivable / (payable)
05/31/2022 (Settled)		Platts										23,374								(1,087)
01/01/2023 to 01/31/2023 (Settled)		Platts								(196,908)								(1,107)
02/01/2023 to 02/28/2023 (Settled)		Platts								(212,418)								2,423
03/01/2023 to 03/31/2023 (Settled)		Platts								(158,701)								1,982
04/01/2023 to 04/30/2023 (Settled)		Platts								21,394								65
05/01/2023 to 05/31/2023 (Settled)		Platts								186,366								(3,629)
06/01/2023 to 06/31/2023 (Settled)		Platts								19,092								(4,801)
07/01/2023 to 07/31/2023 (Settled)		Platts								29,229								(3,106)
08/01/2023 to 08/31/2023 (Settled)		Platts								23,336								(2,664)
09/01/2023 to 09/31/2023 (*)		Platts		766,881		(786,693)		(19,812)		(21,554)								(38)
10/01/2023 to 10/31/2023		Platts		1,552,437		(1,602,215)		(49,778)						(48,837)				(941)
11/01/2023 to 11/30/2023		Platts		1,374,467		(1,393,509)		(19,042)						(18,691)				(351)
12/01/2023 to 12/31/2023		Platts		1,151,485		(1,150,947)		538						527				11
01/01/2024 to 01/31/2024		Platts		170,872		(169,877)		995						975				20
				5,016,142		(5,103,241)		(87,099)		(310,164)		23,374		(66,026)		-		(12,136)		(1,087)

(*) The operation matured on September 30, 2023 and was settled in early October 2023.

 

The changes in the amounts related to cash flow hedge accounting - Platts index recorded in shareholders' equity on September 30, 2023, are shown as follows:

 

	12/31/2022		Movement		Realization		09/30/2023
Cash flow hedge accounting  –  “Platts”	(341,269)		(34,921)		310,164		(66,026)
Income tax and social contribution on cash flow hedge accounting	116,031		11,873		(105,456)		22,448
Fair Value of cash flow accounting - Platts, net	(225,238)		(23,048)		204,708		(43,578)

 

The cash flow hedge accounting - Platts index – is 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.

 

Sensitivity analysis for Platts price risks

 

We present below the sensitivity analysis for Platts price risks. The Company considered scenarios 1 and 2 with 25% and 50% price devaluation using as a reference the probable price at the maturity of each operation.

 

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

 

		09/30/2023
Maturity		Probable scenario (*) R$		Scenario 1 R$		Scenario 2 R$
10/01/2023 to 10/31/2023		(24,388)		(411,180)		(797,972)
11/01/2023 to 11/30/2023		9,554		(325,110)		(659,775)
12/01/2023 to 12/31/2023		26,267		(249,539)		(525,344)
01/01/2024 to 01/31/2024		5,587		(34,918)		(75,423)
		17,020		(1,020,747)		(2,058,514)

(*) The probable scenario was calculated considering the Platts quotation on October 13,2023.

 

b) Cash flow hedge accounting

 

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 and its subsidiary CSN Mineração designated part of their dollar liabilities as an instrument of future hedge exports. As a result, the exchange rate variation resulting from the designated liabilities will be temporarily 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 hedge accounting does not imply the contracting of any financial instrument.

 

The table below presents a summary of the relations of hedge as of September 30, 2023:

 

																		09/30/2023
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$'000)
4/2/2018		Bonds		Part of the highly probable future monthly iron ore exports		Foreign exchange - R$ vs. US$ spot rate		July 2018 - February 2023		3.3104		1,170,045		(1,170,045)		(281,258)
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		(871,761)		(57,873)		(585,311)
1/10/2020		Bonds		Part of the highly probable future monthly iron ore exports		Foreign exchange - R$ vs. US$ spot rate		March 2027 - January 2028		4.0745		1,416,000		(1,287,000)				(1,334,970)
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						(801,200)
6/1/2022		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		(137,300)		(24,475)		(280,930)
6/1/2022		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		(91,450)		(10,546)		(219,390)
12/1/2022		Advance on foreign exchange contract		Part of the highly probable future monthly iron ore exports		Foreign exchange - R$ vs. US$ spot rate		December 2022 - November 2023		5.1643		60,000						9,402
12/1/2022		Advance on foreign exchange contract		Part of the highly probable future monthly iron ore exports		Foreign exchange - R$ vs. US$ spot rate		December 2022 - December 2025		5.2565		100,000						24,890
12/1/2022		Advance on foreign exchange contract		Part of the highly probable future monthly iron ore exports		Foreign exchange - R$ vs. US$ spot rate		December 2022 - January 2024		5.2660		50,000						12,920
12/1/2022		Advance on foreign exchange contract		Part of the highly probable future monthly iron ore exports		Foreign exchange - R$ vs. US$ spot rate		December 2022 - November 2023		5.3270		20,000						6,388
12/1/2022		Bonds		Part of the highly probable future monthly iron ore exports		Foreign exchange - R$ vs. US$ spot rate		December 2022 - June 2031		5.0360		490,000		(10,000)		(1,373)		13,632
12/1/2022		Export prepayments in US$ to third parties		Part of the highly probable future monthly iron ore exports		Foreign exchange - R$ vs. US$ spot rate		December 2022 - June 2027		5.0360		70,000						1,988
Total												7,742,746		(3,567,556)		(375,525)		(3,152,581)

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

 

The net balance of amounts designated and already amortized in dollars totals US$3.567.556.

 

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

 

As of September 30, 2023, the hedging relationships established by the Company were effective according to the retrospective and prospective tests performed. Thus, no reversal for cash flow 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 interim financial information as of December 31, 2022. The balance recorded as of September 30, 2023 and December 31, 2022 is R$6,293.

 

d) Hedge accounting movements

 

The changes in the amounts related to cash flow hedge accounting recorded in shareholders’ equity as of September 30, 2023 are shown as follows:

							Consolidated
	12/31/2022		Movement		Realization		09/30/2023
Cash flow hedge accounting	(4,434,697)		906,591		375,525		(3,152,581)
Income tax and social contribution on cash flow hedge accounting	1,507,797		(308,241)		(127,679)		1,071,877
Fair Value of cash flow accounting, net taxes	(2,926,900)		598,350		247,846		(2,080,704)
							Parent Company
	12/31/2022		Movement		Realization		09/30/2023
Cash flow hedge accounting	(4,022,353)		722,195		364,979		(2,935,179)
Income tax and social contribution on cash flow hedge accounting	1,367,600		(245,546)		(124,093)		997,961
Fair Value of cash flow accounting, net taxes	(2,654,753)		476,649		240,886		(1,937,218)

 

·

Credit risk

 

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

 

With regard 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 honor 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, financing and debentures are shown in note 12.

 

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

 

									Consolidated
At September 30, 2023	Less than one year		From one to two years		From two to five years		Over five years		Total
Borrowings, financing and debentures (note 12)	6,140,645		7,733,030		16,498,130		13,824,200		44,196,005
Lease Liabilities (note 14)	144,781		198,537		141,391		255,867		740,576
Derivative financial instruments (note 13 a)	130,520		50,520						181,040
Trade payables (note 15)	7,047,849		12,851		1,803		1,906		7,064,409
Trade payables - Drawee Risk (note 16)	2,993,574								2,993,574
Dividends and interest on equity (note 16)	4,939								4,939
	16,462,308		7,994,938		16,641,324		14,081,973		55,180,543

 

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 interim financial information at their book values, 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:

 

			09/30/2023				12/31/2022
	Closing Balance		Fair value		Closing Balance		Fair value
Fixed Rate Notes (*)	15,030,441		12,825,475		15,656,088		13,782,836

 

(*) Source: Bloomberg

 

13.c)

Protection instruments: Derivatives

 

· Derivative financial instruments portfolio position

 

Swap exchange rate CDI x Dollar

 

The Company has derivative transactions to protect its debt in NCE raised in September 2019 with maturity in October 2023 in the amount of US$67.000 (equivalent to R$278.000) at a cost compatible with that usually practiced by the Company.

 

Swap exchange rate Real x Dollar

 

The subsidiary CSN Cimentos, after contracting a borrowing in foreign currency of US$115,000, 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 derivative transactions to hedge their exposure to the IPCA. CSN Mineração's contracts have maturities scheduled from 2031 to 2037, while CSN Cimentos' contracts mature in 2032.

 

Below is the position of the derivatives:

 

																Consolidated
														09/30/2023		09/30/2022
								Appreciation (R$)				Fair value (market)		Impact on financial income (expenses) (note 26)
Instrument		Maturity		Functional Currency		Notional amount		Asset position		Liability position		Amounts receivable / (payable)
Exchange rate swap
Exchange rate swap Dollar x Real		Settled		Dollar												176,992
Exchange rate swap CDI x Dollar		10/02/2023		Dollar		67,000		23,470		(66,891)		(43,421)		29,923		32,428
Exchange rate swap Real x Dollar		6/10/2027		Dollar		115,000		606,920		(657,440)		(50,520)		(64,497)		(21,535)
Total Swap						182,000		630,390		(724,331)		(93,941)		(34,574)		187,885
Interest rate swap
Interest rate (Debentures) CDI x IPCA		07/15/2031		Real		576,448		649,062		(627,849)		21,213		22,771		(48,073)
Interest rate (Debentures) CDI x IPCA		07/15/2032		Real		745,000		855,235		(825,520)		29,715		(1,823)		(6,910)
Interest rate (Debentures) CDI x IPCA		07/15/2036		Real		423,552		474,781		(476,492)		(1,711)		40,779		(7,164)
Interest rate (Debentures) CDI x IPCA		07/15/2037		Real		655,382		716,306		(699,140)		17,166		(44,937)		(10,704)
Interest rate (Debentures) CDI x IPCA		02/16/2032		Real		600,000		692,872		(645,018)		47,854		9,595		(3,348)
Interest rate (Debentures) CDI x IPCA		2/12/2032		Real		600,000		689,825		(640,595)		49,230		11,719		(23,535)
Total interest rate (Debentures) CDI x IPCA						3,600,382		4,078,081		(3,914,614)		163,467		38,104		(99,734)
								4,708,471		(4,638,945)		69,526		3,530		88,151

 

·

Classification of derivatives in the balance sheet and income statement

 

								09/30/2023		09/30/2022
Instruments		Liabilities						Financial income (expenses), net (note 26)
		Current		Non-current		Total
Exchange rate swap (NDF) Dollar x real (settled)										176,992
Exchange rate swap Real x Dollar				(50,520)		(50,520)		(64,497)		(21,535)
Exchange rate swap CDI x Dollar		(43,421)				(43,421)		29,923		32,428
Iron ore derivative		(87,099)				(87,099)		(12,136)		(1,087)
Interest rate swap CDI x IPCA				163,467		163,467		38,104		(99,734)
		(130,520)		112,947		(17,573)		(8,606)		87,064

 

Derivative instruments Swap CDI x IPCA are fully classified in the borrowings and financing group, since they are linked to debentures in order to protect exposure to the IPCA.

