Form 6-K NATIONAL STEEL CO For: Sep 30

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Table of Contents

 

Company Information
Capital Breakdown	1
Parent Company Financial Statements
Balance Sheet – Assets	2
Balance Sheet – Liabilities	3
Statement of Income	4
Statement of Comprehensive Income	5
Statement of Cash Flows	6
Statement of Changes in Shareholders’ Equity
01/01/2022 to 09/30/2022	8
01/01/2021 to 09/30/2021	9
Statement of Value Added	10
Consolidated Financial Statements
Balance Sheet – Assets	11
Balance Sheet - Liabilities	12
Statement of Income	13
Statement of Comprehensive Income	14
Statement of Cash Flows	15
Statement of Changes in Shareholders’ Equity
01/01/2022 to 09/30/2022	17
01/01/2021 to 09/30/2021	18
Statement of Value Added	19
Comments on the Company’s Consolidated Performance	20
Notes to the financial information	44
Comments on the Performance of Business Projections	96
Reports and Statements
Unqualified Independent Auditors’ Review Report	100
Officers Statement on the Financial Statements	102
Officers Statement on Auditor’s Report	103

 

 

Company Information / Capital Breakdown

 

Number of Shares (Units)	Current Year 09/30/2022
Paid-in Capital
Common	1,326,093,947
Preferred	0
Total	1,326,093,947
Treasury Shares
Common	0
Preferred	0
Total	0

 

 

Parent Company Financial Statements / Balance Sheet - Assets (BRL thousand)
Code	Description	Current Quarter 09/30/2022	Previous Year 12/31/2021
1	Total Assets	61,135,432	61,933,890
1.01	Current assets	14,516,561	18,241,837
1.01.01	Cash and cash equivalents	2,764,344	3,885,265
1.01.02	Financial investments	1,339,364	2,426,457
1.01.02.01	Financial investments measured a fair value through profit or loss	1,288,977	2,383,059
1.01.02.01.03	Financial investments measured a fair value through profit or loss – Usiminas’ shares	1,288,977	2,383,059
1.01.02.03	Financial investments at amortized cost	50,387	43,398
1.01.03	Trade receivables	2,103,276	2,375,512
1.01.04	Inventory	6,955,768	7,508,183
1.01.06	Recoverable taxes	737,137	1,255,697
1.01.08	Other current assets	616,672	790,723
1.01.08.03	Others	616,672	790,723
1.01.08.03.02	Prepaid expenses	291,386	185,968
1.01.08.03.03	Dividends receivable	150,989	486,506
1.01.08.03.04	Others	174,297	118,249
1.02	Non-current assets	46,618,871	43,692,053
1.02.01	Long-term assets	10,658,113	9,982,573
1.02.01.03	Financial investments at amortized cost	136,167	132,523
1.02.01.07	Deferred taxes assets	4,097,191	4,843,653
1.02.01.10	Other non-current assets	6,424,755	5,006,397
1.02.01.10.03	Recoverable taxes	870,813	691,286
1.02.01.10.04	Judicial deposits	239,138	222,481
1.02.01.10.05	Prepaid expenses	85,914	109,583
1.02.01.10.06	Receivable from related parties	3,166,393	2,442,198
1.02.01.10.07	Others	2,062,497	1,540,849
1.02.02	Investments	28,192,190	26,140,909
1.02.02.01	Equity interest	28,051,447	25,998,331
1.02.02.02	Investment Property	140,743	142,578
1.02.03	Property, plant and equipment	7,716,629	7,508,842
1.02.03.01	Property, plant and equipment in operation	6,732,734	6,752,158
1.02.03.02	Right of use in leases	13,238	15,996
1.02.03.03	Property, plant and equipment in progress	970,657	740,688
1.02.04	Intangible assets	51,939	59,729

 

 

 

Parent Company Financial Statements / Balance Sheet – Liabilities
(BRL thousand)
Code	Description	Current Quarter 09/30/2022	Previous Year 12/31/2021
2	Total Liabilities	61,135,432	61,933,890
2.01	Current liabilities	14,366,065	16,202,230
2.01.01	Payroll and related taxes	190,675	133,595
2.01.02	Trade payables	4,006,546	4,710,811
2.01.03	Tax payables	221,344	761,868
2.01.04	Borrowings and financing	3,195,066	3,864,228
2.01.05	Other payables	6,722,401	6,696,157
2.01.05.02	Others	6,722,401	6,696,157
2.01.05.02.04	Dividends and interests on shareholder´s equity	455,002	1,125,359
2.01.05.02.05	Advances from customers	121,321	148,822
2.01.05.02.06	Trade payables – Forfaiting and Drawee risk	5,328,002	4,439,967
2.01.05.02.07	Lease liabilities	8,524	7,602
2.01.05.02.08	Other payables	809,552	974,407
2.01.06	Provisions	30,033	35,571
2.01.06.01	Provision for tax, social security, labor and civil risks	30,033	35,571
2.02	Non-current liabilities	25,656,852	25,416,662
2.02.01	Borrowings and financing	16,423,469	16,568,616
2.02.02	Other payables	253,453	319,859
2.02.02.02	Others	253,453	319,859
2.02.02.02.03	Lease liabilities	6,567	10,339
2.02.02.02.04	Derivative financial instruments	69,394	101,822
2.02.02.02.05	Trade payables	18,642	43,396
2.02.02.02.06	Other payables	158,850	164,302
2.02.04	Provisions	8,979,930	8,528,187
2.02.04.01	Provision for tax, social security, labor and civil risks	320,230	333,285
2.02.04.02	Other provisions	8,659,700	8,194,902
2.02.04.02.03	Provision for environmental liabilities and decommissioning of assets	167,382	159,254
2.02.04.02.04	Pension and healthcare plan	584,288	584,288
2.02.04.02.05	Provision for losses on investments	7,908,030	7,451,360
2.03	Shareholders’ equity	21,112,515	20,314,998
2.03.01	Paid-up capital	10,240,000	10,240,000
2.03.02	Capital reserves	32,720	32,720
2.03.04	Earnings reserves	9,697,708	10,092,888
2.03.04.01	Legal reserve	1,081,222	1,081,222
2.03.04.02	Statutory reserve	8,616,486	9,948,596
2.03.04.09	Treasury shares	-	(936,930)
2.03.05	Accumulated earnings (losses)	1,537,119	-
2.03.08	Other comprehensive income	(395,032)	(50,610)

 

 

Parent Company Financial Statements / Statement of Income
(BRL thousand)
Code	Description	Current Quarter 07/01/2022 to 09/30/2022	Year to date 01/01/2022 to 09/30/2022	Same quarter previous year 07/01/2021 to 09/30/2021	YTD previous year  01/01/2021 to 09/30/2021
3.01	Revenues from sale of goods and rendering of services	6,474,363	19,011,952	6,873,294	18,524,592
3.02	Costs from sale of goods and rendering of services	(5,555,003)	(15,317,359)	(4,176,175)	(11,910,176)
3.03	Gross profit	919,360	3,694,593	2,697,119	6,614,416
3.04	Operating (expenses)/income	(616,628)	(83,999)	(312,976)	5,334,820
3.04.01	Selling expenses	(244,946)	(708,561)	(210,412)	(517,200)
3.04.02	General and administrative expenses	(59,809)	(170,135)	(54,251)	(171,726)
3.04.04	Other operating income	164,627	202,219	(14,452)	2,650,650
3.04.05	Other operating expenses	(772,796)	(1,524,625)	(166,188)	(720,986)
3.04.06	Equity in results of affiliated companies	296,296	2,117,103	132,327	4,094,082
3.05	Income before financial income (expenses) and taxes	302,732	3,610,594	2,384,143	11,949,236
3.06	Financial income (expenses)	(3,127)	(1,364,779)	(235,883)	302,365
3.06.01	Financial income	116,663	(605,214)	(361,353)	1,014,750
3.06.02	Financial expenses	(119,790)	(759,565)	125,470	(712,385)
3.06.02.01	Net exchange differences over financial instruments	514,586	922,314	435,400	276,199
3.06.02.02	Financial expenses	(634,376)	(1,681,879)	(309,930)	(988,584)
3.07	Income before income taxes	299,605	2,245,815	2,148,260	12,251,601
3.08	Income tax and social contribution	(166,214)	(708,696)	(998,723)	(896,278)
3.09	Net income  from continued operations	133,391	1,537,119	1,149,537	11,355,323
3.11	Net income for the year	133,391	1,537,119	1,149,537	11,355,323
3.99	Earnings per share – (Reais / Share)
3.99.01	Basic earnings per share
3.99.01.01	Common shares	0.10059	1.15804	0.83293	8.22781
3.99.02	Diluted earnings per share
3.99.02.01	Common shares	0.10059	1.15804	0.83293	8.22781

 

Parent Company Financial Statements / Statement of Comprehensive Income
(BRL thousand)
Code	Description	Current Quarter 07/01/2022 to 09/30/2022	Year to date 01/01/2022 to 09/30/2022	Same quarter previous year 07/01/2021 to 09/30/2021	YTD previous year  01/01/2021 to 09/30/2021
4.01	Net income for the year	133,391	1,537,119	1,149,537	11,355,323
4.02	Other comprehensive income	(286,479)	(569,348)	(921,415)	(144,162)
4.02.01	Actuarial gains over pension plan of subsidiaries, net of taxes	12	68	28	77
4.02.02	Reflex treasury shares acquired by subsidiary	-	-	(141,479)	(141,479)
4.02.04	Cumulative translation adjustments for the year	(128,842)	(714,813)	174,408	(18,060)
4.02.06	(Loss)/gain cash flow hedge accounting  –  “Platts”, net taxes,  from investments in subsidiaries	(72,879)	(308,335)	(20,795)	477
4.02.11	(Loss)/gain cash flow hedge accounting, net of taxes	(493,872)	(376,400)	(998,799)	(302,649)
4.02.13	Cash flow hedge accounting reclassified to income upon realization, net of taxes	409,102	830,132	65,222	317,472
4.03	Comprehensive income for the year	(153,088)	967,771	228,122	11,211,161

 

 

 

