SUPPORT OPERATIONS FOR STEELMAKING ACTIVITIES IN BRAZIL

Comercial Gerdau

Comercial Gerdau, the largest steel distributor in Brazil, focused investments in 2003 on opening new service centers and branches to better serve customers.

It inaugurated three rebar fabricating facilities in the cities of Campo Grande (state of Mato Grosso do Sul), Cuiabá (Mato Grosso) and São Luís (Maranhão), for a total of nine plants located in strategic regions throughout the country. These centers deliver fabricated rebar on a 24-hour basis. The plants are destined to meet the needs of small to medium-sized construction projects and are installed in cities with an average monthly consumption of up to 500 metric tons of steel.

Comercial Gerdau also distributes the complete line of flat steels manufactured by other Brazilian steel makers. Currently, it has five flat steel processing centers, one of which was inaugurated this year in the city of Fortaleza (state of Ceará).

To improve customer service for flat steel consumers, Comercial Gerdau operates oxy, plasma and laser cutting centers, in partnership with White Martins. These are state-of-the-art technologies in thermal cutting designed primarily for the metal-mechanic industry. In 2003, Comercial Gerdau opened two more centers in the cities of São Caetano do Sul (state of São Paulo) and Cachoeirinha (Rio Grande do Sul).

Comercial Gerdau also opened two new branches, one in the city of Feira de Santana (state of Bahia) and the other in the city of Campos dos Goytacazes (Rio de Janeiro). In total, Comercial Gerdau has 73 branches spread throughout Brazil.

In 2003, Comercial Gerdau ended the year with R$ 1.7 billion in net sales, 15% more than in 2002.


Banco Gerdau

Banco Gerdau (Gerdau Bank) develops products and financial services for customers, suppliers and service providers at competitive prices and with high quality customer service.

In 2003, the number of bank customers grew from 663 to 1.2 thousand, and the number of financing contracts increased 42%, from R$ 362 million to R$ 515 million.

Banco Gerdau's asset portfolio reached R$ 79.5 million and the sum of resources managed in the form of investment funds practically doubled, reaching R$ 1.1 billion.


Gerdau Florestal

Gerdau Florestal owns 135 thousand hectares of pine and eucalyptus forest in four Brazilian states.

In the pine segment, Gerdau Florestal owns 25 thousand hectares of forest in the states of Santa Catarina and Mato Grosso do Sul. In 2003, 1.6 million meters of timber were sold, a volume 16% higher than that of the previous year.

During the year, the Santa Catarina unit was awarded the Forest Stewardship Council (FSC) certification. This certification, valid on an international level, attests that a company's handling of natural resources is ecologically appropriate and in compliance with current legislation.

In the eucalyptus segment, Gerdau Florestal owns 110 thousand hectares of planted forest. In 2003, Gerdau Florestal invested US$ 8.9 million in eucalyptus forests. Worthy of mention is the planting of 10 million seedlings in the state of Minas Gerais, equivalent to a total area of 8.2 thousand hectares. Over the next three years, 48 thousand hectares of trees will be planted, an activity that will require US$ 44 million in investments.

Since 1988, Gerdau Florestal has developed the Forest Farmer Project in the region. The program provides incentive for small rural landowners to cultivate eucalyptus by supplying them with seedlings, raw materials and technical assistance. Currently, the program covers 13 thousand hectares and involves 870 farmers, with an average planted area of 14 hectares on each property.

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