 

13.d)

Investments in securities measured at fair value through profit or loss

 

The Company has common shares (USIM3), preferred shares (USIM5) of Siderúrgica de Minas Gerais S.A. (“Usiminas”) and shares of Panatlântica S.A. (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 line 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		09/30/2023								12/31/2022								09/30/2023		09/30/2022
		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%		6.94		739,949		106,620,851		15.12%		7.41		790,061		(50,112)		(672,778)
USIM5		55,144,456		10.07%		6.64		366,159		55,144,456		10.07%		7.16		394,834		(28,675)		(421,303)
								1,106,108								1,184,895		(78,787)		(1,094,081)
PATI3		2,705,726		11.31%		25.15		68,049		2,705,726		11.31%		35.00		94,700		(26,651)		(27,977)
								1,174,157								1,279,595		(105,438)		(1,122,058)

 

·

Stock market price risks

 

The Company is exposed to the risk of changes in the stock price due to the investments measured at fair value through profit or loss that have their quotations based on the market price on the B3.

 

Sensitivity analysis for stock price risks

 

We present below the sensitivity analysis for the stock price risks. The Company considered scenarios 1 and 2 with 25% and 50% devaluation in the stock price using as reference the closing price on September 30, 2023. The probable scenario considered a 5% devaluation in the stock price.

 

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

 

				09/30/2023
Class of shares		Probable scenario		Scenario 1		Scenario 2
		5%		25%		50%
USIM3		(36,997)		(184,987)		(369,974)
USIM5		(18,308)		(91,540)		(183,080)
PATI3		(3,402)		(17,012)		(34,025)

 

 

 

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		09/30/2023		12/31/2022
Shareholder's equity (equity)		20,100,845		21,816,044
Borrowings and Financing (Third-party capital)		43,574,221		40,918,742
Gross Debit/Shareholder's equity		2.17		1.88

 

14.   LEASE LIABILITIES

 

Lease liabilities are shown below:

 

			Consolidated				Parent Company
	09/30/2023		12/31/2022		09/30/2023		12/31/2022
Leases	2,066,975		1,916,636		10,258		14,306
Present value adjustment - Leases	(1,326,399)		(1,222,790)		(491)		(1,126)
	740,576		693,846		9,767		13,180
Classified:
Current	144,781		177,010		8,902		8,451
Non-current	595,795		516,836		865		4,729
	740,576		693,846		9,767		13,180

 

The Company has lease agreements for port terminals in Itaguaí, the Solid Bulk Terminal - TECAR, used for loading and unloading iron ores and others and the Container Terminal - TECON, with remaining terms of 24 and 27 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 12 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
	09/30/2023		12/31/2022		09/30/2023		12/31/2022
Opening balance	693,846		611,551		13,180		17,941
New leases	186,494		29,633				2,808
Present Value Adjustments - New leases	(116,097)		(3,300)				(508)
Contract review	80,481		99,419		3,990		201
Write-off			(781)
Payments	(163,388)		(155,995)		(8,300)		(8,836)
Interest appropriated	58,740		69,510		897		1,574
Acquisition of companies			45,352
Exchange variation	500		(1,543)
Net balance	740,576		693,846		9,767		13,180

 

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 September 30, 2023, the expected minimum payments are the following:

 

 

							Consolidated
	Less than one year		Between one and five years		Over five years		Total
Leases	155,968		475,348		1,435,659		2,066,975
Present value adjustment - Leases	(11,187)		(135,420)		(1,179,792)		(1,326,399)
	144,781		339,928		255,867		740,576

 

·

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
	09/30/2023		12/31/2022		09/30/2023		12/31/2022
Leases	1,787,427		1,835,101		9,953		13,466
Present value adjustment - Leases	(1,212,464)		(1,221,378)		(476)		(1,066)
Potencial PIS and COFINS credit	165,337		169,747		921		1,246
Present value adjustment – Potential PIS and COFINS credit	(112,153)		(112,977)		(44)		(99)

 

·

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.

 

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 period are:

 

								Consolidated
	Nine months ended					Three months ended
	09/30/2023		09/30/2022			09/30/2023		09/30/2022
Contract less than 12 months	3,431		905			736		66
Lower Assets value	11,795		2,548			3,671		644
Variable lease payments	302,302		259,739			102,466		81,037
	317,528		263,192			106,873		81,747

 

								Parent Company
	Nine months ended					Three months ended
	09/30/2023		09/30/2022			09/30/2023		09/30/2022
Lower Assets value	6,146		927			1,993		416
Variable lease payments	-		955			-		147
	6,146		1,882			1,993		563

 

15.

TRADE PAYABLES

 

			Consolidated				Parent Company
	09/30/2023		12/31/2022		09/30/2023		12/31/2022
Trade payables	7,147,708		6,723,077		4,049,548		3,750,724
(-) Adjustment present value	(83,299)		(79,893)		(56,442)		(51,579)
	7,064,409		6,643,184		3,993,106		3,699,145
Classified:
Current	7,047,849		6,596,915		3,985,582		3,684,793
Non-current	16,560		46,269		7,524		14,352
	7,064,409		6,643,184		3,993,106		3,699,145

16.

OTHER PAYABLES

 

The other payables classified in current and non-current liabilities are comprised as follows:

 

							Consolidated								Parent Company
	Current				Non-current				Current				Non-current
	09/30/2023		12/31/2022		09/30/2023		12/31/2022		09/30/2023		12/31/2022		09/30/2023		12/31/2022
Payables to related parties (note 20 a)	31,478		109,087		36,784		53,356		377,845		406,583		2,803		41,694
Derivative financial instruments (note 13 a)	130,520		416,935		50,520		69,472		43,421						58,005
Dividends and interest on capital	4,939		611,307						4,642		598,267
Advances from customers (1)	1,918,683		1,120,072		5,525,704		943,919		298,421		83,300		783,181
Taxes in installments	145,454		280,721		173,256		184,106		15,855		9,173		56,649
Profit sharing - employees	225,873		266,705						111,713		136,909
Taxes payable					30,620		10,925						9,251		8,962
Provision for consumption and services	253,844		241,965						121,449		110,910
Third party materials in our possession	214,891		303,858						198,213		286,805
Trade payables - Drawee Risk and forfaiting (2)	2,993,574		5,709,069						2,691,691		5,318,425
Trade payables (note 15)					16,560		46,269						7,524		14,352
Lease Liabilities (note 14)	144,781		177,010		595,795		516,836		8,902		8,451		865		4,729
Other payables	98,988		81,922		373,196		391,535		23,435		2,358		57,839		21,248
	6,163,025		9,318,651		6,802,435		2,216,418		3,895,587		6,961,181		918,112		148,990

 

(1) Advances from Customers: On December 31, 2022 the subsidiaries CSN Mineração and CSN Cimentos entered into advance contracts for the sale of electricity with national operators in the sector to be executed up to 8 years. Additionally, the subsidiary CSN Mineração S.A. received in advance the total amount of US$500.000 (R$2,599,300) referring to supply contracts of approximately 13 million tons of iron ore signed with a major international player, to be executed within 4 years, with supply expected to begin in 2024. On June 30, 2023, the subsidiary CSN Mineração entered into an amendment to the advance contract, signed on January 16, 2023, in the amount of US$300,000 for additional supply of 6.3 million tons of iron ore. From this amendment, the Company received on June 30, 2023 the amount of US$205,000 (R$987,936), the remaining balance of US$95,000 will be received until July 31, 2023.

 

(2) The Company classifies drawee risk and forfaiting transactions with suppliers under other liabilities. These transactions are negotiated with financial institutions by which suppliers to anticipate receivables arising from sales of goods and, consequently, lengthen the payment terms of the Company's own obligations. The actual anticipation of receivables depends on the acceptance by its suppliers, since their participation is not compulsory. The Company is not reimbursed and/or benefited by the financial institution for discounts for payment executed before the due date agreed with the supplier, there is no alteration in the degree of subordination of the title in the case of judicial execution and no alteration in the existing commercial conditions between the Company and its suppliers.

 

17.