Parent Company Financial Statements / Statements of Cash Flows – Indirect Method
(BRL thousand)
Code	Description	Year to date 01/01/2022 to 09/30/2022	YTD previous year  01/01/2021 to 09/30/2021
6.01	Net cash from operating activities	4,348,079	6,761,807
6.01.01	Cash from operations	2,218,355	5,540,978
6.01.01.01	Net income for the period	1,537,106	11,355,323
6.01.01.02	Financial charges in borrowing and financing raised	895,963	524,453
6.01.01.03	Financial charges in borrowing and financing granted	(133,367)	(42,093)
6.01.01.04	Charges on lease liabilities	1,232	1,627
6.01.01.05	Depreciation, amortization and depletion	790,140	637,837
6.01.01.06	Equity in results of affiliated companies	(2,117,103)	(4,094,082)
6.01.01.07	Deferred taxes assets	512,722	469,233
6.01.01.08	Provision for tax, social security, labor, civil and environmental risks	(18,593)	(61,032)
6.01.01.09	Monetary and exchange variations, net	73,306	14,028
6.01.01.11	Updated shares – Fair value through profit or loss	1,122,058	(185,944)
6.01.01.12	Write-off of property, plant and equipment and Intangible assets	1,065	-
6.01.01.13	Provision for environmental liabilities and decommissioning of assets	8,128	31,281
6.01.01.14	Accrued/(reversal) for consumption and services	16,120	12,417
6.01.01.16	Receivables by indemnity	(422,254)	-
6.01.01.17	Net gains on the sale of the shares of CSN Mineração	-	(2,472,497)
6.01.01.18	Net gains on the sale of the shares of Usiminas	-	(505,844)
6.01.01.19	Dividends USIMINAS	(105,732)	(176,512)
6.01.01.20	Others	57,564	32,783
6.01.02	Changes in assets and liabilities	2,129,724	1,220,829
6.01.02.01	Trade receivables - third parties	(309,915)	(962,073)
6.01.02.02	Trade receivables - related party	491,084	(939,599)
6.01.02.03	Inventory	340,518	(3,020,516)
6.01.02.04	Receivables related parties/dividends	2,423,868	2,868,493
6.01.02.05	Recoverable taxes	339,033	549,554
6.01.02.06	Judicial deposits	(16,657)	(16,390)
6.01.02.09	Trade payables	(730,571)	102,195
6.01.02.10	Trade payables – Forfaiting and Drawee risk	888,035	2,835,533
6.01.02.11	Payroll and related taxes	57,080	61,800
6.01.02.12	Tax payables	(477,746)	366,116
6.01.02.13	Payables to related parties	66,498	22,957
6.01.02.15	Interest paid	(719,792)	(599,523)
6.01.02.17	Interest received	2,277	-
6.01.02.18	Others	(223,988)	(47,718)
6.02	Capital reduction in investee	(3,878,010)	2,629,974
6.02.01	Investments / AFAC / Acquisitions of Shares	(2,747,830)	(1,048,117)
6.02.02	Purchase of property/intangible assets	(957,567)	(710,518)

 

6.02.06	Net cash received from sale of CSN Mineração's shares	-	3,164,612
6.02.07	Intercompany loans granted	(165,658)	(145,892)
6.02.09	Intercompany loans received	3,679	(280)
6.02.11	Financial Investments, net of redemption	(10,634)	1,370,169
6.03	Net cash used in financing activities	(1,590,990)	(12,468,096)
6.03.01	Borrowings and financing raised	1,912,203	190,903
6.03.02	Transactions cost - Borrowings and financing	(5,216)	(9,863)
6.03.03	Borrowings and financing – related parties	3,972,052	1,830,102
6.03.05	Amortization of borrowings and financing	(3,523,998)	(4,265,560)
6.03.06	Amortization of borrowings and financing - related parties	(2,857,843)	(7,556,745)
6.03.07	Amortization of leases	(6,584)	(7,485)
6.03.08	Dividends and interest on shareholder’s equity	(673,129)	(2,649,448)
6.03.10	Share repurchase	(408,475)	-
6.05	Increase (decrease) in cash and cash equivalents	(1,120,921)	(3,076,315)
6.05.01	Cash and equivalents at the beginning of the year	3,885,265	4,647,125
6.05.02	Cash and equivalents at the end of the year	2,764,344	1,570,810

 

 

 

 

Parent Company Financial Statements / Statement of Changes in Equity - 01/01/2022 to 09/30/2022
(BRL thousand)
Code	Description	Paid-up capital	Capital reserve, granted options and treasury shares	Earnings reserve	Retained earnings (accumulated losses)	Other comprehensive income	Shareholders’ equity
5.01	Opening balances	10,240,000	32,720	10,092,888	-	(50,610)	20,314,998
5.04	Capital transaction with shareholders	-	-	(395,180)	-	224,926	(170,254)
5.04.04	Treasury shares acquired	-	(395,180)	-	-	-	(395,180)
5.04.08	Reclassifications of treasury shares	-	(936,930)	936,930	-	-	-
5.04.09	Treasury shares canceled	-	1,332,110	(1,332,110)	-	-	-
5.04.10	(Loss) / gain on the percentage change in investments	-	-	-	-	224,926	224,926
5.05	Total comprehensive income	-	-	-	1,537,119	(569,348)	967,771
5.05.01	Net income for the period	-	-	-	1,537,119	-	1,537,119
5.05.02	Other comprehensive income	-	-	-	-	(569,348)	(569,348)
5.05.02.04	Cumulative translation adjustments for the year	-	-	-	-	(714,813)	(714,813)
5.05.02.06	Actuarial gains/(losses) on pension plan, net of taxes	-	-	-	-	68	68
5.05.02.07	(Loss) / gain on cash flow hedge accounting, net of taxes	-	-	-	-	145,397	145,397
5.07	Closing balance	10,240,000	32,720	9,697,708	1,537,119	(395,032)	21,112,515

 

 

 

 

Parent Company Financial Statements / Statement of Changes in Equity - 01/01/2021 to 09/30/2021
(BRL thousand)
Code	Description	Paid-up capital	Capital reserve, granted options and treasury shares	Earnings reserve	Retained earnings (accumulated losses)	Other comprehensive income	Shareholders’ equity
5.01	Opening balances	6,040,000	32,720	5,824,350	-	(1,983,619)	9,913,451
5.03	Adjusted opening balances	6,040,000	32,720	5,824,350	-	(1,983,619)	9,913,451
5.04	Capital transaction with shareholders	-	-	-	(1,750,000)	820,203	(929,797)
5.04.06	Dividends	-	-	-	(1,750,000)	-	(1,750,000)
5.04.08	Net gain of transaction primary and secondary distribution shares of CSN Mineração	-	-	-	-	829,486	829,486
5.04.09	(Loss) / gain on the percentage change in investments	-	-	-	-	(9,283)	(9,283)
5.05	Total comprehensive income	-	-	-	11,355,323	(144,162)	11,211,161
5.05.01	Net income for the period	-	-	-	11,355,323	-	11,355,323
5.05.02	Other comprehensive income	-	-	-	-	(144,162)	(144,162)
5.05.02.04	Cumulative translation adjustments for the year	-	-	-	-	(18,060)	(18,060)
5.05.02.06	Actuarial gains/(losses) on pension plan, net of taxes	-	-	-	-	77	77
5.05.02.07	(Loss) / gain on cash flow hedge accounting, net of taxes	-	-	-	-	15,300	15,300
5.05.02.08	Treasury shares acquired by reflex subsidiary	-	-	-	-	(141,479)	(141,479)
5.07	Closing balance	6,040,000	32,720	5,824,350	9,605,323	(1,307,578)	20,194,815

 

 

 

 

Parent Company Financial Statements / Statement of Value Added
(BRL thousand)
Code	Description	Year to date 01/01/2022 to 09/30/2022	YTD previous year  01/01/2021 to 09/30/2021
7.01	Revenues	23,123,457	26,239,778
7.01.01	Sales of products and rendering of services	22,921,627	22,911,052
7.01.02	Other revenues	192,161	3,329,657
7.01.04	Allowance for (reversal of) doubtful debts	9,669	(931)
7.02	Raw materials acquired from third parties	(18,848,172)	(16,092,623)
7.02.01	Cost of sales and services	(16,960,170)	(14,498,351)
7.02.02	Materials, electric power, outsourcing and other	(1,759,286)	(1,532,883)
7.02.03	Impairment/recovery of assets	(128,716)	(61,389)
7.03	Gross value added	4,275,285	10,147,155
7.04	Retentions	(789,682)	(637,302)
7.04.01	Depreciation, amortization and depletion	(789,682)	(637,302)
7.05	Value added created	3,485,603	9,509,853
7.06	Value added received	3,896,487	5,407,326
7.06.01	Equity in results of affiliates companies	2,117,103	4,094,082
7.06.02	Financial income	488,867	1,014,750
7.06.03	Others	1,290,517	298,494
7.07	Value added for distribution	7,382,090	14,917,179
7.08	Value added distributed	7,382,090	14,917,179
7.08.01	Personnel	938,908	947,787
7.08.01.01	Salaries and wages	724,544	710,181
7.08.01.02	Benefits	170,316	194,753
7.08.01.03	Severance payment (FGTS)	44,048	42,853
7.08.02	Taxes, fees and contributions	1,760,994	1,599,425
7.08.02.01	Federal	1,461,047	1,198,074
7.08.02.02	State	299,947	401,351
7.08.03	Remuneration on third-party capital	3,145,069	1,014,644
7.08.03.01	Interest	925,321	543,460
7.08.03.02	Rental	906	3,764
7.08.03.03	Others	2,218,842	467,420
7.08.03.03.01	Other and passive exchange variations	2,218,842	467,420
7.08.04	Remuneration on Shareholders' capital	1,537,119	11,355,323
7.08.04.02	Dividends	-	1,750,000
7.08.04.03	Retained earnings (accumulated losses)	1,537,119	9,605,323

 

 

 

 

 

 

Consolidated Financial Statements / Balance Sheet - Assets
(BRL thousand)
Code	Description	Current Quarter 09/30/2022	Previous Year 12/31/2021
1	Total assets	82,638,399	79,379,103
1.01	Current assets	31,118,220	34,972,354
1.01.01	Cash and cash equivalents	14,319,373	16,646,480
1.01.02	Financial investments	1,477,615	2,644,732
1.01.02.01	Financial investments measured a fair value through profit or loss	1,288,977	2,383,059
1.01.02.01.03	Financial investments measured a fair value through profit or loss – Usiminas’ shares	1,288,977	2,383,059
1.01.02.03	Financial investments at amortized cost	188,638	261,673
1.01.03	Trade receivables	2,733,706	2,597,838
1.01.04	Inventory	10,428,521	10,943,835
1.01.06	Recoverable taxes	1,365,088	1,655,349
1.01.08	Other current assets	793,917	484,120
1.01.08.03	Others	793,917	484,120
1.01.08.03.02	Prepaid expenses	497,077	225,036
1.01.08.03.03	Dividends receivable	61,924	76,878
1.01.08.03.05	Others	234,916	182,206
1.02	Non-current assets	51,520,179	44,406,749
1.02.01	Long-term assets	12,813,651	11,206,737
1.02.01.03	Financial investments at amortized cost	152,348	147,671
1.02.01.05	Inventory	948,234	656,193
1.02.01.07	Deferred taxes assets	5,072,047	5,072,092
1.02.01.10	Other non-current assets	6,641,022	5,330,781
1.02.01.10.03	Recoverable taxes	1,282,507	965,026
1.02.01.10.04	Judicial deposits	460,691	339,805
1.02.01.10.05	Prepaid expenses	116,403	133,614
1.02.01.10.06	Receivable from related parties	2,703,349	2,070,305
1.02.01.10.07	Others	2,078,072	1,822,031
1.02.02	Investments	5,674,022	4,011,828
1.02.02.01	Equity interest	5,514,175	3,849,647
1.02.02.02	Investment Property	159,847	162,181
1.02.03	Property, plant and equipment	25,347,190	21,531,134
1.02.03.01	Property, plant and equipment in operation	20,514,520	17,305,628
1.02.03.02	Right of use in leases	649,420	581,824
1.02.03.03	Property, plant and equipment in progress	4,183,250	3,643,682
1.02.04	Intangible assets	7,685,316	7,657,050

