The Gerdau Group understands that there is still much to be done in regard to social issues in Brazil. We also believe that social participation is essential for the development of intelligent solutions to the challenges faced by the country in the areas of education, culture and scientific research, among many others.

In 2005, the Group supported 414 projects that benefited 604 institutions and 7.3 million people from 178 different Brazilian municipalities. Allocated resources totaled R$ 41.1 million, 10.5% more than in 2004.

Some 120 projects are supervised by the Gerdau Professionals Pro-Childhood Fund, which collects tax deductible donations (in accordance with the Brazilian Funcriança Law) from the Group and its employees. During the year, the initiative helped 22,400 children and teenagers in 38 Brazilian municipalities, with funds totaling R$ 4.5 million.

Also in 2005 was the creation of the Gerdau Institute, which undertook the coordination of the Group’s social responsibility policies and guidelines. Besides optimizing resources and encouraging partnerships with other public and private organizations, the institute works to make the projects self-sustainable. This year, the institute’s actions were limited to Brazil, but the intention is to expand activities to the other Group operations in 2006.

The institute has committees in all Brazilian units. The committees work to detect community needs and monitor the results of each initiative.

The volunteer work of Gerdau employees has been crucial to the success of social projects, and 1,438 employees worked as volunteers. In 2006, this figure should increase with the launching of the Gerdau volunteer program. The objective is to further increase employee awareness and provide improved training for volunteer work, as well as unifying the policies of all the Company’s steel operations in Brazil.

The Gerdau Group has already set its volunteer work goal: to have 20% of its Brazilian employees, or nearly 3,500 people, engaged in volunteer activities by the end of 2006.

The Group’s social responsibility culture is older than the Company itself, having begun in 1875, before it was founded. The German immigrant João Gerdau, who at the time was a store owner, helped found a singing society, Canto Esperança. It was the first cultural organization in the Santo Ângelo colony, currently the municipality of Agudo in the southern Brazilian state of Rio Grande do Sul. That same year, he contributed to the building of the Agudo Church altar.