INCOME TAX AND SOCIAL CONTRIBUTION

 

17.a)

Income tax 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
	Nine months ended				Three months ended
	09/30/2023		09/30/2022		09/30/2023		09/30/2022
Income tax and social contribution income (expense)
Current	(828,108)		(1,563,960)		(569,846)		(293,759)
Deferred	609,660		(584,923)		236,597		(277,035)
	(218,448)		(2,148,883)		(333,249)		(570,794)
							Parent Company
	Nine months ended				Three months ended
	09/30/2023		09/30/2022		09/30/2023		09/30/2022
Income tax and social contribution income (expense)
Current	179,100		(195,974)		(2,346)		41,423
Deferred	675,341		(512,722)		267,752		(207,637)
	854,441		(708,696)		265,406		(166,214)

 

 

The reconciliation of income tax 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:

 

							Consolidated
	Nine months ended				Three months ended
	09/30/2023		09/30/2022		09/30/2023		09/30/2022
Income before income tax and social contribution	(230,008)		4,119,789		424,043		808,426
Tax rate	34%		34%		34%		34%
Income tax and social contribution at combined statutory rate	78,203		(1,400,728)		(144,175)		(274,865)
Adjustment to reflect the effective rate:
Equity in results of affiliated companies	127,467		71,375		48,612		36,225
Difference Tax Rate in companies abroad	(184,189)		(146,918)		(166,066)		(153,729)
Tax loss carryforwards without recognizing deferred taxes	-		(18,631)		-		(4,677)
Indebtdness limit	-		(6,382)		-		(2,058)
Unrecorded deferred taxes on temporary differences	-		(13,658)		-		(14,116)
Income taxes and social contribution on foreign profit	121,271		11,803		121,271		11,803
Tax incentives	27,463		30,411		21,048		9,679
Interest on equity	19,235				-
Recognition/(reversal) of tax credits	(344,710)		(696,590)		(203,226)		(179,915)
Other permanent deductions (additions)	(63,188)		20,435		(10,713)		859
Income tax and social contribution in net income for the period	(218,448)		(2,148,883)		(333,249)		(570,794)
Effective tax rate	-95%		52%		79%		71%
							Parent Company
	Nine months ended				Three months ended
	09/30/2023		09/30/2022		09/30/2023		09/30/2022
Income before income tax and social contribution	(1,751,714)		2,245,815		(419,886)		299,605
Tax rate	34%		34%		34%		34%
Income tax and social contribution at combined statutory rate	595,583		(763,577)		142,761		(101,866)
Adjustment to reflect the effective rate:
Equity in results of affiliated companies	478,151		719,815		145,581		100,741
Indebtdness limit			(6,382)				(2,058)
Income taxes and social contribution on foreign profit	90,687		11,803		90,687		11,803
Interest on equity	(75,772)
Tax incentives			4,702				(1,327)
Recognition/(reversal) of tax credits	(190,456)		(696,590)		(30,599)		(179,915)
Other permanent deductions (additions)	(43,752)		21,533		(83,024)		6,408
Income tax and social contribution in net income for the period	854,441		(708,696)		265,406		(166,214)
Effective tax rate	49%		32%		63%		55%

 

 

17.b)

Deferred income tax and social contribution:

 

Deferred income tax and social contribution balances are as follows:

 

				Consolidated				Parent Company
		09/30/2023		12/31/2022		09/30/2023		12/31/2022
Deferred
Income tax losses		4,045,386		2,679,028		2,092,535		1,279,792
Social contribution tax losses		1,386,685		894,183		775,608		482,104
Temporary differences		(458,916)		1,305,557		693,824		1,494,816
Tax, social security, labor, civil and environmental provisions		534,687		584,834		182,390		205,440
Estimated losses on assets		192,004		369,826		138,447		143,926
Gains/(Losses) on financial assets		491,592		468,813		498,327		442,333
Actuarial Liabilities (Pension and Health Plan)		191,142		226,875		182,679		222,745
Provision for consumption and services		209,671		205,880		197,555		172,566
Cash Flow Hedge Accounting and Unrealized Exchange Variations		477,022		1,459,012		402,323		1,206,064
(Gain) on loss of control of Transnordestina		(224,096)		(224,096)		(224,096)		(224,096)
Fair Value SWT/CBL Acquisition		(149,489)		(149,489)
Business combination		(1,401,675)		(1,632,370)		(721,992)		(721,992)
Others		(779,774)		(3,728)		38,191		47,830
Total		4,973,155		4,878,768		3,561,967		3,256,712
Total Deferred Assets		6,360,579		5,095,718		4,515,912		4,219,717
Total Deferred Liabilities		(1,387,424)		(216,950)		(953,945)		(963,005)
Total Deferred		4,973,155		4,878,768		3,561,967		3,256,712

 

The Company has in its corporate structure subsidiaries abroad, whose income is 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 2019 and 2023, these subsidiaries generated income in the amount of R$156,367. If the Brazilian tax authorities understand that this income is subject to additional taxation in Brazil for income tax and social contribution, these, if due, would reach approximately R$53,165. 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 interim financial information.

 

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 levy 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.

 

17.c)

Changes in deferred income tax and social contribution

 

The changes in deferred taxes is shown below:

 

		Consolidated		Parent Company
Balance at January 1, 2022		4,569,011		4,843,653
Recognized in the result		(420,773)		(988,588)
Recognized in other comprehensive income		(322,876)		(598,353)
Acquisition of companies		1,053,406
Balance at December 31, 2022		4,878,768		3,256,712
Recognized in the result		609,660		675,341
Recognized in other comprehensive income		(521,640)		(369,642)
Use of tax credit in installment program		(451)		(444)
Reverse incorporation		6,818
Balance at September 30, 2023		4,973,155		3,561,967

 

17.d)

Income tax and social contribution recognized in equity:

 

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

 

			Consolidated				Parent Company
	09/30/2023		12/31/2022		09/30/2023		12/31/2022
Income tax and social contribution
Actuarial gains on defined benefit pension plan	104,455		100,139		99,288		99,288
Exchange differences on translating foreign operations	(325,350)		(325,350)		(325,350)		(325,350)
Cash flow hedge accounting	954,186		1,571,953		997,961		1,367,601
	733,291		1,346,742		771,899		1,141,539

 

18.

PROVISIONS FOR TAX, SOCIAL SECURITY, LABOR, CIVIL AND 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:

 

								Consolidated								Parent Company
		Accrued liabilities				Judicial deposits				Accrued liabilities				Judicial deposits
		09/30/2023		12/31/2022		09/30/2023		12/31/2022		09/30/2023		12/31/2022		09/30/2023		12/31/2022
Tax		149,512		219,196		152,585		184,687		16,939		96,865		57,088		57,316
Social security		1,595		1,567		4				1,595		1,549
Labor		368,177		375,416		303,494		297,507		159,536		177,902		138,421		160,983
Civil		779,387		851,305		26,503		25,502		151,667		130,250		14,134		12,174
Environmental		42,832		37,341		3,212		2,859		12,087		15,250		1,153		1,154
Deposit of a guarantee						21,019		23,109
		1,341,503		1,484,825		506,817		533,664		341,824		421,816		210,796		231,627
Classified:
Current		38,926		73,089						22,218		31,371
Non-current		1,302,577		1,411,736		506,817		533,664		319,606		390,445		210,796		231,627
		1,341,503		1,484,825		506,817		533,664		341,824		421,816		210,796		231,627

The changes in tax, social security, labor, civil and environmental provisions in the year ended September 30, 2023 can be summarized as follows:

 

										Consolidated
										Current + Non-current
Nature		12/31/2022		Additions		Accrued charges		Net utilization of reversal		09/30/2023
Tax		219,196		2,327		12,511		(84,522)		149,512
Social security		1,567				68		(40)		1,595
Labor		375,416		32,064		39,061		(78,364)		368,177
Civil		851,305		20,834		51,851		(144,603)		779,387
Environmental		37,341		2,993		5,970		(3,472)		42,832
		1,484,825		58,218		109,461		(311,001)		1,341,503

 

										Parent Company
										Current + Non-current
Nature		12/31/2022		Additions		Accrued charges		Net utilization of reversal		09/30/2023
Tax		96,865		928		2,896		(83,750)		16,939
Social security		1,549				68		(22)		1,595
Labor		177,902		11,263		16,200		(45,829)		159,536
Civil		130,250		724		25,301		(4,608)		151,667
Environmental		15,250		83		113		(3,359)		12,087
		421,816		12,998		44,578		(137,568)		341,824

 

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

 

§

Possible administrative and judicial proceedings

 

The Company does not make provisions for lawsuits, which Management’s expectations, 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 as of September 30, 2023 and December 31, 2022.

				Consolidated
		09/30/2023		12/31/2022
Notice of Violation and Imposition of Fine (AIIM) / Tax Foreclosure - RFB - IRPJ/CSLL - Capital Gain for alleged sale of equity interest in subsidiary NAMISA		15,311,254		14,174,838
Notice of Violation and Imposition of Fine (AIIM) / Tax Foreclosure - RFB - IRPJ/CSLL - Disallowance of goodwill deductions generated in the reverse incorporation of Big Jump by Namisa		5,334,695		4,920,177
Notice of Violation and Imposition of Fine (AIIM) / Tax Enforcement - RFB - IRPJ/CSLL - Disallowance of prepayment interest arising from iron ore supply and port services contracts		2,628,747		2,388,423
Infraction and Fine Imposition Notices (AIIM) / Writ of Mandamus - RFB - IRPJ/CSLL - Profits earned abroad in 2008, 2010, 2011, 2012, 2014, 2015, 2016 and 2017		4,377,939		4,104,626
Unapproved compensation - RFB - IRPJ/CSLL, PIS/COFINS and IPI		2,254,133		2,138,608
ICMS - SEFAZ/RJ - Assessment Notice -  questions about sales for incentive area		1,365,927		1,255,251
Notice of Violation and Imposition of Fine (AIIM) - RFB - Disallowance of PIS/COFINS Credits for inputs and freight		1,357,989		1,238,018
CFEM – difference of understanding between CSN and ANM on the calculation basis		1,248,299		1,143,275
Notice of Infraction and Imposition of Fine (AIIM) - RFB - Collection IRRF - Business Combinations CMIN 2015		1,081,763		986,196
ICMS - SEFAZ/RJ - Electricity Credits		1,042,238		950,469
Notice of Violation and Imposition of Fine (AIIM) - IRPJ/CSLL - Disallowance of deductions of goodwill generated in the acquisition of Cimentos Mauá		790,649		715,152
ICMS - SEFAZ/RJ  - Disallowance of the ICMS credits - Transfer of iron ore		718,090		666,816
ICMS - SEFAZ/RJ - Disallowance of credits on purchases of intermediate products		433,788		623,748
Disallowance of tax loss and negative calculation base resulting from adjustments in SAPLI - RFB		725,077		663,594
Infraction and Fine Imposition Notices (AIIM) - RFB - IRPJ/CSLL - Transfer Pricing		355,531
ICMS - SEFAZ/RJ - Transfer of imported raw material for a value lower than the TECAR import document		387,055		357,006
Notice of Violation and Imposition of Fine (AIIM) / Annulment Action - RFB - IRRF - Capital gain of CFM company sellers located abroad		311,722		289,406
Other tax lawsuits (federal, state, and municipal)		5,986,631		5,579,232
Social security lawsuits		257,498		187,338
Action to discuss the balance of the construction contract – Tebas		593,716		560,638
Action related to power supply payment’s charge - Light		432,416		386,834
Action that discusses Negotiation of energy sales - COPEN - CEEE-G		194,475		193,469
Collection of defaulted amounts of contracts for the execution of the Presidente Médici Thermoelectric Power Plant - SACE - CEEE-G		197,237		192,212
Enforcement action applied by Brazilian antitrust authorities (CADE)		119,468		109,206
Other civil lawsuits		1,377,128		1,168,591
Labor and social security lawsuits		2,039,759		1,726,517
Tax foreclosures – Fine – Volta Redonda IV		135,720		122,639
ACP landfill Márcia		306,389		306,389
Other environmental lawsuits		627,364		539,410
		51,992,697		47,688,078

In the first quarter of 2021, the Company was notified of an arbitration proceeding 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 basis for the estimates of the amount asked. 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 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.