 

 

 

 

 

Consolidated Financial Statements / Balance Sheet – Liabilities
(BRL thousand)
Code	Description	Current Quarter 09/30/2022	Previous Year 12/31/2021
2	Total Liabilities	82,638,399	79,379,103
2.01	Current liabilities	21,388,059	24,541,616
2.01.01	Payroll and related taxes	493,587	328,443
2.01.02	Trade payables	6,259,680	6,446,999
2.01.03	Tax payables	1,161,575	3,308,614
2.01.04	Borrowings and financing	4,980,561	5,486,859
2.01.05	Other payables	8,434,029	8,904,654
2.01.05.02	Others	8,434,029	8,904,654
2.01.05.02.04	Dividends and interests on shareholder´s equity	454,520	1,206,870
2.01.05.02.05	Advances from customers	1,543,448	2,140,783
2.01.05.02.06	Trade payables – Forfaiting and Drawee risk	5,506,326	4,439,967
2.01.05.02.07	Lease liabilities	168,134	119,047
2.01.05.02.09	Other payables	761,601	997,987
2.01.06	Provisions	58,627	66,047
2.01.06.01	Provision for tax, social security, labor and civil risks	58,627	66,047
2.02	Non-current liabilities	37,459,826	31,463,098
2.02.01	Borrowings and financing	32,198,750	27,020,663
2.02.02	Other payables	2,411,121	1,948,164
2.02.02.02	Others	2,411,121	1,948,164
2.02.02.02.03	Advances from customers	1,081,494	947,896
2.02.02.02.04	Lease liabilities	525,108	492,504
2.02.02.02.05	Derivative financial instruments	90,928	101,822
2.02.02.02.06	Trade payables	40,188	98,625
2.02.02.02.07	Other payables	673,403	307,317
2.02.03	Deferred taxes assets	278,887	503,081
2.02.04	Provisions	2,571,068	1,991,190
2.02.04.01	Provision for tax, social security, labor and civil risks	1,037,622	508,305
2.02.04.02	Other provisions	1,533,446	1,482,885
2.02.04.02.03	Provision for environmental liabilities and decommissioning of assets	934,381	898,597
2.02.04.02.04	Pension and healthcare plan	599,065	584,288
2.03	Shareholders’ equity	23,790,514	23,374,389
2.03.01	Paid-up capital	10,240,000	10,240,000
2.03.02	Capital reserves	32,720	32,720
2.03.04	Earnings reserves	9,697,708	10,092,888
2.03.04.01	Legal reserve	1,081,222	1,081,222
2.03.04.02	Statutory reserve	8,616,486	9,948,596
2.03.04.09	Treasury shares	-	(936,930)
2.03.05	Accumulated earnings (losses)	1,537,119	-
2.03.08	Other comprehensive income	(395,032)	(50,610)
2.03.09	Earnings attributable to the non-controlling interests	2,677,999	3,059,391

 

Consolidated Financial Statements / Statements of Income                                                                              (BRL thousand )
Code	Description	Current Quarter 07/01/2022 to 09/30/2022	Year to date 01/01/2022 to 09/30/2022	Same quarter previous year 07/01/2021 to 09/30/2021	YTD previous year  01/01/2021 to 09/30/2021
3.01	Revenues from sale of goods and rendering of services	10,897,049	33,232,837	10,246,173	37,551,074
3.02	Costs from sale of goods and rendering of services	(8,358,934)	(23,206,660)	(5,941,522)	(19,231,398)
3.03	Gross profit	2,538,115	10,026,177	4,304,651	18,319,676
3.04	Operating (expenses)/income	(1,411,195)	(3,572,645)	(625,288)	(354,671)
3.04.01	Selling expenses	(647,943)	(1,595,871)	(603,615)	(1,706,395)
3.04.02	General and administrative expenses	(150,475)	(440,727)	(158,853)	(438,756)
3.04.04	Other operating income	173,285	222,901	8,922	2,705,119
3.04.05	Other operating expenses	(879,423)	(1,925,974)	33,269	(1,078,194)
3.04.06	Equity in results of affiliated companies	93,361	167,026	94,989	163,555
3.05	Income before financial income (expenses) and taxes	1,126,920	6,453,532	3,679,363	17,965,005
3.06	Financial income (expenses)	(318,494)	(2,333,743)	(943,426)	(1,483,984)
3.06.01	Financial income	284,757	(259,219)	(297,930)	1,079,410
3.06.02	Financial expenses	(603,251)	(2,074,524)	(645,496)	(2,563,394)
3.06.02.01	Net exchange differences over financial instruments	479,862	987,446	247,882	(138,476)
3.06.02.02	Financial expenses	(1,083,113)	(3,061,970)	(893,378)	(2,424,918)
3.07	Income before income taxes	808,426	4,119,789	2,735,937	16,481,021
3.08	Income tax and social contribution	(570,794)	(2,148,883)	(1,411,285)	(3,946,396)
3.09	Net income  from continued operations	237,632	1,970,906	1,324,652	12,534,625
3.11	Consolidated net income for the year	237,632	1,970,906	1,324,652	12,534,625
3.11.01	Earnings  attributable to the controlling interests	133,391	1,537,119	1,149,537	11,355,323
3.11.02	Earnings it attributable to the non-controlling interests	104,241	433,787	175,115	1,179,302
3.99	Earnings per share – (Reais / Share)	-	-	-	-
3.99.01.01	Basic Earnings Common shares	0.10059	1.15804	0.83293	8.22781
3.99.02.01	Diluted Earnings Common shares	0.10059	1.15804	0.83293	8.22781

 

 

Consolidated Financial Statements / Statement of Comprehensive Income
(BRL thousand)
Code	Description	Current Quarter 07/01/2022 to 09/30/2022	Year to date 01/01/2022 to 09/30/2022	Same quarter previous year 07/01/2021 to 09/30/2021	YTD previous year  01/01/2021 to 09/30/2021
4.01	Consolidated net income for the year	237,632	1,970,906	1,324,652	12,534,625
4.02	Other comprehensive income	(304,859)	(647,500)	(966,533)	(183,424)
4.02.01	Actuarial gains over pension plan of subsidiaries, net of taxes	(2)	54	32	87
4.02.04	Cumulative translation adjustments for the year	(128,842)	(714,813)	174,408	(18,060)
4.02.06	Treasury shares acquired by reflex subsidiary	-	-	(180,819)	(180,819)
4.02.10	(Loss)/gain cash flow hedge accounting, net of taxes	(493,872)	(376,400)	(998,799)	(302,649)
4.02.13	Cash flow hedge reclassified to income upon realization, net of taxes	409,102	830,132	65,222	317,472
4.02.15	Cash flow hedge - Platts, reclassified to income upon realization, net of taxes	5,617	(9,809)	(204,435)	18,300
4.02.16	(Loss)/gain cash flow hedge accounting  –  “Platts”, net taxes,  from investments in subsidiaries	(96,862)	(376,664)	177,858	(17,755)
4.03	Consolidated comprehensive income for the year	(67,227)	1,323,406	358,119	12,351,201
4.03.01	Earnings  attributable to the controlling interests	(153,088)	967,771	228,122	11,211,161
4.03.02	Earnings it attributable to the non-controlling interests	85,861	355,635	129,997	1,140,040

 

 

Consolidated Financial Statements / Statements of Cash Flows – Indirect Method
(BRL thousand)
Code	Description	Year to date 01/01/2022 to 09/30/2022	YTD previous year  01/01/2021 to 09/30/2021
6.01	Net cash from operating activities	2,131,547	13,455,539
6.01.01	Cash from operations	6,203,015	13,144,258
6.01.01.01	Earnings attributable to the controlling interests	1,537,119	11,355,323
6.01.01.02	Earnings attributable to the non-controlling interests	433,787	1,179,302
6.01.01.03	Financial charges in borrowing and financing raised	1,786,561	1,580,062
6.01.01.04	Financial charges in borrowing and financing granted	(111,221)	(36,869)
6.01.01.05	Charges on lease liabilities	51,714	45,172
6.01.01.06	Depreciation, amortization and depletion	2,030,390	1,569,893
6.01.01.07	Equity in results of affiliated companies	(167,026)	(163,555)
6.01.01.08	Deferred taxes assets	584,923	286,915
6.01.01.09	Provision for tax, social security, labor, civil and environmental risks	35,191	(47,479)
6.01.01.10	Monetary and exchange variations, net	(584,096)	670,981
6.01.01.12	Updated shares – Fair value through profit or loss	1,122,058	(185,944)
6.01.01.13	Write-off of property, plant and equipment and Intangible assets	10,780	4,546
6.01.01.14	Accrued/(reversal) for consumption and services	6,030	1,808
6.01.01.15	Provision for environmental liabilities and decommissioning of assets	1,415	76,311
6.01.01.16	Net gains on the sale of the shares of CSN Mineração	-	(2,472,497)
6.01.01.17	Net gains on the sale of the shares of Usiminas	-	(505,844)
6.01.01.18	Receivables by indemnity	(422,254)	-
6.01.01.19	Dividends USIMINAS	(105,763)	(179,215)
6.01.01.20	Others	(6,593)	(34,652)
6.01.02	Changes in assets and liabilities	(4,071,468)	311,281
6.01.02.01	Trade receivables - third parties	(642,845)	1,322,434
6.01.02.02	Trade receivables - related party	61,236	(68,362)
6.01.02.03	Inventory	83,270	(4,734,305)
6.01.02.04	Receivables related parties/dividends	105,758	-
6.01.02.05	Recoverable taxes	195,917	529,495
6.01.02.06	Judicial deposits	(25,763)	(33,531)
6.01.02.07	Trade payables	(729,251)	1,292,726
6.01.02.08	Trade payables – Forfaiting and Drawee risk	1,066,359	2,835,533
6.01.02.09	Payroll and related taxes	138,538	114,411
6.01.02.10	Tax payables	(2,330,376)	1,442,686
6.01.02.11	Payables to related parties	(33,610)	(44,825)
6.01.02.12	Advance from Minerals contracts	(681,373)	(481,431)
6.01.02.13	Advance from electric energy contracts	701,157	-
6.01.02.14	Interest paid	(1,631,139)	(1,702,971)
6.01.02.17	Receipt/Payment of Derivative Operations	96,595	(82,987)
6.01.02.18	Others	(445,941)	(77,592)
6.02	Net cash investment activities	(7,569,026)	1,218,689
6.02.01	Investments Acquisition of Shares	(430,012)	(150,994)
6.02.02	Purchase of property/intangible assets	(2,357,384)	(1,899,832)
6.02.06	Intercompany loans granted	(116,412)	(116,000)
6.02.08	Financial Investments, net of redemption	68,358	1,157,637

