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The Gerdau Group has three steelmaking operations in Brazil: Gerdau Aços Longos, Gerdau Açominas and Gerdau Aços Especiais. The mills are so named based on their product line or geographic location.
During the year, the Group invested US$ 568.8 million in its Brazilian facilities (66.3% of the total amount invested in 2005).
Common long steel is produced at nine mills distributed in the southern, southeastern and northeastern regions of the country. The facilities follow the market mill concept, which means that the raw materials are purchased from the same region where the steel products are sold. The mills are focused primarily on meeting the domestic demand of the civil construction, industrial and agricultural sectors (see boxes: Gerdau Steel Used in São Paulo Subway Expansion and Largest Wind Farm in Latin America Built with Gerdau Steel). The main highlight of the year in the long steel sector was the construction of the Gerdau São Paulo steel mill in Araçariguama (state of São Paulo). The mill began operations at the end of 2005 (see box: Gerdau São Paulo Begins Production).
Gerdau also operates a specialty steel unit, Gerdau Aços Especiais Piratini, based in Charqueadas (state of Rio Grande do Sul), and an integrated mill, Gerdau Açominas, in Ouro Branco (state of Minas Gerais), focused on the production of slabs, blooms and billets.
Gerdau Açominas is mainly focused on the international market due to its production process and superior logistic capacity. The Group will expand the installed capacity of this mill from 3 million metric tons to 4.5 million metric tons of steel per year. The main equipment will begin operating at the end of 2007.
Gerdau Aços Especiais Piratini directs around 80% of its production at the Brazilian automotive industry, with the steel being used in automobiles and agricultural machinery sold on several continents. In 2005, the unit celebrated its second doubling of production by reaching an installed capacity of 500,000 metric tons of finished products and 400,000 metric tons of steel. It also allocated R$ 2.9 million for research and development, and in the first quarter of 2006, resources for projects undertaken internally and in partnership with universities and research centers totaled R$ 4.9 million.
At the beginning of 2006, Gerdau Aços Especiais Piratini received the Quality Achievement Performance Certificate from Toyota Mercosur. The certificate is in recognition of the suppliers that met a series of product quality requirements in 2005, including a zero defect rate per one million parts produced and a zero service failure rate. Toyota Mercosur is recognized in the market for the quality and reliability of its vehicles. Among its main products are the Toyota Corolla and Toyota Hylux.
Over the next three years, the rhythm of Gerdau Group investments in Brazil will continue at an accelerated pace. More than US$ 2.5 billion will be made available for the modernization and expansion of the units in the country, which represents 66% of the total global investment plan for the period.
Comercial Gerdau, the largest steel distributor in Brazil, supplies the most complete range of long steel products manufactured by the Group, as well as flat steel products manufactured by other domestic steel companies. In 2005, it served over 124,000 customers and invoiced R$ 2.4 billion, representing a growth of over 14% in relation to the previous year. Comercial Gerdau currently operates with 68 retail stores throughout the country. With its six flat steel service centers, the Company offers a full range of products, including roofs, sheets, straps and profiles, among others.
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