 

The Company has been offering judicial guarantees (Guarantee Insurance/Letter of Guarantee) in the total amount updated to September 30, 2023, of R$8.462.939 (December 31, 2022, R$4,939,419), 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 RETIREMENT OBLIGATIONS

 

The balance of provisions for environmental liabilities and asset retirement obligation is as follows:

 

			Consolidated				Parent Company
	09/30/2023		12/31/2022		09/30/2023		12/31/2022
Environmental liabilities	186,744		172,574		170,369		158,213
Asset retirement obligations	822,603		765,083
	1,009,347		937,657		170,369		158,213

 

20.

RELATED-PARTY BALANCES AND TRANSACTIONS

 

20.a)

Transactions with subsidiaries, jointly controlled entities, associates, exclusive funds and other related parties

 

·

Consolidated

 

		Consolidated
		09/30/2023								12/31/2022
		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)					1,179,172		1,179,172						1,768,915		1,768,915
Trade receivables (note 5)	(2)	42,845		4,636		48,589		96,070		48,236		1,182		59,716		109,134
Dividends (note 8)	(3)			77,377				77,377				77,377				77,377
Loans (note 8)	(4)			5,335				5,335				5,383				5,383
Other receivables (note 8)				2		1,828		1,830		30				1,828		1,858
		42,845		87,350		1,229,589		1,359,784		48,266		83,942		1,830,459		1,962,667
Non-current Assets
Investments	(1)					115,175		115,175						140,510		140,510
Loans (note 8)	(4)	3,718		1,614,195				1,617,913		3,678		1,381,095				1,384,773
Actuarial asset (note 8)						35,477		35,477						35,477		35,477
Other receivables (note 8)	(5)			1,705,332				1,705,332				1,484,759				1,484,759
		3,718		3,319,527		150,652		3,473,897		3,678		2,865,854		175,987		3,045,519
		46,563		3,406,877		1,380,241		4,833,681		51,944		2,949,796		2,006,446		5,008,186
Liabilities
Current Liabilities
Trade payables		299		64,790		25,042		90,131				93,115		37,448		130,563
Accounts payable				21,456				21,456				23,555		24,134		47,689
Provision for consumption				10,022				10,022				61,398				61,398
		299		96,268		25,042		121,609				178,068		61,582		239,650
Non-current Liabilities
Accounts payable				36,784				36,784				53,356				53,356
				36,784				36,784				53,356				53,356
		299		133,052		25,042		158,393				231,424		61,582		293,006

 

		Consolidated
		09/30/2023								09/30/2022
		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		74,457		14,562		1,254,418		1,343,437		168,475		22,308		1,926,149		2,116,932
Cost and expenses		(779)		(1,504,666)		(196,710)		(1,702,155)		(66)		(1,114,540)		(151,952)		(1,266,558)
Financial income (expenses)
Interest (note 26)				135,812		17,160		152,972				104,851		23,031		127,882
Financial investments	(1)					(78,787)		(78,787)						(1,094,081)		(1,094,081)
		73,678		(1,354,292)		996,081		(284,533)		168,409		(987,381)		703,147		(115,825)

·

Parent Company

 

		Parent Company
		09/30/2023								12/31/2022
		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)					1,186,312		1,186,312						1,125,578		1,125,578
Trade receivables (note 5)	(2)	946,398				47,378		993,776		1,066,375				59,407		1,125,782
Loans (note 8)	(4)			5,335				5,335				5,383				5,383
Dividends (note 8)	(3)	196,161		39,621				235,782		255,859		39,621				295,480
Other receivables (note 8)		232,765		2		1,829		234,596		99,866				1,829		101,695
		1,375,324		44,958		1,235,519		2,655,801		1,422,100		45,004		1,186,814		2,653,918
Non-current Assets
Investments	(1)					115,175		115,175						140,510		140,510
Loans (note 8)	(4)	503,254		1,516,746				2,020,000		380,913		1,287,469				1,668,382
Actuarial asset (note 8)						28,072		28,072						28,072		28,072
Other receivables (note 8)	(5)	102,572		1,705,332				1,807,904		223,908		1,484,759				1,708,667
		605,826		3,222,078		143,247		3,971,151		604,821		2,772,228		168,582		3,545,631
		1,981,150		3,267,036		1,378,766		6,626,952		2,026,921		2,817,232		1,355,396		6,199,549
Liabilities
Current Liabilities
Intercompany Loans (note 12)	(6)	1,689,921						1,689,921		43,806						43,806
Trade payables		548,687		28,673		24,096		601,456		269,264		41,654		36,289		347,207
Accounts payable		48,794						48,794		103,012				24,134		127,146
Provision for consumption		319,029		10,022				329,051		279,437						279,437
		2,606,431		38,695		24,096		2,669,222		695,519		41,654		60,423		797,596
Non-current Liabilities
Intercompany Loans (note 12)	(6)	7,418,931						7,418,931		9,984,044						9,984,044
Accounts payable		2,803						2,803		41,694						41,694
		7,421,734						7,421,734		10,025,738						10,025,738
		10,028,165		38,695		24,096		10,090,956		10,721,257		41,654		60,423		10,823,334

 

		Parent Company
		09/30/2023								09/30/2022
		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		2,371,865		(15)		1,242,813		3,614,663		3,295,037		284		1,925,793		5,221,114
Cost and expenses		(1,981,717)		(342,956)		(243,246)		(2,567,919)		(2,088,264)		(396,557)		(131,310)		(2,616,131)
Financial income (expenses)
Interest (note 26)		(134,880)		133,515		16,635		15,270		(52,236)		103,958		3,391		55,113
Exclusive funds (note 26)						11,141		11,141						9,753		9,753
Financial investments	(1)					(78,786)		(78,786)						(1,075,238)		(1,075,238)
Exchange rate variations and  monetary, net		392,346						392,346		362,843						362,843
		647,614		(209,456)		948,557		1,386,715		1,517,380		(292,315)		732,389		1,957,454

 

Consolidated and Parent Company Information:

 

(1)

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

 

(2)

Accounts receivables: refers mainly to sales transactions of steel products from the Parent Company to related parties.

 

(3)

Dividends receivable: In the Parent Company on September 30, 2023, it mainly refers to interest on equity from Minérios Nacional S.A in the amount of R$9,353 (R$14,785 in December 2022) and dividends from the subsidiary CSN Cimentos Brasil S.A in the amount of R$178,348 on September 30, 2023 (R$178,348 on December 31, 2022) and in the Consolidated dividends from MRS Logística S.A in the amount of R$77,377 (R$77,377 in December 2022).

 

(4)

Loans (Assets):

 

Long term: In Consolidated refers mainly to loan agreements with Transnordestina Logística amounting to R$1,603,482 (R$1,384,773 as of December 31, 2022) with an average rate of 125.0% to 130.0% of CDI.

 

(5)

Others (Assets): In Consolidated as of September 30, 2023, refers advance for future capital increase with Transnordestina Logística S.A. in the amount of R$1,705,332 (R$1,484,759 as of December 31, 2022).

 

(6)

Borrowings (Liabilities):

 

Foreign currency: In the Parent Company these are intercompany contracts amounting to R$7,342,254 as of September 30, 2023 (R$10,027,850 as of December 31, 2022).

 

20.b)

Key management personnel

 

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 September 30, 2023, and 2022.

 

		09/30/2023		09/30/2022
		P&L
Short-term benefits for employees and officers		47,354		47,196
Post-employment benefits		354		195
		47,708		47,391

 

20.c)

Guarantees

 

The Company is liable for guarantees of its subsidiaries and jointly controlled entities as follows:

 

	Currency		Maturities		Borrowings				Tax foreclosure				Others				Total
					09/30/2023		12/31/2022		09/30/2023		12/31/2022		09/30/2023		12/31/2022		09/30/2023		12/31/2022
Transnordestina Logísitca	R$		Up to 09/19/2056 and Indefinite		2,132,291		2,096,291		10,029		9,365		4,235		3,853		2,146,555		2,109,509
Group subsidiaries	R$		Up to 12/21/2024 and indefinite		1,900,000						197		131,920		2,163		2,031,920		2,360
CSN Mineração	R$		Up to 12/21/2024				540,946												540,946
Total in R$					4,032,291		2,637,237		10,029		9,562		136,155		6,016		4,178,475		2,652,815
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		1,150,000		1,150,000										1,150,000		1,150,000
CSN Cimentos	US$		Indefinite		115,000		115,000										115,000		115,000
Total in US$					2,565,000		2,565,000										2,565,000		2,565,000
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$					12,844,494		13,867,929						397,500		396,780		13,241,994		14,264,709
					16,876,785		16,505,166		10,029		9,562		533,655		402,796		17,420,469		16,917,524

 

21.

SHAREHOLDERS’ EQUITY

 

21.a)

Paid-up capital

 

The fully subscribed and paid-up capital as of September 30, 2023, is R$10,240,000, divided into 1,326,093,947 common and book-entry shares (as of December 31, 2022, R$10,240,000 divided into 1, 326,093,947 common and book-entry shares), with no par value. Each common share entitles to one vote in the resolutions of the General Meeting.