 

6.02.11	Acquisition of Topázio Energética, Santa Ana and Brasil Central	(466,153)	-
6.02.12	Cash received from acquisition of investments -Topázio and Santa Ana	6,486	-
6.02.13	Acquisition of CSN Cimentos Brasil	(4,770,354)	-
6.02.14	Cash received from acquisition of CSN Cimentos Brasil	496,445	-
6.02.15	Net cash received from sale of CSN Mineração's shares	-	3,164,612
6.02.16	Cash on Elizabeth´s consolidation	-	54,768
6.02.17	Escrow deposit for the acquisition of CSN Cimentos Brasil	-	(263,750)
6.02.18	Price paid in investiments of Elizabeth´s	-	(727,752)
6.03	Net cash used in financing activities	3,079,058	(9,356,140)
6.03.01	Borrowings and financing raised	13,371,615	8,307,523
6.03.02	Transaction cost - Borrowings and financings	(297,813)	(159,795)
6.03.04	Amortization of borrowings and financing	(8,211,226)	(15,334,408)
6.03.06	Amortization of leases	(106,934)	(81,696)
6.03.07	Dividends and interest on shareholder’s equity	(1,266,016)	(3,290,487)
6.03.10	Issuance of new CSN Mineração's shares	-	1,347,862
6.03.11	Share repurchase	(410,568)	(145,139)
6.04	Exchange rate on translating cash and cash equivalents	31,314	(7,569)
6.05	Increase (decrease) in cash and cash equivalents	(2,327,107)	5,310,519
6.05.01	Cash and equivalents at the beginning of the year	16,646,480	9,944,586
6.05.02	Cash and equivalents at the end of the year	14,319,373	15,255,105

 

 

 

 

 

Consolidated Financial Statements / Statements of Changes in Equity - 01/01/2022 to 09/30/2022
(BRL thousand)
Code	Description	Paid-up capital	Capital reserve, granted options and treasury shares	Earnings reserve	Retained earnings (accumulated losses)	Other comprehensive income	Shareholders’ equity	Non-controlling interests	Shareholders’ equity
5.01	Opening balances	10,240,000	32,720	10,092,888	-	(50,610)	20,314,998	3,059,391	23,374,389
5.04	Capital transaction with shareholders	-	-	(395,180)	-	224,926	(170,254)	(737,027)	(907,281)
5.04.04	Treasury shares acquired	-	(395,180)	-	-	-	(395,180)	(1,638)	(396,818)
5.04.07	Interest on equity	-	-	-	-	-	-	(510,463)	(510,463)
5.04.08	Reclassifications of treasury shares	-	(936,930)	936,930	-	-	-	-	-
5.04.09	Treasury shares canceled	-	1,332,110	(1,332,110)	-	-	-	-	-
5.04.10	(Loss)/gain on the percentage change in investments	-	-	-	-	224,926	224,926	(224,926)	-
5.05	Total comprehensive income	-	-	-	1,537,119	(569,348)	967,771	355,635	1,323,406
5.05.01	Net income for the year	-	-	-	1,537,119	-	1,537,119	433,787	1,970,906
5.05.02	Other comprehensive income	-	-	-	-	(569,348)	(569,348)	(78,152)	(647,500)
5.05.02.04	Cumulative translation adjustments for the year	-	-	-	-	(714,813)	(714,813)	-	(714,813)
5.05.02.06	Actuarial gains/(losses) on pension plan, net of taxes	-	-	-	-	68	68	(14)	54
5.05.02.07	(Loss) / gain on cash flow hedge accounting, net of taxes	-	-	-	-	145,397	145,397	(78,138)	67,259
5.07	Closing balance	10,240,000	32,720	9,697,708	1,537,119	(395,032)	21,112,515	2,677,999	23,790,514

 

 

 

 

 

 

 

 

Consolidated Financial Statements / Statements of Changes in Equity - 01/01/2021 to 09/30/2021
(BRL thousand)
Code	Description	Paid-up capital	Capital reserve, granted options and treasury shares	Earnings reserve	Retained earnings (accumulated losses)	Other comprehensive income	Shareholders’ equity	Non-controlling interests	Shareholders’ equity
5.01	Opening balances	6,040,000	32,720	5,824,350	-	(1,983,619)	9,913,451	1,338,054	11,251,505
5.03	Adjusted opening balances	6,040,000	32,720	5,824,350	-	(1,983,619)	9,913,451	1,338,054	11,251,505
5.04	Capital transaction with shareholders	-	-	-	(1,750,000)	820,203	(929,797)	629,186	(300,611)
5.04.01	Capital increase proposed	-	-	-	-	-	-	294,900	294,900
5.04.06	Dividends	-	-	-	(1,750,000)	-	(1,750,000)	(598,156)	(2,348,156)
5.04.08	Net gain of transaction primary and secondary distribution shares of CSN Mineração	-	-	-	-	829,486	829,486	923,159	1,752,645
5.04.09	(Loss)/gain on the percentage change in investments	-	-	-	-	(9,283)	(9,283)	9,283	-
5.05	Total comprehensive income	-	-	-	11,355,323	(144,162)	11,211,161	1,140,040	12,351,201
5.05.01	Net income for the year	-	-	-	11,355,323	-	11,355,323	1,179,302	12,534,625
5.05.02	Other comprehensive income	-	-	-	-	(144,162)	(144,162)	(39,262)	(183,424)
5.05.02.04	Cumulative translation adjustments for the year	-	-	-	-	(18,060)	(18,060)	-	(18,060)
5.05.02.06	Actuarial gains/(losses) on pension plan, net of taxes	-	-	-	-	77	77	10	87
5.05.02.07	(Loss) / gain on cash flow hedge accounting, net of taxes	-	-	-	-	15,300	15,300	68	15,368
5.05.02.08	Treasury shares acquired by reflex subsidiary	-	-	-	-	(141,479)	(141,479)	(39,340)	(180,819)
5.07	Closing balance	6,040,000	32,720	5,824,350	9,605,323	(1,307,578)	20,194,815	3,107,280	23,302,095

 

 

 

Consolidated Financial Statements / Statements of Value Added
(BRL thousand)
Code	Description	Year to date 01/01/2022 to 09/30/2022	YTD previous year 01/01/2021 to 09/30/2021
7.01	Revenues	38,199,932	45,957,315
7.01.01	Sales of products and rendering of services	38,011,569	42,624,813
7.01.02	Other revenues	184,418	3,331,827
7.01.04	Allowance for (reversal of) doubtful debts	3,945	675
7.02	Raw materials acquired from third parties	(25,961,868)	(23,063,989)
7.02.01	Cost of sales and services	(22,581,581)	(19,507,744)
7.02.02	Materials, electric power, outsourcing and other	(3,233,884)	(3,423,080)
7.02.03	Impairment/recovery of assets	(146,403)	(133,165)
7.03	Gross value added	12,238,064	22,893,326
7.04	Retentions	(2,024,965)	(1,565,822)
7.04.01	Depreciation, amortization and depletion	(2,024,965)	(1,565,822)
7.05	Value added created	10,213,099	21,327,504
7.06	Value added received	3,145,643	1,889,836
7.06.01	Equity in results of affiliated companies	167,026	163,555
7.06.02	Financial income	834,862	1,079,410
7.06.03	Others	2,143,755	646,871
7.07	Value added for distribution	13,358,742	23,217,340
7.08	Value added distributed	13,358,742	23,217,340
7.08.01	Personnel	2,017,649	1,747,915
7.08.01.01	Salaries and wages	1,602,603	1,348,782
7.08.01.02	Benefits	329,038	331,682
7.08.01.03	Severance payment (FGTS)	86,008	67,451
7.08.02	Taxes, fees and contributions	4,054,848	5,716,728
7.08.02.01	Federal	3,350,011	4,881,018
7.08.02.02	State	665,960	803,428
7.08.02.03	Municipal	38,877	32,282
7.08.03	Remuneration on third-party capital	5,315,339	3,218,072
7.08.03.01	Interest	1,891,596	1,608,643
7.08.03.02	Rental	2,979	7,809
7.08.03.03	Others	3,420,764	1,601,620
7.08.03.03.01	Other and exchange losses	3,420,764	1,601,620
7.08.04	Remuneration on Shareholders' capital	1,970,906	12,534,625
7.08.04.02	Dividends	-	1,750,000
7.08.04.03	Retained earnings (accumulated losses)	1,537,119	9,605,323
7.08.04.04	Non-controlling interests in retained earnings	433,787	1,179,302

 

 

 

São Paulo, October 31, 2022 - Companhia Siderúrgica Nacional ("CSN") (B3: CSNA3) (NYSE: SID) discloses its third quarter of 2022 (3Q22) financial results in Brazilian Reais, with all financial statements consolidated in accordance with accounting practices adopted in Brazil issued by the Accounting Pronouncements Committee ("CPC"), approved by the Brazilian Securities and Exchange Commission ("CVM") and the Federal Accounting Council ("CFC") and in accordance with international financial reporting standards (“IFRS”), issued by the International Accounting Standards Board (“IASB”).

 

The comments address the Company's consolidated results in the third quarter of 2022 (3Q22) and the comparisons are in relation to the third quarter of 2021 (3Q21) and the second quarter of 2022 (2Q22). The price of the dollar was BRL 5.44 on 09/30/2021; BRL 5.24 on 06/30/2022 and BRL 5.41 on 09/30/2022.

 

 

Operational and financial highlights of 3Q22

 

 

 

 

Consolidated Table - Highlights

¹ Adjusted EBITDA is calculated from net income (loss), plus depreciation and amortization, taxes on income, net financial result, income from investment participation, income from other operating income/expenses and includes a proportional participation of 37.27% of the EBITDA of the joint subsidiary MRS Logística.

² Adjusted Ebitda Margin is calculated from Adjusted Ebitda divided by Management Net Revenue.

³ Adjusted Net Debt and Adjusted Cash/Availability consider 37.27% of MRS, in addition to not considering Forfaiting and Cashed Risk transactions.

 

Consolidated Results

 

·

Net revenue totaled BRL 10,897 million on 3Q22, which represents a 3.1% increase when compared to 2Q22. This result reflects the increased commercial activity and increased sales volume of the Company's main segments, but partially offset by lower prices of iron ore and steel products.

 

·

The cost of goods sold (COGS) totaled BRL 8,359 million in 3Q22, an increase of 10.5% compared to 2Q22, as a result of the continued high prices of some raw materials such as coke oven coal, in addition to higher costs with reducers in steel operations and greater mine movement.

 

·

The higher cost pressure negatively impacted the gross margin that attained 23.3% in 3Q22 and was 5.2 p.p. lower than that recorded in 2Q22. This performance mainly reflects the dynamics of the provisional prices in mining and the temporary impact of rising raw material costs, an effect that is already starting to decrease in 4Q22.

