The objective of Gerdau Group investments is growth and increased competitiveness in the
international scenario. The Company also works to reduce risks in the markets in which it
operates and obtain the best returns on capital. Gerdau’s investments focus on the expansion
and upgrading of industrial plants and the acquisition of assets in regions with potential for
steel consumption.
MAIN INITIATIVES IN 2005
During the year, global investments totaled US$ 858 million, 11.2% more than in 2004. Brazil
received US$ 568.8 million, with approximately 40% (US$ 227 million) allocated for the
expansion of Gerdau Açominas (state of Minas Gerais), a project scheduled for completion by
2007. The plant, which serves primarily the international market, will have its installed capacity
increased from 3 to 4.5 million metric tons per year.
There were also significant investments
during the year designed to increase supply
to the Brazilian domestic market. Gerdau
São Paulo, a new steel mill focused on the
civil construction market, began operations
at the end of 2005. The unit is equipped to
produce up to 900,000 metric tons of steel
per year. The rebar rolling mill, which will
have an annual installed capacity of 600,000
metric tons, will also start operating during
the second half of 2006.
The Group also completed its investments to increase the production capacity at Gerdau
Aços Especiais Piratini (state of Rio Grande do Sul) to 500,000 metric tons of finished
products per year (see box: Gerdau Steel Part of the Automotive Supply Chain).
In Colombia, the Gerdau Group acquired control of the companies Diaco and Sidelpa as part
of the staggered acquisition of shares from the previous controllers, the Mayagüez Group
and Latinamerican Enterprise Steel Holding. The deal, announced in December 2004, involved
a total sum of US$ 122.6 million, with debt accounting for US$ 36.9 million. The Gerdau Group
currently holds 57.1% of the capital stock at Diaco, Colombia’s largest producer of steel for
civil construction, and 98% of Sidelpa, the country’s only specialty steel producer. The Gerdau
Group plans to expand the production of the units over the next few years. It will also be
investing in the implementation of new management technologies and employee training,
designed to increase industrial productivity.
Gerdau’s presence in the Argentinean market also increased after the Group acquired an
additional 36% of the Sipar rolling mill, raising its stake to 74.4% of Sipar’s equity. The deal
meant a US$ 40.5 million investment over the next three years. Located in Perez, province
of Santa Fé, Sipar is the second largest long steel supplier in Argentina, with an annual
production capacity of 240,000 metric tons.
In Canada, Gerdau Ameristeel Whitby (Ontario) was the focus of major investments with the
refurbishing project in the continuous casting area and improvements in the rolling mill and
in the storing and shipping areas. In the United States, the highlight was the installation
of a new billet reheating furnace at Gerdau Ameristeel Sayreville (New Jersey), which has
simultaneously reduced costs and increased production capacity from 550,000 to 650,000
metric tons. In Cartersville (Georgia), the Group installed a new profile finishing area to
increase the capacity by 100,000 metric tons to 580,000 metric tons per year.
FUTURE INVESTMENTS (2006-2008)
The Gerdau Group plans to invest US$ 3.8 billion in the Americas over the next three
years. Of this total, US$ 2.5 billion will be spent in Brazil and US$ 143 million on the units in
Argentina, Chile, Colombia and Uruguay. The industrial plants in North America will receive
US$ 1.2 billion and the Spanish company Sidenor, US$ 35 million (see box: Gerdau Enters
Europe with Sidenor).
There were also significant investments
during the year designed to increase supply
to the Brazilian domestic market. Gerdau
São Paulo, a new steel mill focused on the
civil construction market, began operations
at the end of 2005. The unit is equipped to
produce up to 900,000 metric tons of steel
per year. The rebar rolling mill, which will
have an annual installed capacity of 600,000
metric tons, will also start operating during
the second half of 2006.