 

21.b)

Authorized capital

 

The Company’s bylaws in effect on September 30, 2023, define that the share capital may be increased to up to 2,400,000,000 shares, by decision of the Board of Directors, regardless of amendments to the bylaws.

 

21.c)

Legal reserve

 

It is constituted at the rate of 5% of the net income calculated in each fiscal year, before any other allocation, pursuant to art. 193 of Law 6,404/86, up to a limit of 20% of the capital stock.

 

21.d)

Ownership structure

 

As of September 30, 2023, and December 31, 2022, the Company’s ownership structure was as follows:

 

						09/30/2023						12/31/2022
		Number of common shares		% of total shares		% of voting capital		Number of common shares		% of total shares		% of voting capital
Vicunha Aços S.A.		543,617,803		40.99%		40.99%		679,522,254		51.24%		51.24%
Rio Iaco Participações S.A.		45,706,242		3.45%		3.45%		45,706,242		3.45%		3.45%
CFL Participações S.A.		135,904,451		10.25%		10.25%		0		0.00%		0.00%
NYSE (ADRs)		269,650,326		20.33%		20.33%		254,520,040		19.19%		19.19%
Other shareholders		331,215,125		24.98%		24.98%		346,345,411		26.12%		26.12%
Outstanding shares		1,326,093,947		100.00%		100.00%		1,326,093,947		100.00%		100.00%

 

As of March 31, 2023, an Asset Restructuring Agreement was entered into between Rio Purus Participações S.A. and CFL Participações S.A. ("CFL"), the shareholders that directly and indirectly hold all the shares of Vicunha Aços S.A. ("Vicunha Aços"). Thus, the implementation of this Transaction results in CFL Ana Participações S.A. ("CFL Ana"), a subsidiary of CFL, holding 135,904,451 common shares, book-entry and without par value issued by CSN, representing on this date 10.25% of its capital stock.

 

21.e)

Treasury shares

 

On September 30, 2023, the Company did not have an open treasury share buyback program, below is the movement of the programs that were closed:

 

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

 

21.f)

Earnings per share

 

The earnings per share are shown below:

 

							Parent Company
	Nine months ended				Three months ended
	09/30/2023		09/30/2022		09/30/2023		09/30/2022
	Common Shares				Common Shares
(Loss)/profit for the period	(897,273)		1,537,119		(154,480)		133,391
Weighted average number of shares	1,326,093,947		1,327,343,593		1,326,093,947		1,326,093,947
Basic and diluted (loss)/earnings per share	(0.67663)		1.15804		(0.11649)		0.10059

 

22.

COMPENSATION TO SHAREHOLDERS

 

On May 17, 2023, the Company paid its shareholders interest on equity in the amount of R$700,000, corresponding to a gross amount of R$0.52786606981 per share. Considering the incidence of Withholding Income Tax at the rate of 15%, the net amount of Income Tax will be paid of R$595,000 equivalent to R$0.44868615934 per share and dividends in the amount of R$1,614,000 equivalent to R$1.21710833810 per share.

 

23.

NET REVENUE FROM SALES

 

Net sales revenue is comprised as follows:

 

								Consolidated
		Nine months ended				Three months ended
		09/30/2023		09/30/2022		09/30/2023		09/30/2022
Gross revenue
Domestic market		21,323,643		22,801,754		7,247,887		8,231,980
Foreign market		17,032,354		15,417,709		5,557,506		4,406,455
		38,355,997		38,219,463		12,805,393		12,638,435
Deductions
Sales returns, discounts and rebates		(452,863)		(207,894)		(216,795)		(86,469)
Taxes on sales		(4,470,305)		(4,778,732)		(1,463,570)		(1,654,917)
		(4,923,168)		(4,986,626)		(1,680,365)		(1,741,386)
Net revenue		33,432,829		33,232,837		11,125,028		10,897,049

 

								Parent Company
		Nine months ended				Three months ended
		09/30/2023		09/30/2022		09/30/2023		09/30/2022
Gross revenue
Domestic market		15,483,700		20,086,467		5,222,135		7,008,557
Foreign market		1,679,281		3,049,264		520,353		859,699
		17,162,981		23,135,731		5,742,488		7,868,256
Deductions
Sales returns, discounts and rebates		(323,906)		(214,104)		(171,609)		(82,692)
Taxes on sales		(2,877,269)		(3,909,675)		(957,216)		(1,311,201)
		(3,201,175)		(4,123,779)		(1,128,825)		(1,393,893)
Net revenue		13,961,806		19,011,952		4,613,663		6,474,363

 

 

24.

EXPENSES BY NATURE

 

								Consolidated
		Nine months ended				Three months ended
		09/30/2023		09/30/2022		09/30/2023		09/30/2022
Raw materials and inputs		(9,279,330)		(11,122,342)		(3,119,846)		(3,952,017)
Outsourcing material		(3,895,247)		(2,412,410)		(1,223,886)		(776,390)
Labor cost		(3,081,949)		(2,338,496)		(1,098,453)		(846,490)
Supplies		(2,945,922)		(2,513,231)		(928,438)		(1,003,132)
Maintenance cost (services and materials)		(462,336)		(835,269)		(261,444)		(258,475)
Outsourcing services		(2,264,404)		(1,497,304)		(597,384)		(522,485)
Freight		(3,110,482)		(1,770,492)		(1,113,837)		(769,423)
Depreciation, amortization and depletion		(2,411,816)		(1,967,394)		(842,389)		(689,033)
Others		(964,737)		(786,320)		(309,285)		(339,907)
		(28,416,223)		(25,243,258)		(9,494,962)		(9,157,352)
Classified as:
Cost of sales		(25,138,859)		(23,206,660)		(8,319,723)		(8,358,934)
Selling expenses		(2,725,144)		(1,595,871)		(984,689)		(647,943)
General and administrative expenses		(552,220)		(440,727)		(190,550)		(150,475)
		(28,416,223)		(25,243,258)		(9,494,962)		(9,157,352)

 

								Parent Company
		Nine months ended				Three months ended
		09/30/2023		09/30/2022		09/30/2023		09/30/2022
Raw materials and inputs		(7,943,210)		(10,429,422)		(2,673,097)		(3,745,471)
Labor cost		(1,229,846)		(1,066,444)		(430,445)		(364,421)
Supplies		(2,156,660)		(1,767,188)		(701,497)		(706,007)
Maintenance cost (services and materials)		(146,506)		(326,588)		(40,150)		(73,592)
Outsourcing services		(961,559)		(864,895)		(349,741)		(297,196)
Freight		(550,946)		(651,030)		(182,043)		(254,972)
Depreciation, amortization and depletion		(864,653)		(784,510)		(309,890)		(271,431)
Others		(176,651)		(305,978)		(108,093)		(146,668)
		(14,030,031)		(16,196,055)		(4,794,956)		(5,859,758)
Classified as:
Cost of sales		(13,218,969)		(15,317,359)		(4,516,482)		(5,555,003)
Selling expenses		(593,908)		(708,561)		(197,941)		(244,946)
General and administrative expenses		(217,154)		(170,135)		(80,533)		(59,809)
		(14,030,031)		(16,196,055)		(4,794,956)		(5,859,758)

 

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

 

							Consolidated
	Nine months ended				Three months ended
	09/30/2023		09/30/2022		09/30/2023		09/30/2022
Production costs (1)	(2,374,561)		(1,934,833)		(827,094)		(677,360)
Selling expenses	(15,139)		(10,121)		(7,052)		(3,681)
General and administrative expenses	(22,116)		(22,440)		(8,243)		(7,992)
	(2,411,816)		(1,967,394)		(842,389)		(689,033)
Other operational (2)	(64,279)		(57,571)		(22,720)		(19,335)
	(2,476,095)		(2,024,965)		(865,109)		(708,368)
							Parent Company
	Nine months ended				Three months ended
	09/30/2023		09/30/2022		09/30/2023		09/30/2022
Production costs (1)	(845,657)		(768,100)		(303,219)		(265,913)
Selling expenses	(7,248)		(6,263)		(2,556)		(2,142)
General and administrative expenses	(11,748)		(10,147)		(4,115)		(3,376)
	(864,653)		(784,510)		(309,890)		(271,431)
Other operational (2)	(6,104)		(5,172)		(2,498)		(1,932)
	(870,757)		(789,682)		(312,388)		(273,363)

 

(1) The cost of production includes PIS and COFINS credits on lease agreements as of September 30, 2023, in the amount of R$5,782 in the consolidated (R$5,426 as of September 30, 2022) and R$620 in the parent company (R$458 as of September 30, 2022).

 

(2) They mainly refer to the depreciation of investment properties, paralyzed equipment and amortization of the SWT customer portfolio, classified in other operating expenses, see note 25.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

25.