 

·

Sales, general and administrative expenses totaled for BRL 798 million in 3Q22, 22.6% higher than in the previous quarter, as a consequence of the increase in commercial activity through all segments in the period, but partially offset by lower prices with freight on the C3 route.

 

·

The group of other operating income and expenses was negative in BRL 707 million in 3Q22, mainly as a result of the cash flow hedge accounting operations that totaled BRL 418 million in the period.

 

·

The financial result was negative in BRL 318 million in 3Q22, which represents a 64.3% decline compared to the previous quarter, as a consequence of the normalization of financial expenses after a quarter with minimal changes in the value of Usiminas shares.

 

 

 

 

·

The equity result was positive at BRL 94 million in 3Q22, a performance 74% higher than in the last quarter, as a consequence of the operational improvement in MRS results.

 

 

·

In 3Q22, the Company's Net Income was BRL 238 million, 35.5% lower than in the last quarter, highlighting the lower operating performance in the period due to the decline in international prices, which ended up compensating for the lower financial expenses presented in the quarter.

 

Adjusted EBITDA

 

* The Company discloses its adjusted EBITDA excluding participation in investments and other operating income (expenses), understanding that it should not be considered in the calculation of recurring Operational Cash generation.

 

·

In 3Q22, Adjusted EBITDA was BRL 2,714 million, with an Adjusted EBITDA Margin of 23.9%, 5.7 p.p. below that recorded last quarter. This reduction in profitability is a direct consequence of the cost pressure in the steel industry and the impact of iron ore and steel prices on international markets, which ended up compensating for the higher commercial activity recorded in the quarter. However, it is also important to highlight the temporary effect of this pressure since it is already possible to check an accommodation of costs and prices for the result at the end of the year. In addition, it is also worth noting the impact of the incorporation of LafargeHolcim in the cement segment, whose EBITDA increased by 58.4% in 3Q22, even considering only one month of operational result.

 

Adjusted EBITDA (BRL MM) and Adjusted EBITDA Margin¹ (%)

 

¹ Adjusted EBITDA Margin is calculated from the division between Adjusted EBITDA and Adjusted Net Revenue, which considers 100% of the stakes in CSN Mineração's consolidation and 37.27% in MRS.

 

Adjusted Cash Flow¹

 

Adjusted Cash Flow in 3Q22 reached BRL 3,168 million, an increase of BRL 2,338 million compared to the previous quarter due to the combination of (i) efficient working capital management, (ii) seasonality in the payment of taxes, and (iii) lower impact of financial expenses. With this, the Company was able to mitigate the lowest operating results, presenting a reduction in accounts receivable and longer term with suppliers.

 

Adjusted Cash Flow¹ on 3Q22 (BRL MM)

 

¹ The concept of adjusted cash flow is calculated from adjusted Ebitda, subtracting Ebitda from Jointly Controlled Companies, CAPEX, IT, Financial Results and Changes in Assets and Liabilities², excluding the effect of the Glencore advance.

² Adjusted Working Capital is composed by the change in Net Working Capital, plus the change in accounts of long-term assets and liabilities and disregarding the net change in IT and SC.

 

Debt

 

As of 09/30/2022, consolidated net debt reached BRL 24,300 million, with the leverage indicator measured by the Net Debt/EBITDA ratio reaching 1.69x. This leverage increase is a consequence of the disbursement made in the period, with the payment for the acquisition of LafargeHolcim, in addition to the CSN Mineração’s 2^nd Debentures Issuance. However, despite this greater need for financial disbursements, CSN maintained its policy of carrying a large amount of cash, which in this quarter reached approximately BRL 15.7 billion.

 

Debt (BRL Billion) and

Net Debt /Adjusted EBITDA (x)

¹ Net Debt / EBITDA: To calculate the debt, please consider the final dollar of each period and for net debt and EBITDA the average dollar of the period.

 

The Company remains very active in its goal of extending its debt amortization period, focusing on long-term operations and the local capital market. Among the main projects of 3Q22, the second issuance of CMIN’s Infrastructure debentures in the amount of BRL 1.4 billion, as well as operations to support the acquisition of LafargeHolcim's Brazilian assets, stand out. In addition, the Company has just completed its 12^th issuance of institutional debentures, which will impact the 4Q22 result and focuses precisely on the extension of the average debt term.

 

Amortization Schedule (BRL Billion)

¹ IFRS: does not consider participation in MRS (37.27%).

² Gross Debt/Management Net considers participation in MRS (37.27%) and gross interest.

³ Medium term after completion of the Liability Management Plan.

 

Foreign Exchange Exposure

 

The accumulated net foreign exchange exposure in the consolidated balance sheet of 3Q22 was US$ 217 million, as shown in the table below, in line with the Company's policy of minimizing the impacts of exchange rate volatility on the result. The Hedge Accounting adopted by CSN correlates the projected dollar exports flow with future debt maturities in the same currency. Thus, the exchange variation of the dollar debt is temporarily recorded in the equity, being brought to the result when the dollar revenues from said exports occur.

 

 

Investments

 

A total of BRL 839 million was invested in 3Q22, a stable performance compared to the previous quarter with the increase in investments in cement offsetting the delayed delivery of orders for expansion projects in the mining segment, which should present a higher concentration at the beginning of 2023.

 

 

 

Net Working Capital

 

Net Working Capital applied to the business totaled BRL 1,343 million in 3Q22, a 69% decrease when compared to 2Q22 as a result of the increase in the line of suppliers, due to the mix of purchases and longer negotiated terms, in addition to the drop in inventories.

 

The calculation of the Net Working Capital applied to the business does not take Glencore's advances, as shown in the following table:

¹ Other CCL Assets: Considers employees advances and other accounts receivable.

² Other CCL Liabilities: Considers other accounts payable, dividends payable, installment taxes and other provisions.

³ Inventories: Does not consider the effect of the provision for inventory losses. For the calculation of the SME, warehouse balances are not considered.

 

Closing of LafargeHolcim

 

On September 6, 2022, the Company completed the acquisition of 100% of the shares issued by LafargeHolcim Brasil and officially became the second largest cement producer in the Brazilian market, with an installed capacity of 16.3 Mton year, 172% higher than 2021. With the conclusion of this operation, the cement segment had one month of LafargeHolcim’s results in its 3Q22 numbers.

 

 

Results by Business Segments

 

 

Result 3Q22 (BRL million)	Steel	Mining	Logistics (Port)	Logistics (Railway)	Energy	Cement	Corporate Expenses/Elimination	Consolidated
Net Revenue	7,698	2,527	69	653	48	778	(875)	10,897
Domestic Market	5,655	437,50	69	653	48	778	(1,091)	6,549
Foreign Market	2,044	2,089					215	4,348
COGS	(6,426)	(1,800)	(54)	(397)	(53)	(501)	873	(8,359)
Gross profit	1,272	727	14	256	(5)	276	(3)	2,538
DGA/DVE	(334)	(63,49)	(7)	(37)	(10)	(100)	(248)	(798)
Depreciation	313	253	9	108	4	82	(78)	689
Proportional EBITDA of joint contr.	-		-	-	-	-	285	285
Adjusted EBITDA	1,251	916	16	327	(10)	257	(44)	2,714
Result 2Q22 (BRL million)	Steel	Mining	Logistics (Port)	Logistics (Railway)	Energy	Cement	Corporate Expenses/Elimination	Consolidated
Net Revenue	7,706	2,608	77	592	47	475	(940)	10,566
Domestic Market	5,248	411,20	77	592	47	475	(1,032)	5,819
Foreign Market	2,458	2,196	-	-	-	-	93	4,747
COGS	(5,789)	(1,832)	(53)	(386)	(49)	(301)	849	(7,560)
Gross profit	1,917	776	24	206	(2)	174	(90)	3,005
DGA/DVE	(313)	(87,03)	(8)	(34)	(8)	(69)	(132)	(651)
Depreciation	301	242	8	126	4	57	(95)	643
Proportional EBITDA of joint contr.	-		-	-	-	-	265	265
Adjusted EBITDA	1,905	931	24	298	(6)	163	(52)	3,263
Result 3Q21 (BRL million)	Steel	Mining	Logistics (Port)	Logistics (Railway)	Energy	Cement	Corporate Expenses/Elimination	Consolidated
Net Revenue	7,627	2,804	70	508	66	387	(1,216)	10,246
Domestic Market	5,508	970,76	70	508	66	387	(1,491)	6,020
Foreign Market	2,118	1,833	-	-	-	-	275	4,226
COGS	(4,736)	(1,883)	(53)	(325)	(38)	(229)	1,322	(5,942)
Gross profit	2,891	920	17	183	29	159	106	4,305
DGVA	(302)	(69,74)	(7)	(34)	(9)	(61)	(281)	(762)
Depreciation	265	193	9	111	4	45	(94)	533
Proportional EBITDA of joint contr.	-		-	-	-	-	220	220
Adjusted EBITDA	2,854	1,043	19	260	24	143	(49)	4,295

 

Steel Result

 

According to the World Steel Association (WSA), global crude steel production totaled 450.0 million tons (Mt) on 3Q22, representing a drop of 2.5% compared to the same period in 2021, also reflecting the effects of the conflict between Russia and Ukraine and its direct developments for the lowest volume of production in European countries. China produced 56.1% of the global volume (252.3 Mt), which corresponds to an increase of 3.1 p.p. in relation to the same period of 2021, mainly as a result of the September performance where it was possible to verify a seasonal return of demand and low inventories, in addition to the lower production observed in Europe. In the accumulated year-to-date, however, there is a 3.7% drop in the volume produced in China, reflecting the direct impact of production interruptions due to the Covid Zero Policy, in addition to the lower dynamism of the real estate market, which reduced the consumption of steel in China throughout 2022. Despite this situation, the Chinese government has sought to increase investment in infrastructure through economic stimulus that should keep demand at a satisfactory level by the end of this year. On the other hand, Brazil accrued a YTD production of 25.9 Mt, which corresponds to an annual reduction of 5.3%, as a result of the cost pressures faced by the industry, and a more difficult comparison basis due to the strong volumes seen last year.

 

Steel Production (thousand tons)

 

Regarding to CSN, plate production on 3Q22 totaled 1,027 Kton, a performance 15.4% higher than in the previous quarter. In turn, the production of flat laminates, our main market, reached 911 Kton, an increase of 18.7% compared to 2Q22, due to the normalization of the production process since the previous quarter was impacted by planned maintenances.

 

Sales Volume (Kton) - Steel

 

Total sales reached 1,160 Kton on the third quarter of 2022, a volume 18.2% higher than in the same period of last year. When analyzing the behavior in the different markets, it is perceived that domestic sales were the main responsible for this growth by adding 859 thousand tons of steel products, an increase of 18.7% compared to 2Q22, as a result of a very resilient demand and more competitive prices. In the foreign market, 3Q22 sales totaled 301 thousand tons and were 12% lower than those realized in 2Q22, as a consequence of a weaker sales volume verified in Europe, affecting the results of SWT and Lusosider. In the quarter, 22 Kton were exported directly and 279 Kton were sold by subsidiaries abroad, 62 Kton by LLC, 159 Kton by SWT and 58 Kton by Lusosider.

