OPERATIONS IN SUPPORT OF STEEL-MAKING ACTIVITY
Comercial Gerdau

   The largest steel distributor in Brazil, Comercial Gerdau's highlight for 2002 was the diversification of its product lines of Gerdau long steel and flat steel produced by other Brazilian mills.

   To better service regional customers, two new rebar fabricating service centers were inaugurated in Bauru, state of São Paulo, and Teresina, state of Piaui. There are now six units in the country servicing the civil construction sector, project by project, with material delivered to the site according to the construction schedule.

   In the flat steel sector, the Company now offers oxygen, plasma and laser thermal cutting services at the units in Belo Horizonte, state of Minas Gerais, Curitiba, state of Paraná, and Recife, state of Pernambuco. These units offer precision cut products, intended primarily for industry and steel structures. In São Caetano do Sul, state of São Paulo, the Company inaugurated its largest coil processing unit, which occupies an area of 44,000 square meters.

   Comercial Gerdau also retails the engineering and stainless steels produced by Gerdau Aços Finos Piratini, supplied in the quantity and dimensions requested by the customer.

   The Company sells steel to 155,000 customers each year, at 68 branches and four flat steel service centers. This year, revenues totaled R$ 1.5 billion, 25% more than in 2001.

Banco Gerdau

   Banco Gerdau (Gerdau Bank) operates in the commercial, credit, financing and investment areas, working in tandem with the Group's operations with customers and suppliers.

   In 2002, loan concessions led by Gerdau Customer Financing (FCG) operations grew 14%, to R$ 362 million up from R$ 319 million. The asset portfolio reached R$ 75 million, 50% higher than the previous year, and the balance from administration of resources, carried out via investment funds, reached R$ 562 million, up 212%.

Gerdau Florestal

   Gerdau Florestal (Gerdau Forestry) is one of the largest reforestation enterprises in Brazil, with 139,000 hectares of pine and eucalyptus plantations in five states.

   The eucalyptus activities guarantee renewable inputs for steel production, as part of a commitment to sustainable economic development. In 2002, US$ 6 million was invested in planting 9,800 hectares, making up a total area of 112,000 hectares. A further 32,000 hectares will be planted in the next three years, with investments reaching US$ 18 million.

  In the pine sector, Gerdau Florestal is among the largest suppliers to the Brazilian timber industry. It operates 27,000 hectares of plantations in the states of Santa Catarina and Mato Grosso do Sul, with annual sales of 1.3 million cubic meters. The Company has adult forests of up to 30 years of age, forming the basis for a profitable, high quality product.