OTHER OPERATING INCOME AND EXPENSES

 

								Consolidated
		Nine months ended				Three months ended
		09/30/2023		09/30/2022		09/30/2023		09/30/2022
Other operating income
Receivables by indemnity		6,422		152,437		956		143,406
Rentals and leases		15,765		8,826		4,416		4,304
Contractual fines		3,508		2,437		1,393		418
Updated shares – Fair value through profit or loss (Note 13)		(26,651)		(27,977)		(26,651)		(25,623)
Gain on disposal of investments (1)		114,763				114,763
Other revenues		28,904		87,178		6,662		50,780
		142,711		222,901		101,539		173,285
		-		-		-		-
Other operating expenses
Taxes and fees		(71,984)		(115,514)		(9,833)		(56,358)
Expenses/reversal with environmental liabilities, net		(6,665)		(356)		(2,299)		(1,096)
Write-off/(Provision) of judicial lawsuits		47,625		(61,962)		43,114		(17,319)
Depreciation and amortization (note 24)		(64,279)		(57,571)		(22,720)		(19,335)
Reversal/(Write-offs) of estimated losses in fixed assets, intangible assets and Investment properties, net of reversal (notas 9.d, 10 e 11) (2)		(27,365)		(11,561)		(26,640)		(4,949)
Estimated (Loss)/reversal in inventories (3)		(545,940)		(179,169)		(57,200)		(60,947)
Idleness in stocks and paralyzed equipment (4)		(287,344)		(113,093)		(20,330)		(18,465)
Studies and project engineering expenses		(39,199)		(40,893)		(14,090)		(15,008)
Healthcare plan expenses		(69,444)		(63,918)		(16,256)		(12,759)
Cash flow hedge accounting realized (note 13) (5)		(685,689)		(815,269)		28,562		(417,613)
Other expenses		(299,612)		(466,668)		(117,166)		(255,574)
		(2,049,896)		(1,925,974)		(214,858)		(879,423)
Other operating income (expenses), net		(1,907,185)		(1,703,073)		(113,319)		(706,138)

 

								Parent Company
		Nine months ended				Three months ended
		09/30/2023		09/30/2022		09/30/2023		09/30/2022
Other operating income
Receivables by indemnity		5,932		150,777		1,228		143,398
Rentals and leases		10,424		6,907		3,783		2,731
Contractual fines		2,080		1,654		798		342
Updated shares – Fair value through profit or loss (Note 13)		(26,651)		(27,977)		(26,651)		(25,623)
Other revenues		467		70,858		554		43,779
		(7,748)		202,219		(20,288)		164,627
Other operating expenses
Taxes and fees		(33,886)		(81,542)		662		(47,618)
Expenses with environmental liabilities, net		(2,442)		1,501		(769)		(13)
Write-off/(Provision) of judicial lawsuits		11,411		(26,236)		58,131		478
Depreciation of investment property, equipment paralyzed and amortization of intangible assets (note 24)		(6,104)		(5,172)		(2,498)		(1,932)
Write-offs and estimated losses of PPE, intangible assets and investment properties, net of reversal (notes 10 and 11)		(659)		(1,065)		(1,973)		(783)
Estimated (Loss)/reversal in inventories (3)		(279,913)		(128,673)		(49,052)		(51,218)
Idleness in stocks and paralyzed equipment (4)		(279,663)		(11,169)		(17,923)		(11,169)
Studies and project engineering expenses		(11,831)		(15,794)		(3,533)		(6,313)
Research and development expenses				(296)				(89)
Healthcare plan expenses		(67,125)		(63,355)		(15,934)		(12,702)
Cash flow hedge accounting realized (note 13) (5)		(364,979)		(830,132)		(1,744)		(409,102)
Other expenses		(163,493)		(362,692)		(62,039)		(232,335)
		(1,198,684)		(1,524,625)		(96,672)		(772,796)
Other operating income (expenses), net		(1,206,432)		(1,322,406)		(116,960)		(608,169)

(1)

Refers to the gain on the sale of Consórcio Machadinho (see note 9.e)

(2)

Mostly refers to the write-off on the sale of Consortium Machadinho (R$ 22,326 see note 9.e)

(3)

In the Parent Company, refers substantially to losses incurred in the production process at the Presidente Vargas Plant ("UPV") and in Consolidated, losses in inventories in the amount of (R$213,490);

(4)

In 2023, unused capacity due to lower than normal production volume at Presidente Vargas Plant ("UPV");

(5)

In the Parent Company this is the realization of a Cash Flow Hedge in the amount of (R$364,979) and in Consolidated the realization of a Cash Flow Hedge in the amount of (R$375,525) and a Hedge of Platts in the amount of (R$310,164).

 

 

 

 

26.

FINANCIAL INCOME (EXPENSES)

 

								Consolidated
		Nine months ended				Three months ended
		09/30/2023		09/30/2022		09/30/2023		09/30/2022
Financial income
Related parties (Note 20 a)		159,159		135,427		52,970		54,726
Income from financial investments		576,208		566,209		189,268		251,163
Updated shares – Fair value through profit or loss (Note 13.d)		(78,787)		(1,094,081)		(61,029)		(63,379)
Interest and fines		70,154		43,571		18,193		29,374
Other income		72,590		89,655		6,088		12,873
		799,324		(259,219)		205,490		284,757
Financial expenses
Borrowings and financing - foreign currency (note 12)		(1,161,219)		(935,326)		(452,157)		(335,108)
Borrowings and financing - local currency (note 12)		(1,583,364)		(948,725)		(536,911)		(362,934)
Capitalised interest (note 10)		133,864		97,490		39,522		34,627
Related parties		(6,187)		(7,545)		(2,063)		(2,669)
Lease liabilities		(54,836)		(48,535)		(18,441)		(16,951)
Interest and fines		(135,711)		(120,238)		(17,917)		(70,520)
Interest on drawn/forfaiting risk operations		(355,329)		(288,371)		(97,464)		(90,829)
(-) Adjustment present value of trade payables		(253,571)		(329,713)		(86,058)		(107,304)
Commission, bank fees, Guarantee and bank fees		(148,620)		(106,056)		(49,567)		(1,237)
PIS/COFINS over financial income		(70,458)		(103,979)		(35,822)		(47,007)
Other financial expenses		(385,554)		(270,972)		(121,995)		(83,181)
		(4,020,985)		(3,061,970)		(1,378,873)		(1,083,113)
Others financial items, net
Foreign exchange and monetary variation, net		(380,880)		899,295		130,870		467,697
Gains and (losses) on exchange derivatives (*)		3,530		88,151		(180,962)		12,165
		(377,350)		987,446		(50,092)		479,862
		(4,398,335)		(2,074,524)		(1,428,965)		(603,251)
Financial income (expenses), net		(3,599,011)		(2,333,743)		(1,223,475)		(318,494)
(*) Statement of gains and (losses) on derivative transactions (note 13.c)
Dollar - to - real NDF				176,992				131,831
Exchange rate swap Real x Dollar		(64,497)		(21,535)		17,880		3,703
Interest rate swap CDI x IPCA		29,923		(99,734)		(186,418)		(109,353)
Exchange rate swap CDI x Dollar		38,104		32,428		(12,424)		(14,016)
		3,530		88,151		(180,962)		12,165

 

 

								Parent Company
		Nine months ended				Three months ended
		09/30/2023		09/30/2022		09/30/2023		09/30/2022
Financial income
Related parties (Note 20 a)		212,571		146,767		71,270		47,965
Income from financial investments		82,358		173,264		38,908		75,955
Interest and fines		51,796		30,942		13,686		-
Updated shares – Fair value through profit or loss (Note 13.d)		(78,787)		(1,094,081)		(61,029)		(63,379)
Other income		63,075		137,894		4,302		56,122
		331,013		(605,214)		67,137		116,663
Financial expenses
Borrowings and financing - foreign currency (note 12)		(206,994)		(108,292)		(112,454)		(39,393)
Borrowings and financing - local currency (note 12)		(957,102)		(735,128)		(335,117)		(261,197)
Related parties (note 12)		(186,160)		(81,901)		(64,318)		(40,021)
Lease liabilities		(766)		(1,115)		(225)		(347)
Capitalised interest (note 10)		46,503		29,358		7,693		11,831
Interest and fines		(91,234)		(57,989)		(9,741)		(55,253)
Interest on drawn/forfaiting risk operations		(345,857)		(288,371)		(87,992)		(90,829)
(-) Adjustment present value of trade payables		(192,734)		(283,040)		(65,090)		(91,299)
Commission, bank fees, Guarantee and bank fees		(71,097)		(71,106)		(23,173)		(20,996)
PIS/COFINS over financial income		(14,301)		(32,267)		(7,332)		(19,487)
Other financial expenses		(62,510)		(52,028)		(23,527)		(27,385)
		(2,082,252)		(1,681,879)		(721,276)		(634,376)
Others financial items, net
Foreign exchange and monetary variation, net		(162,068)		875,571		116,749		514,287
Gains and (losses) on exchange derivatives (*)		29,923		46,743		(12,424)		299
		(132,145)		922,314		104,325		514,586
Financial income (expenses), net		(1,883,384)		(1,364,779)		(549,814)		(3,127)
(*) Statement of gains and (losses) on derivative transactions (note 13 c)
Dollar - to - real NDF		-		14,315		-		14,315
Exchange rate swap CDI x Dollar		29,923		32,428		(12,424)		(14,016)
		29,923		46,743		(12,424)		299

 

27.

SEGMENT INFORMATION

 

The financial information related to the business segments is not changed from that disclosed in the Company's financial statements as of December 31, 2022. Accordingly, management has decided not to repeat them in this condensed interim financial 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 jointly controlled entities 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.

 

 

 

 

																Nine months ended
																09/30/2023
P&L		Steel		Mining		Logistics				Energy		Cement		Corporate expenses/elimination		Consolidated
						Port		Railroads
Net revenues
Domestic market		12,443,912		1,221,064		198,702		1,917,243		420,362		3,420,891		(3,028,318)		16,593,856
Foreign market		4,619,407		10,886,945										1,332,619		16,838,971
Cost of sales and services (note 24)		(15,649,209)		(7,439,776)		(185,847)		(1,059,221)		(328,798)		(2,826,543)		2,350,536		(25,138,858)
Gross profit		1,414,110		4,668,233		12,855		858,022		91,564		594,348		654,837		8,293,969
General and administrative expenses (note 24)		(899,301)		(344,823)		(7,840)		(150,882)		(43,702)		(363,893)		(1,466,922)		(3,277,363)
Other operating (income) expenses, net (note 25)		(1,063,238)		(472,171)		460		(5,173)		200,024		(132,048)		(435,037)		(1,907,183)
Equity in results of affiliated companies (note 9)														259,582		259,582
Operating result before Financial Income and Taxes		(548,429)		3,851,239		5,475		701,967		247,886		98,407		(987,540)		3,369,005
Sales by geographic area
Asia				10,436,605										1,332,619		11,769,224
North America		1,217,242														1,217,242
Latin America		113,062														113,062
Europe		3,289,103		450,340												3,739,443
Foreign market		4,619,407		10,886,945										1,332,619		16,838,971
Domestic market		12,443,912		1,221,064		198,702		1,917,243		420,362		3,420,891		(3,028,318)		16,593,856
Total		17,063,319		12,108,009		198,702		1,917,243		420,362		3,420,891		(1,695,699)		33,432,827
																Three months ended
																09/30/2023
P&L		Steel		Mining		Logistics				Energy		Cement		Corporate expenses/elimination		Consolidated
						Port		Railroads
Net revenues
Domestic market		4,129,803		567,045		74,531		730,009		121,801		1,159,397		(1,169,672)		5,612,914
Foreign market		1,213,964		3,768,219										529,928		5,512,111
Cost of sales and services (note 24)		(5,208,860)		(2,567,265)		(64,995)		(367,196)		(105,604)		(915,106)		909,303		(8,319,723)
Gross profit		134,907		1,767,999		9,536		362,813		16,197		244,291		269,559		2,805,302
General and administrative expenses (note 24)		(298,523)		(71,074)		(2,937)		(56,686)		(16,300)		(144,618)		(585,100)		(1,175,238)
Other operating (income) expenses, net (note 25)		(128,142)		(15,851)		(1,388)		(4,181)		98,299		(55,616)		(6,438)		(113,317)
Equity in results of affiliated companies (note 9)														130,771		130,771
Operating result before Financial Income and Taxes		(291,758)		1,681,074		5,211		301,946		98,196		44,057		(191,208)		1,647,518
Sales by geographic area
Asia				3,664,918										529,928		4,194,846
North America		371,507														371,507
Latin America		29,000														29,000
Europe		813,458		103,301												916,759
Others
Foreign market		1,213,965		3,768,219										529,928		5,512,112
Domestic market		4,129,803		567,045		74,531		730,009		121,801		1,159,397		(1,169,672)		5,612,914
Total		5,343,768		4,335,264		74,531		730,009		121,801		1,159,397		(639,744)		11,125,026