 

In relation to the total sales volume in 3Q22 compared to the previous quarter, the construction (+49%), distribution (+37%) and automotive (+9.5%) segments were the main positive highlights of the period and ended up compensating for the still uncertain period lived by the home appliances sector and industry, mainly in the State of São Paulo.

 

According to ANFAVEA (National Association of Motor Vehicle Manufacturers), the third quarter production registered 665,000 units, an increase of 12% compared to the last quarter and 32% compared to the same period of the previous year. The Association also projects a year growth of 4.1% in 2022, with a production of 2,340,000 vehicles’ units, which shows that the segment has already begun to overcome the difficulties faced in the last 2 years.   According to the Brazil Steel Institute (IABr) data, crude steel production in the third quarter was 8.407 Mton, a performance 10.6% lower than in the same period last year. Apparent Consumption was 5.9 Mton, a 10.1% retraction compared to 3Q21. In turn, the Steel Industry Confidence Indicator (ICIA) for September was 53.4 points, an increase of 8.0 p.p. compared to June and above the 50-point break line, indicating greater confidence for the next six months in the local market.   According to IBGE data, the production of home appliances (white line) for the months of July and August recorded a decline of 18.6% compared to the same period of last year. For this year, the white line market is expected to have a weaker performance after the strong sales volume seen in the sector in 2020 and 2021.

 

·

Net revenue in Steel reached BRL 7,698 million in 3Q22, a stable performance compared to the previous quarter. As previously commented, the intense increase in commercial activity ended up being offset by the reduction in domestic price, generating this marginally lower revenue. In the sense, the average price of 3Q22 in the domestic market was 9% lower than that of 2Q22, a performance that accompanies the weaker dynamics of international prices. In turn, the price of the foreign market was 5.5% lower compared to last quarter, a performance driven by the economic slowdown in Europe.

 

·

The plate cost in 3Q22 reached BRL 4,133/t, representing a 6% decline compared to the previous quarter as a result of the higher dilution of fixed costs due to the higher production volume, despite the 7% increase in raw material costs and overall manufacturing costs (mainly natural gas).

 

 

 

·

The steel’s Adjusted EBITDA reached BRL 1,251 million in 3Q22 and was 34.3% lower than in 2Q22, with an EBITDA Margin of 16.3% (-8.5 p.p.). Despite the lower profitability and the higher cost pressure in production, the Company was able to sustain its margins at a very reasonable level and with a tendency to recover at the end of the year, as it is already possible to see a drop in the costs of the main raw materials.

 

 

Adjusted EBITDA and Steel Margin (BRL MM and %)

 

 

Mining Result

 

In 3Q22, concerns about the Chinese market and the sustainability of growth continued to dictate the pace of iron ore prices in the international market. The quarter in China was still marked by heat waves that led to a water crisis and increased the cost of energy. In addition, the continuous stoppages resulting from Covid Zero policy and the continuing crisis in the real estate market were other components that increased instability and mitigated the government's efforts to bring, through incentive packages and credit concessions, greater economic dynamism. In addition, the quarter was also marked by the ongoing conflict between Russia and Ukraine, by the maintenance of inflationary pressures and by the increase in interest rates that jointly helped to increase concerns about the global demand for iron ore. In the midst of this context, the price of iron ore underwent a greater adjustment at the beginning of the quarter, ending 3Q22 with an average of US$ 103.31/dmt (Platts, Fe62%, N. China), 25.1% lower than the 2Q22 (US$ 137.9/dmt), and 36.6% below 3Q21 (US$ 162.94/dmt).

In relation to sea freight, the BCI-C3 Route (Tubarão-Qingdao) presented an average of US$ 24.03/wmt in 3Q22, which represents a significant contraction of 21% in relation to the cost of the previous quarter, as a reflection of the normalization and better logistics organization of the transoceanic market, in addition to the lower pressure on fuel costs.

 

 

 

·

Iron ore production totaled 9,625 thousand tons in 3Q22, representing an increase of 16% compared to 2Q22, as a result of the increase in the performance of projects integrated to the Central Plant and lower rainfall volume that allowed an improvement in production and efficiency in the Company's mines.

 

·

Sales volume reached 9,095 thousand tons in the 3Q22, a performance 20.1% higher than the previous quarter as a consequence of the higher volume produced and the drier period observed throughout the quarter, enabling an increase in port shipments. To contextualize this performance, the sales volume to the foreign market was 19% higher than in the previous quarter.

 

·

Net revenue totaled BRL 2,527 million in 3Q22 and was 3.1% lower than in the last quarter, as a result of a lower price realization that ended up offsetting the higher sales volume presented in the period. Unitary net revenue was US$ 53.23 per wet ton, a 25.8% decline against 2Q22, a performance that reflects not only the lower price of the benchmark index, but also the impact of the provisioned prices realization in the previous quarters given the high volatility presented in the period. These factors were partially offset by a better product mix with a higher share of own production in relation to third-party purchases, quality improvement and reduction in freight costs during the quarter.

 

·

In turn, the cost of products sold from mining totaled BRL 1,800 million in 3Q22, a 1.7% decline compared to the previous quarter, as a result of lower rail and port transport costs, in addition to the reduction in demurrage. On the other hand, C1 Cost reached US$ 19.4/t in 3Q22, and was 20% lower when compared to 2Q22, reflecting not only the lower logistics costs, but also the greater dilution of fixed costs due to the increase in the volume produced.

 

·

Adjusted EBITDA reached BRL 916 million in 3Q22, with a quarterly EBITDA Margin of 36.3% or 0.5 p.p. lower than that recorded in 2Q22. This stability in the EBITDA Margin is a direct result of exogenous factors and high volatility in the price of iron ore throughout the year. On the other hand, when observing the decline in the cost of production and freight, there is a more optimistic outlook regarding the increase in profitability for the coming quarters.

 

 

Cement Result

Throughout 3Q22, the cement segment maintained the strong dynamism presented in the previous quarter, packed by consumption-friendly movements, with the increase in Brazil aid, GDP growth and the decrease in inflationary impact. This combination of factors eventually offset higher interest rates and the slow recovery in wages, which make credit and new loans more difficult. According to the National Cement Industry Union (SNIC), cement sales reached 16.97 Mton in 3Q22, 6.7% higher than the previous quarter, but still 3.0% below the same period in 2021. In this context, the real estate market remains an important demand driver, but the segment has also seen a significant increase in sales directed to infrastructure projects. To corroborate this favorable environment, the Industrial Entrepreneur Confidence Index (ICEI), measured by the Brazilian Chamber of the Construction Industry (CBIC), presented values above 50 in all indicators, reaching 60.2 in October.

Regarding to CSN Cimentos, on September 6 the Company completed the acquisition process of LafargeHolcim, now called CSN Cimentos Brasil S.A., consolidating one month of the operating and financial results in the segment performance. Sales on 3Q22 totaled 1,890 Kton, a result 50% higher than the previous quarter, reflecting (i) the incorporation of part of Lafarge's sales in the quarter, and (ii) a positive performance in the other cement operations of the Company which also managed to overcome the strong dynamism observed in the previous quarter.

 

Sales Volume – Cements (thousand tones)

* LafargeHolcim's operations were integrated in September 2022.

 

·

Net Revenue reached an all-time high of BRL 778 million in 3Q22, a performance 63.7% higher than last quarter, driven by the solid operating performance observed in the quarter, with increases in production, sales and prices applied in the period, in addition to the incorporation of LafargeHolcim's results.

 

·

In turn, unitary costs also rose in the quarter, as a result of the increase in the cost of imported coke and distribution freight, which is a result of the global increase in fuel costs.

 

·

Even so, Adjusted EBITDA in the segment increased 58.4% compared to the previous quarter, reaching BRL 257 million in 3Q22 and with an Adjusted EBITDA Margin of 33.1%, or 1.1 p.p. lower than that seen in 2Q22. This small loss of profitability, even considering cost pressures and integration expenses, reinforces the excellent moment CSN’s cement operation goes through, in addition to highlighting the strong operational improvement that LafargeHolcim's assets have shown since the acquisition was approved.

 

Logistics Result

Rail Logistics: In 3Q22, net revenue reached BRL 653 million, with an Adjusted EBITDA of BRL 327 million and an Adjusted EBITDA Margin of 50%. Comparing to 2Q22, net revenue increased 10.3% due to the increased volume and prices of goods transported. In the same comparison line, Adjusted EBITDA was 9.8% higher.

Port Logistics: In 3Q22, 431,000 tons of steel products were shipped by Sepetiba Tecon, in addition to 12,000 containers, 32,000 tons of general cargo and 52,000 tons of bulk. Compared to the previous quarter, the Company had a change in its shipment mix, giving more relevance to the overall cargo volume, with a quarterly increase of 672%, against a 76% reduction in the bulk volume. In addition to this variation, the volume of steel products increased by 40% in the period. As a result, the net revenue of the port segment was 11.3% lower than in the last quarter, reaching BRL 69 million in 3Q22 and also impacting the Adjusted EBITDA for the period, which had a margin decrease of 7.8 p.p.

 

Energy Result

In 3Q22, the energy volume traded generated a net revenue of BRL 48 million, with a negative Adjusted EBITDA of BRL 10 million. Compared to the second quarter of 2022, the net revenue was practically stable, even with lower prices, while there was a small increase in the production cost, generating this negative EBITDA in the quarter.

 

ESG - Environmental, Social & Governance

 

ESG COMMITMENTS - CSN GROUP

 

AXIS	ESG Goals
Natural Capital	Climate Change
	ü  Reduction of 10% of CO2 emissions per ton of crude steel by 2035, WSA (World Steel Association) methodology compared to 2018.
	ü  Reduction of 20% of CO2 emissions  per ton of crude steel by 2035, WSA (World Steel Association) methodology compared to 2018.
	ü  Reduction of 28% of CO2 per ton of cement emissions by 2030, reaching 375 kgCO2e/t cement, CSI (Cement Sustainability Initiative) methodology. Equivalent to the target set in the CSI roadmap for the sector in 2050, base year 2020.
	ü  Reduction of 30% in CO2 emissions aper ton of ore produced by 2035 (scopes 1 and 2), base year 2019.
	ü  Net Zero by 2044 in the emissions of scopes 1 and 2 of CSN Mineração.
	Atmospheric Emissions
	ü  Reduction of 40% of particulate matter emissions per ton of crude steel produced at UPV by 2030, base year 2019.
	Efficiency in Water Use and Effluent Management
	ü  Reduce new water consumption for iron ore production by at least 10% per ton of ore produced by 2030 compared to the base year 2018.
Intellectual Capital	Innovation
	ü  Between 2020 and 2022, develop two new products/services on the ESG theme.
	ü  By 2022, we will conduct six weeks of training in innovation, ESG and Venture Capital in the CSN Group units in relation to 2020.
	Governance, Ethics and Compliance
	ü  Continuously increase our Compliance Index with the best governance practices provided for in CVM Resolution No. 80/2022 (considered "Practice" and "Partial practice").
Human and Social Capital	Social Responsibility
	ü  By 2022, increase by 39% the care of children and adolescents by the Project Garoto Cidadão, by the CSN Foundation, in relation to 2020.
	Health and safety at work
	ü  Continuously achieve the zero-fatality rate throughout the CSN Group (own and third parties).
	ü  Reduce by 30% the frequency rate of accidents (CAF+SAF – own and third parties) by 2030 in the CSN Group compared to 2020 (factor of 1 million HHT).
	ü  Reduce by 30% the number of days of sick leave by accident with own employees by 2030 compared to 2021.
	Dam Management and Mischaracterization
	ü  Perform the complete mischaracterization of the dams built upstream of CSN Mineração by 2030.
	Diversity and Inclusion
	ü  Achieve 28% female representation in the CSN Group by 2025 compared to 2020.