 

 

 

 

 

																Nine months ended
																09/30/2022
P&L		Steel		Mining		Logistics				Energy		Cement		Corporate expenses/elimination		Consolidated
						Port		Railroads
Net revenues
Domestic market		16,087,365		1,364,074		221,754		1,703,843		139,310		1,638,512		(3,114,101)		18,040,757
Foreign market		7,199,082		7,631,901										361,097		15,192,080
Cost of sales and services (note 24)		(18,041,998)		(5,227,045)		(162,504)		(1,124,867)		(148,765)		(1,074,036)		2,572,555		(23,206,660)
Gross profit		5,244,449		3,768,930		59,250		578,976		(9,455)		564,476		(180,449)		10,026,177
General and administrative expenses (note 24)		(973,837)		(212,919)		(23,986)		(101,708)		(26,520)		(237,802)		(459,826)		(2,036,598)
Other operating (income) expenses, net (note 25)		(653,472)		(247,544)		(12,760)		13,816		(1,346)		(37,657)		(764,110)		(1,703,073)
Equity in results of affiliated companies (note 9)														167,026		167,026
Operating result before Financial Income and Taxes		3,617,140		3,308,467		22,504		491,084		(37,321)		289,017		(1,237,359)		6,453,532
Sales by geographic area
Asia				6,462,994										361,097		6,824,091
North America		1,757,243														1,757,243
Latin America		332,801														332,801
Europe		5,107,972		1,168,907												6,276,879
Others		1,066														1,066
Foreign market		7,199,082		7,631,901										361,097		15,192,080
Domestic market		16,087,365		1,364,074		221,754		1,703,843		139,310		1,638,512		(3,114,101)		18,040,757
Total		23,286,447		8,995,975		221,754		1,703,843		139,310		1,638,512		(2,753,004)		33,232,837
																Three months ended
																09/30/2022
		Steel		Mining		Logistics				Energy		Cement		Corporate expenses/elimination		Consolidated
						Port		Railroads
Net revenues
Domestic market		5,654,870		437,502		68,566		653,161		47,853		777,535		(1,090,586)		6,548,901
Foreign market		2,043,519		2,089,469										215,160		4,348,148
Cost of sales and services (note 24)		(6,426,119)		(1,800,015)		(54,345)		(397,365)		(52,590)		(501,272)		872,772		(8,358,934)
Gross profit		1,272,270		726,956		14,221		255,796		(4,737)		276,263		(2,654)		2,538,115
General and administrative expenses (note 24)		(333,724)		(63,493)		(6,693)		(36,793)		(9,613)		(100,372)		(247,730)		(798,418)
Other operating (income) expenses, net (note 25)		(321,627)		(48,557)		(2,833)		(10,344)		(442)		(14,222)		(308,113)		(706,138)
Equity in results of affiliated companies (note 9)														93,361		93,361
Operating result before Financial Income and Taxes		616,919		614,906		4,695		208,659		(14,792)		161,669		(465,136)		1,126,920
Sales by geographic area
Asia				1,764,373										215,160		1,979,533
North America		565,374														565,374
Latin America		160,355														160,355
Europe		1,317,790		325,096												1,642,886
Foreign market		2,043,519		2,089,469										215,160		4,348,148
Domestic market		5,654,870		437,502		68,566		653,161		47,853		777,535		(1,090,586)		6,548,901
Total		7,698,389		2,526,971		68,566		653,161		47,853		777,535		(875,426)		10,897,049

 

28.

ADDITIONAL INFORMATION TO CASH FLOWS

 

The following table provides additional information about transactions related to the statement of cash flows:

 

			Consolidated				Parent Company
	09/30/2023		09/30/2022		09/30/2023		09/30/2022
Income tax and social contribution paid	676,226		3,028,030		6,665		278,919
Addition to PP&E with interest capitalization (notes 10 and 26)	133,864		97,490		46,503		29,358
Remeasurement and addition – Right of use (note 10 i)	150,878		94,257		3,990		2,501
Addition to PP&E without adding cash	81,860		19,970
Capitalization in associate with no cash effect	11,037
	1,053,865		3,239,747		57,158		310,778

 

 

 

 

 

 

 

29.

STATEMENT OF COMPREHENSIVE INCOME

 

								Consolidated
		Nine months ended				Three months ended
		09/30/2023		09/30/2022		09/30/2023		09/30/2022
Profit for the period/(Loss)		(448,456)		1,970,906		90,794		237,632
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		7,616		54		6,265		(2)
		7,616		54		6,265		(2)
Items that could be subsequently reclassified to the statement of income
Cumulative translation adjustments for the year		(173,711)		(714,813)		24,382		(128,842)
(Loss)/gain cash flow hedge, net of taxes		476,649		(94,155)		(412,890)		(354,777)
Cash flow hedge reclassified to income upon realization, net of taxes		240,886		547,887		1,151		270,007
(Loss)/gain cash flow hedge accounting, net taxes,  from investments in subsidiaries		310,321		(386,473)		(212,259)		(91,245)
		854,145		(647,554)		(599,616)		(304,857)
		861,761		(647,500)		(593,351)		(304,859)
Comprehensive income for the year		413,305		1,323,406		(502,557)		(67,227)

 

								Parent Company
		Nine months ended				Three months ended
		09/30/2023		09/30/2022		09/30/2023		09/30/2022
Profit for the period/(Loss)		(897,273)		1,537,119		(154,480)		133,391
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		7,560		68		6,218		12
		7,560		68		6,218		12
Items that could be subsequently reclassified to the statement of income
Cumulative translation adjustments for the year		(173,711)		(714,813)		24,382		(128,842)
(Loss)/gain cash flow hedge, net of taxes		476,649		(94,155)		(412,890)		(354,777)
Cash flow hedge reclassified to income upon realization, net of taxes		240,886		547,887		1,151		270,007
(Loss)/gain cash flow hedge accounting  –  “Platts”  in subsidiaries, net of taxes		247,494		(308,335)		(169,285)		(72,879)
		791,318		(569,416)		(556,642)		(286,491)
		798,878		(569,348)		(550,424)		(286,479)
Comprehensive income for the year		(98,395)		967,771		(704,904)		(153,088)

 

30.

SUBSEQUENT EVENTS

 

Export Credit Note (NCE)

 

On October 4, 2023, the Company formalized the raising of an Export Credit Note with Banco Bradesco, in the amount of R$680 million, with due dates in 2026, 2027 and 2028.

 

Acquisition of equity interest

 

On October 27, 2023, the Company entered into a Stock Purchase and Sale Agreement and Other Covenants (“Purchase and Sale Agreement”) for the acquisition of 18.61% of Panatlântica S.A.'s share capital, at the price of R$150 million, to be paid in 6 annual installments, With the first payment on the transaction closing date and the remaining payments on the subsequent five anniversaries. With this, the Company will, under the terms of the Purchase and Sale Agreement, hold shares representing 29.91% of Panatlântica's share capital. The closing of this transaction is subject to approval by competition authorities.

 

 

News published in the media

 

On November 7, 2023, the Company issued a material fact in response to Official Letter 1.252/2023- SLS da Bolsa, Brasil, Balcão – B3, dated November 6, 2023, whose content of the consultation deals with a possible interest in the assets of the company Intercement Participações. The Company clarifies that it always evaluates investment opportunities in line with its business and growth strategy in the cement sector. In this sense, it confirms the hiring of the bank Morgan Stanley to analyze the assets of Intercement Participações but reinforces that the process is still in a preliminary phase, and there is no binding fact or document that deserves disclosure to the market under the terms of the legislation in force, not It is even possible to determine the potential object of the transaction.

 

Dividend distribution

 

On November 13, 2023, the Company approved, at a Board of Directors Meeting, the distribution of interim dividends in the amount of R$985 million, to the profit reserve account, corresponding to the value of R$0.74 per share of capital stock. Dividends will be paid from November 29, 2023, as an advance of the mandatory minimum dividend and without monetary correction.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

3.1 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 managers. 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:

 

 

 

b)

Projected period and the validity period of the projection.

The projected periods and validity periods can be seen in the table above in item 3.1 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 2023 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 3.1 a).

 

3.2 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 of them are being repeated.

 

Estimates maintained:

 

Estimates replaced in the last 3 financial years:

In Dec/21, the Company replaced its estimate of iron ore production volume in 2021 to 36-37 Mton, against a previous expectation of 38-40 Mton.

In Dec/21, the Company replaced its estimate of Cash Cost Mining in 2021 to US$19.00, against a previous expectation of US$16.00.

 

In Dec/21, the Company replaced its 2021 Expansion Mining CAPEX estimate to R$560 million, against a previous expectation of R$1,000 million.

 

In Dec/21, the Company replaced its estimate of CAPEX for Mining Expansion between 2022-2026 to R$12,000 million, against a previous expectation of R$14,000 million between 2021-2025.

 

In Dec/21, the Company replaced the estimate of Steel CAPEX between 2022-2026 to R$6,300 million, against a previous expectation of R$6,100 million between 2021-2025.

 

In August/ 22, the Company replaced its estimate of Cash Cost Mining in 2022 to the range of US$20.00 - US$22.00, against the previous expectation of US$18.00.

 

In August/22, the Company replaced its estimate of iron ore production volume in 2022 to 36-38 Mton, against a previous expectation of 39-41 Mton.

 

In October/22, the Company replaced its estimate of Consolidated CAPEX in 2022 to R$3,000 million, against a previous expectation of R$4,100 million.

 

In October/22, the Company replaced the leverage projection, measured by the Net Debt/Adjusted EBITDA ratio, from 1.0x in 2022 to a level between 1.75x and 1.95x between the closing of the 2022 and 2023 annual balance sheets.

 

In October/22, the Company replaced its estimate of iron ore production volume in 2022 to 34Mton, against a previous expectation of 36-38Mton.

 

In December/22, the Company replaced the steel sales volume projection of 4,480 Kton in 2022 and added the projection of 4,670 Kton in 2023.

 

In December/22, the Company replaced the CAPEX projection for expansion in Mining of approximately R$ 13.8 billion in the 2023-2027 period, related to phase 1 of the capacity addition project.

 

In December/22, the Company added the mining cash cost projection to a level between US$19/ton and US$21/ton in 2023.

 

In December/22, the Company added the projection of production volume and purchases of third-party ores between 39-41 Mton in 2023.

 

In December/22, the Company added its EBITDA projection in the Energy segment of R$ 23 million in 2022.

 

In December/22, the Company replaced the Consolidated CAPEX projection in the range of R$ 5.5 – R$ 6.5 billion in the period 2024-2027, and added the projection of R$ 4.4 billion in 2023.

 

In November/23, the Company replaced the projection for iron ore production plus third-party purchases from a level between 39,000 kton and 41,000 kton to 42,000 kton and 42,500 kton at the end of 2023;

 

In November/23, the Company replaced the C1 cash cost in mining from a level between US$19/ton and US$21/ton to US$22/ton in 2023;

 

In November/23, the Company replaced the leverage projection, measured by the Net Debt/Adjusted EBITDA ratio, from a level between 1.75x and 1.95x to a level between 2.00x and 2.50x at the close of the 2023 annual balance sheet and below 2.0x at the close of the 2024 annual balance sheet;

 

In November/23, the Company removed its steel sales volume projection of 4,670kton in 2023;

 

In November/23, the Company removed its projection of achieving an EBITDA per ton in the steel industry of US$165/ton in 2023.

 

 

 

 

 

 

 

 

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.

 

2022

 

 

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

 

The volume of ore production was impacted by above-normal rainfall in the Company's operations, which affected the mining and transportation capacity of the ore, and the ramp-up of projects connected to the Central Plant (CMAI 3, spirals, and regrinding).

 

The increase in Capex expenditures, which were above expectations, mainly occurred in the fourth quarter with the integration of Cimentos Brasil's operations.

 

The increase in net debt, in millions of reais, compared to the guidance, was mainly caused by large cash expenditures related to the Company's acquisitions, with the aim of diversifying its business portfolio.

 

 

 

 

 

 

 

 

 

 

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

 

Current and valid estimates:

 

Monitoring and changes in projections disclosed

 

Superseded estimates:

 

In August/22, the Company replaced its estimate of Cash Cost Mining in 2022 to the range of US$20.00 - US$22.00, against the previous expectation of US$18.00.

 

In August/22, the Company replaced its estimate of iron ore production volume in 2022 to 36-38 Mton, against a previous expectation of 39-41 Mton.

 

In October/22, the Company replaced its estimate of Consolidated CAPEX in 2022 to R$3,000 million, against a previous expectation of R$4,100 million.

 

In October/22, the Company replaced the leverage projection, measured by the Net Debt/Adjusted EBITDA ratio, from 1.0x in 2022 to a level between 1.75x and 1.95x between the closing of the 2022 and 2023 annual balance sheets.

 

In October/22, the Company replaced its estimate of iron ore production volume in 2022 to 34Mton, against a previous expectation of 36-38Mton.

 

In December/22, the Company replaced the steel sales volume projection of 4,480 Kton in 2022 and added the projection of 4,670 Kton in 2023.

 

In December/22, the Company replaced the CAPEX projection for expansion in Mining of approximately R$ 13.8 billion in the 2023-2027 period, related to phase 1 of the capacity addition project.

 

In December/22, the Company added the mining cash cost projection to a level between US$19/ton and US$21/ton in 2023.

In December/22, the Company added the projection of production volume and purchases of third-party ores between 39-41 Mton in 2023.

 

In December/22, the Company added its EBITDA projection in the Energy segment of R$ 23 million in 2022.

 

In December/22, the Company replaced the Consolidated CAPEX projection in the range of R$ 5.5 – R$ 6.5 billion in the period 2024-2027 and added th e projection of R$ 4.4 billion in 2023.

 

In November/23, the Company replaced the projection for iron ore production plus third-party purchases from a level between 39,000 kton and 41,000 kton to 42,000 kton and 42,500 kton at the end of 2023;

 

In November/23, the Company replaced the C1 cash cost in mining from a level between US$19/ton and US$21/ton to US$22/ton in 2023;

 

In November/23, the Company replaced the leverage projection, measured by the Net Debt/Adjusted EBITDA ratio, from a level between 1.75x and 1.95x to a level between 2.00x and 2.50x at the close of the 2023 annual balance sheet and below 2.0x at the close of the 2024 annual balance sheet;

 

In November/23, the Company removed its steel sales volume projection of 4,670kton in 2023;

 

In November/23, the Company removed its projection of achieving an EBITDA per ton in the steel industry of US$165/ton in 2023.

To the Shareholders, Directors and Managers of

Companhia Siderúrgica Nacional

Sao Paulo-SP

 

Introduction

 

We have reviewed the parent company and consolidated interim financial information of Companhia Siderúrgica Nacional ("Company"), contained in the Quarterly Information Form - ITR for the quarter ended September 30, 2023, which comprise the balance sheet as of September 30, 2023 and the related statements of income, comprehensive income, for three and nine-month period then ended and changes in shareholder’s equity and cash flows for the nine-month period then ended, including a summary of significant accounting policies and notes.

 

The Company's management is responsible for preparing and presenting the parent company and consolidated interim financial information, in accordance with technical pronouncement NBC TG 21 - Interim Financial Statements and with the international accounting standard IAS 34 - Interim Financial Reporting, issued by the International Accounting Standards Board (IASB), as well as the presentation of this information in accordance with the standards issued by the Brazilian Securities Commission, applicable to the preparation of the Quarterly Information - ITR. Our responsibility is to express a conclusion on this interim financial information based on our review.

 

Scope of review

 

We conducted our review in accordance with Brazilian and International Standards for Reviews of Interim Financial information (NBC TR 2410 - Review of Interim Financial Information Performed by the Entity Auditor and ISRE 2410 - Review of Interim Financial Information Performed by the Independent Auditor of the Entity, respectively). A review of interim information consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. The scope of a review is significantly less than that of an audit conducted in accordance with auditing standards and, consequently, did not enable us to obtain assurance that we became aware of all significant matters that might be identified in an audit. Therefore, we do not express an audit opinion.

 

Conclusion on the individual and consolidated interim financial information

 

Based on our review, we are not aware of any fact which leads us to believe that the individual and consolidated interim financial information included in the aforementioned quarterly information was not prepared, in all material respects, in accordance with NBC TG 21 and IAS 34, applicable to the preparation of the Quarterly Information - ITR, and presented in accordance with the rules issued by the Brazilian Securities and Exchange Commission.

 

Other matters

 

Statement of Value Added

 

The aforementioned quarterly information includes the individual and consolidated Statements of Value Added (DVA), referring to the nine-month period ended September 30, 2023, prepared under the responsibility of the Company's management and presented as supplementary information for IAS purposes 34. These statements were submitted to review procedures performed in conjunction with the review of the Company's quarterly information - ITR -, in order to conclude whether they are reconciled with the interim financial information and accounting records, as applicable, and if their form and content are in accordance with the criteria defined in NBC TG 09 - "Demonstration of Added Value". Based on our review, we are not aware of any facts that lead us to believe that these statements of value added were not prepared, in all material respects, in accordance with the criteria defined in this standard and in a manner consistent with the interim financial information, individual and consolidated, taken together.

 

 

Barueri, November 13, 2023.

 

 

Mazars Auditores Independentes – Sociedade Simples Ltda.

CRC 2 SP023701/O-8

 

 

 

Danhiel Augusto Reis

Contador CRC 1SP254522/O-0

 

 

 

 

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, and Article 31, paragraph 1º, item II of CVM Instruction 80, of March 29, 2022, that we reviewed, discussed and agreed with the Company’s Financial Statements for the quarter ended September 30,2023.

 

 

 

 

São Paulo, November 13, 2023.

 

 

 

 

Benjamin Steinbruch

CEO

 

 

 

Marcelo Cunha Ribeiro

Executive Officer – CFO and Investors Relations

 

 

 

David Moise Salama

Executive Officer

 

 

 

Luis Fernando Barbosa Martinez

Executive Officer

 

 

 

Stephan Heinz Josef Victor Weber

Executive Officer

 

 

 

Alexandre de Campos Lyra

Executive Officer

 

 

 

 

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 and Article 31, paragraph 1º, item II 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 September 30,2023.

 

 

 

 

São Paulo, November 13, 2023.

 

 

 

 

Benjamin Steinbruch

CEO

 

 

 

Marcelo Cunha Ribeiro

Executive Officer – CFO and Investors Relations

 

 

 

David Moise Salama

Executive Officer

 

 

 

Luis Fernando Barbosa Martinez

Executive Officer

 

 

 

Stephan Heinz Josef Victor Weber

Executive Officer

 

 

 

Alexandre de Campos Lyra

Executive Officer

 

 

 

 

 

 

 

 

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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