 

 

 

ESG PERFORMANCE - CSN GROUP

 

In the third quarter of 2022, CSN maintains its reporting model aligned with relevance and materiality for the Company and its stakeholders, in order to offer greater transparency and access to the main results and ESG indicators, also enabling its monitoring in an agile and effective manner.

 

Quantitative indicators are presented in comparison with the period that best represents the metric monitoring. Thus, some are compared with the same quarter of the previous year, and others with the average of the previous period, ensuring a comparison based on seasonality and periodicity.

 

More detailed historical data on CSN's performance and initiatives can be verified in the 2021 Integrated Report, available in the Company's website. The 2021 Integrated Report follows internationally recognized guidelines and frameworks, such as GRI, IIRC, SASB and TCFD, and are presented with due correlation with the Sustainable Development Goals (SDGs) and Principles of the UN Global Compact. The assurance of ESG indicators occurs annually for the closing of the Integrated Report, so the information contained in the quarterly releases is subject to adjustments arising from this process.

 

It is also possible to monitor CSN's ESG performance in an agile and transparent manner, on our website, through the following e-mail address: esg.csn.com.br

 

 

ESG RATINGS

 

 

In the third quarter of 2022, the Company received for the 8th consecutive year the GOLD SEAL of the GHG Protocol, which granted the CSN Group the highest level of qualification of its greenhouse gas emission inventories. Also in this period, CSN improved its performance in the Global S&P Rating to 55 points, when the global average of the sector is 21 points. Additionally, it maintained its performance in the MSCI and Mood's ESG - V.E. and TPI (Transition Pathway Initiative) ratings, global initiatives that assess the maturity of companies in relation to ESG themes.

 

 

 

PERFORMANCE OF THE MAIN ESG TARGETS

 

	Indicators	Unit	Base Year Indicator	Accrued 2022	Status	Goal	Target
Environmental	Steel Emission Intensity (WSA)¹	tCO2and/t raw steel	2.10 (Base year 2018)	2.00		1.68	2035
	Intensity of Emission Cements (CSI)²	kgCO2and/t cement	519 (Base year2020)	480		374	2030
	Mining Emission Intensity (GHG)3 and 4	kgCO2and ore /t	5.77 (Base year 2019)	7.55		4.04	2035
Social	Frequency Rate5	CAF+SAF	2.46 (Base year 2020)	2.02		1.72	2030
Governance	Diversity (women in the functional framework)	%	14% (Base year2020)	18.4%		28%	2025

¹ Considers the scope 1+2 emissions and production of the UPV and SWT units.

³ The base year and the target were adjusted because Alhandra came to be considered in the data management of CSN Cimentos.

² Considers the emissions of scopes 1 and 2 divided per ton of iron ore produced at CSN Mineração, according to the methodology of the Brazilian GHG Protocol Program.

⁴ Considers emissions only from CSN Mining Scope 1 mobile combustion category. They represent 95% of CSN Mineração's Scope 1 emissions, noting that scope 2 emission is zero due to electricity consumption coming from 100% renewable sources. The data reported in the Company's Integrated Report 2021 considers the total emissions of csn mining, scope 1 and 2. The emission intensity was reported 6.58 kgCO2e/ton of ore produced.

⁵ Rate considers (CAF+SAF - own and third/1 million hours worked).

 

CLIMATE CHANGE

 

CSN initiated a study of climate scenarios and review of risk and opportunity management processes. The construction of the scenarios was based on the best market practices using as a basis the reports of the IPCC (2021) and the International Energy Agency, which will enable a more practical decision-making on the issues related to climate change. In September of this year, communication with the Company's senior leadership was reinforced, with periodic monitoring of emission reduction targets and the progress of decarbonization projects.

 

ENVIRONMENTAL MANAGEMENT

 

Energy

 

Sustainability with the purchase of CEEE-G

 

The acquisition of CEEE-G, completed in October of this year, is in line with CSN's strategy of strengthening its operations in the Energy segment, and also aims to support and strengthen the expansion strategy of its business and its subsidiaries, through investments in renewable energy, through self-sufficiency in electricity, for greater competitiveness of its business. Investment in renewable energy is a fundamental pillar in the Company's sustainability strategy and an important step in the decarbonization journey of its operations.

 

NATURAL CAPITAL - ENVIRONMENTAL INDICATORS

 

Air quality CSN¹	Unit	9M21	9M22	Δ%
NOX Emission	t	4,439	3,829	-14%
SOX issue	t	2,278	2,103	-8%
MP issue	t	2,566	2,734	7%

¹ Considers all steel units and cement units in Brazil.

 

Water Management²	Unit	9M21	9M22	Δ%
Water catchment	LM	61,856	56,161	-9.2%
Water disposal	Ml	52,176	46,494	-21%
Water consumption	Ml	9,680	9,667	-0.1%

² Considers all steel units and cement units in Brazil.

 

Water Management	Unit	2021	9M22	Δ%
Intensity by steel production	m³/t raw steel	18.94	15.47	-18%
Intensity per cement production	m³/t cement	0.07	0.08	12%
Intensity by ore production	m³/t ore	0.21	0.23	12%

 

Waste Management³	Unit	9M21	9M22	Δ%
Waste Class 1	t	21,440	15,652	-27%
Waste Class 2	t	2,372,452	2,382,530	-0.4%
Percentage reuse and co-processing	%	95%	93%	-2%

³ Considers all steel, mining and cement producing units.

 

 

DAM MANAGEMENT

 

In the third quarter of 2022, the decharacterization works of the Vigia Dam advanced with the completion of the structural work. For the next quarters, it is expected the completion of the drainage system, and, with this, the mischaracterization of the dam will be completed.

 

 

In September, all stability statements were also renewed of the dams of CSN Mineração e Minérios Nacional, with the exception of the B2A Dam, belonging to Minérios Nacional, which, due to the ongoing stabilization works, showed improvement in its safety factors, and was requested by the Company to ANM, its reclassification from level 2 to emergency level 1.

 

SOCIAL DIMENSION

 

HEALTH AND SAFETY AT WORK

 

2022 SipatMA

 

In September 2022, the Internal Week for The Prevention of Accidents at Work and Environment (SipatMA) was held in a hybrid format in the various units of the CSN Group. There were five days of awareness-raising actions and lectures with internal and external specialists on health, safety and environment issues. The lectures with online transmission allowed more than 6,000 unique accesses held during the week and a total number of participants estimated at 10,000 people, since in many units were made available screens and auditoriums for employees to have access to the content.

 

·

Management and monitoring of the health and safety of own employees and third parties

 

Health and safety at work¹	9M21	9M22	Δ%
Number of accidents with and without leave (own)	84	71	-15%
Number of accidents with and without leave (third parties)	45	48	7%
Fatality (own)	0	1	-
Fatality (third parties)	1	1	-
Frequency rate of mandatory reporting accidents (factor of 200,000 HHT)	0.47	0.40	-13%
Frequency rate of mandatory communication work accidents (factor 1 MM HHT)	2.33	2.02	-13%
Accident severity rate (factor of 200,000 HHT)	37	67	82%
Accident severity rate (1MM HHT factor)	184	336	82%

¹Considers all csn group units in Brazil.

 

PEOPLE MANAGEMENT

 

Corporate University

 

CSN is considered a school by many of its employees. The Company's potential to create opportunities for professional and personal development is a visible foundation on every page of those who write our history. With this motivation and, in order to complement this journey, CSN incorporated in its educational trajectory the Corporate University, which began in September 2022, building innovative education solutions aligned with organizational competencies and culture.

 

CSN's Corporate University emerges to strengthen the principles, promoting a meeting between the legacy of success and a continuous and enriching learning process of the Company. The online platform has several contents and training, such as skills of the future, emotional intelligence, among other training straining that will contribute to the development and improvement of skills and competencies fundamental to the career of each professional.

 

 

Employment¹	Unit	9M21	9M22	Δ%
Women on staff	%	16.8	18.4	9%
Women in leadership positions	%	10.9	11.8	8%
People with disabilities	%	1.2	1.3	16%
Racial Diversity
•        Yellow	%	1.4	1.4	-
•        White	%	42.9	41.7	-3%
•        Indigenous	%	0.3	0.3	-
•        Black	%	14.7	14.8	1%
•        Brown	%	37.5	39.1	4%
•        Not informed	%	3.1	2.6	-16%
Turnover	%	11.6	14.7	27%

¹ The data do not consider employees "Non-CLT" and "Internship Program".

 

 

VALUE CHAIN

 

Sustainable Value Chain³	Unit	9M21	9M22	Δ%
Purchases from local suppliers	%	31.6	29	-8%
Local suppliers (Service)	%	51.6	50.1	-3%
Local suppliers (Materials)	%	27.1	23.3	-14%

³Considers CSN Group in Brazil.

 

SOCIAL RESPONSIBILITY

 

On September 21, and in celebration of Tree Day, CSN and the CSN Foundation initiated a week of activities through its Environmental Education Program (PEA). With the support of the Municipal Departments of Education and the Environment Secretariat (SME and SMMA) social and environmental activities were developed directed to the local community of Volta Redonda. A sustainable playground for early childhood education was inaugurated with the participation of students and teachers of the Municipal Center for Early Childhood Education Iracema Leite Nader.

 

In addition to the events planned for Education, the PEA also had its participation guaranteed in the Internal Week for The Prevention of Accidents at Work and Environment held at the Presidente Vargas Plant. Awareness related to Selective Waste Collection were performed. The end of the week included the planting of 70 native seedlings of Atlantic Forest in the UPV, carried out by employees of CSN, CBSI and the Municipal Environment Department.

 

The CSN Fundação materializes the SDDs in its programs and projects, with the involvement in the dissemination of knowledge about the 2030 Agenda

 

 

 

At the end of the third quarter of 2022, there was the graduation of the class of the first cycle of the Citizen Mentoring program. This program, developed by the CSN Foundation, aims to increase opportunities for professional development and contribute to the employability of young participants. As a result of this cycle, 84% of the beneficiaries of the program joined the Young Apprentice program of CSN.

 

	1Q22	2Q22	3Q22
Impacted young people¹	3,483	3,981	3,978
Public cultural initiatives	3,387	69,673	58,406

¹ Young people impacted by the projects Citizen Boy, Empower, Young Apprentice, Internship, Steel Drums and Football.

² Public present in the public presentations, carried out by the projects: Garoto Cidadão, Caminhão, Tambores de Aço, Centro Cultural e Histórias que Ficam.

 

Capital Markets

 

In the third quarter of 2022, CSN shares devalued 17.6%, while the Ibovespa rose 11.7%. The average daily value (CSNA3) negotiated at B3, in turn, was BRL 171.4 million. On the New York Stock Exchange (NYSE), the Company's American Depositary Receipts (ADRs) devaluation in the dollar of 18.8%, while the Dow Jones index fell 6.7%. The average daily trading with ADRs (SID) on the NYSE was $14.3 million.

 

3Q22
Number of shares in thousands	1,326,094
Market Value
Closing Quote (BRL/share)	12.72
Closing Quote (US$/ADR)	2.38
Market Value (BRL million)	16,868
Market Value (US$ million)	3,155
Change in period
CSNA3 (BRL)	-17.6%
SID (USD)	-18.8%
Ibovespa (BRL)	11.7%
Dow Jones (USD)	-6.7%
Volume
Daily average (thousand shares)	11,993
Daily average (BRL thousand)	171,432
Daily average (thousand ADRs)	5,182
Daily average (US$ thousand)	14,262
Source: Bloomberg

 

Result Conference Call:

 

Webcast Presentation of the 3Q22 Results Investor Relations Team

Conference call in Portuguese with Simultaneous Translation into English November 1st, 2022 11:30 am (Brasilia time) 10:30 am (New York Time) +55 11 3181-8565 / +55 11 4090-1621 Code: CSN Tel. Replay: +55 11 4118-5151 Replay code: 219011# Webcast: click here

Marcelo Cunha Ribeiro - CFO and IR EXECUTIVE DIRECTOR Pedro Gomes de Souza ([email protected]) Danilo Dias ([email protected]) Rafael Byrro ([email protected])

Some of the statements contained herein are future perspectives that express or imply expected results, performance or events. These perspectives include future results that may be influenced by historical results and statements made in 'Perspectives'. Current results, performance and events may differ significantly from hypotheses and perspectives and involve risks such as: general and economic conditions in Brazil and other countries; interest rate and exchange rate levels, protectionist measures in the U.S., Brazil and other countries, changes in laws and regulations, and general competitive factors (globally, regionally or nationally)

INCOME STATEMENT

CONSOLIDATED - Corporate Law - In Thousands of Reais

 

 

 

  

BALANCE SHEET

CONSOLIDATED - Corporate Law - In Thousands of Reais

CASH FLOW

CONSOLIDATED - Corporate Law - In Thousands of Reais

 

1.

DESCRIPTION OF BUSINESS

 

Companhia Siderúrgica Nacional “CSN”, also referred to as “Company”, is a publicly held company incorporated on April 9, 1941, under the laws of the Federative Republic of Brazil (Companhia Siderúrgica Nacional, its subsidiaries, joint ventures, joint operations and associates are collectively referred to herein as the "Group”). The Company’s registered office is located in São Paulo, SP, Brazil.

 

CSN is listed on the São Paulo Stock Exchange (B3 S.A.- Brasil, Bolsa, Balcão) and on the New York Stock Exchange (NYSE).

 

The Group's main operating activities are divided into five (5) segments as follows:

 

·

Steel:

 

The Company’s main industrial facility is the Presidente Vargas Steelworks (“UPV”), located in the city of Volta Redonda, State of Rio de Janeiro. This segment consolidates all operations related to the production, distribution and sale of flat steel, long steel, metallic containers, and galvanized steel. In addition to the facilities in Brazil, CSN has commercial operations in the United States and operations in Portugal and Germany to achieve markets and providing excellent services for final consumers. Its steel is used in home appliances, civil construction, package and automobile industries.

 

·

Mining:

 

The production of iron ore is developed in the cities of Congonhas, Ouro Preto and Belo Vale, State of Minas Gerais – by subsidiary CSN Mineração. The Company´s mining activities also include tin exploration in the state of Rondônia by CSN subsidiary Estanho de Rondônia S.A. ("ERSA"), to supply the needs of the UPV. The surplus of this raw material is sold to subsidiaries and third parties.

 

Iron ore is sold basically in the international market, especially in Europe and Asia. The prices charged in these markets are historically cyclical and subject to significant fluctuations over short periods of time, driven by several factors related to global demand, strategies adopted by the major steel producers, and the foreign exchange rate. All these factors are beyond the Company’s control. The ore is transported by rail to the Terminal de Carvão e Minérios from the Itaguai Port– (“TECAR”), a solid bulk terminal, one of the four terminals that comprise the Itaguai Port, located in the State of Rio de Janeiro and from TECAR to customers around the world. The Imports of coal and coke are also carried out through this terminal by provision of services by CSN Mineração to CSN.

 

All our mining dams are adequately suited to existing environmental legislation

 

·

Cements

 

CSN entered the cement production market in 2009, catapulted by the synergy between this activity and CSN's current business. Beside the UPV facilities, in Volta Redonda / RJ, the Company installed a business unit, which produces CP-III type cement using the slag produced by the UPV’s own blast furnaces. It also explores limestone and dolomite at the Arcos / MG unit, to meet the needs of the Steel and the cement plant. Additionally, in Arcos / MG, the clinker production operation is located.

 

On January 31, 2021, the Company concluded the drop down of the cement business and, accordingly, all assets and liabilities related to the cement business were transferred from CSN to its subsidiary recently incorporated CSN Cimentos S.A. (“CSN Cimentos”)

 

On August 31, 2021, the Company completed the acquisition of control of Elizabeth Cimentos S.A. ("Elizabeth Cimentos") and Elizabeth Mineração S.A. ("Elizabeth Mineração"), with operations in the Northeast region, especially in Paraíba and Pernambuco, under the terms of the Investment Agreement, Purchase and Sale of Quotas, Shares and Other Covenants entered into on June 29, 2021. With the closing of this transaction, CSN Cimentos now has a total capacity of 6 million tons per year.

 

On September 9, 2021, CSN Cimentos entered into the Agreement for the Sale and Purchase of the Shares in LafargeHolcim (Brasil) S.A., for the acquisition of 100% of the shares issued by LafargeHolcim (Brasil) S.A.

("LafargeHolcim"). On August 17, 2022, the transaction was approved by the Administrative Council for Economic Defense ("CADE"), and on September 6, 2022, the acquisition of all shares issued by LafargeHolcim S.A. was completed, changing LafargeHolcim's name to "CSN Cimentos Brasil S.A.", which is now controlled by CSN Cimentos, see explanatory note 10. c. The acquisition of the mentioned company will add a production capacity to CSN Cimentos of 10.3 million tons of cement per year ("MTPA") through cement plants strategically located in the Southeast, Northeast and Midwest regions, in addition to substantial reserves of high-quality limestone and concrete and aggregates units. Significant operational, logistical, management and commercial synergies are expected, with room for evolution in the product mix and expansion of the customer base. With the closing of this operation, CSN Cimentos now has a total capacity of 16.3 million tons per year.

 

·

Logistics:

 

Railroads:

 

CSN has interests in three railroad companies: MRS Logística S.A - (“MRS”)., which manages the former Southeast Railway System of Rede Ferroviária Federal S.A (“RFFSA”)., Transnordestina Logística S.A. (“TLSA”) and FTL - Ferrovia Transnordestina Logística S.A. (“FTL”), which holds the concession to operate the former Northeast Railway System of RFFSA, in the States of Maranhão, Piauí, Ceará, Rio Grande do Norte, Paraíba, Pernambuco, Alagoas - stretches from São Luís to Altos, Altos to Fortaleza, Fortaleza to Sousa, Sousa to Recife/Jorge Lins, Recife/Jorge Lins to Salgueiro, Jorge Lins to Propriá, Paula Cavalcante to Cabedelo, Itabaiana to Macau (Mesh I) and TLSA is responsible for the stretches from Eliseu Martins-Trindade, Trindade-Salgueiro, Salgueiro-Porto Suape, Salgueiro - Missão Velha and Missão Velha - Pecém (Mesh II), under construction.

 

Ports:

 

The Company operates in the State of Rio de Janeiro, by means of its subsidiary Sepetiba Tecon S.A., operates the Container Terminal (“TECON”) and by means of its subsidiary CSN Mineração, the TECAR, both located at the Itaguaí Port. Established in the harbor of Sepetiba, the mentioned port has a privileged highway, railroad, and maritime access.

 

TECON is responsible for the shipments of CSN´s steel products, movement and storage of containers, vehicles, general cargo, among other products; and TECAR performs the operational activities of loading and unloading of solid bulk ships, storage and distribution (road and rail) of coal, coke, zinc concentrate, sulfur, iron ore and other bulk, intended for the seaborne market, for our own operation and for third parties.

 

·

Energy:

 

Since the energy supply is fundamental in CSN´s production process, the Company owns and operates facilities to generate electric power for guaranteeing its self-sufficiency.

 

On June 30, 2022, the Company's subsidiaries, CSN Cimentos and CSN Energia S.A. ("CSN Energia"), completed the acquisition of Santa Ana Energética S.A. (“Santa Ana”), as well as Topázio Energética S.A. ("Topázio") and, indirectly, Brasil Central Energia Ltda. ("BCE"), a subsidiary of Topázio, under the terms of the Share Purchase Agreement entered into on April 8, 2022 with Brookfield Americas Infrastructure (Brazil Power) Fundo de Investimento em Participações Multiestratégia, a private equity fund managed by Brookfield Brasil Asset Management Investimentos Ltda, see note 10.c.

 

·

GOING CONCERN

 

The Management understands that the Company has adequate resources to continue its operations. Accordingly, the Company's interim financial statements for the period ended September 30, 2022, have been prepared on a going concern basis.

 

2.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

2.a)

Declaration of conformity

 

The consolidated and parent company interim financial statements have been prepared and are being presented in accordance with accounting practices adopted in Brazil based on the provisions of the Brazilian Corporate Law, pronouncements, guidelines and interpretations issued (CPC), approved by CVM, besides the own standards issued by the Brazilian Securities and Exchange Commission (“CVM”) and International Financial Reporting Standards

(“IFRS”) issued by the International Accounting Standard Board (IASB) and highlight all the relevant information at the interim financial statements, and only this information, which correspond to those used by the Company's management in its activities. The consolidated interim financial information is identified as "Consolidated" and the parent company's individual interim financial information is identified as "Parent Company"

 

2.b)

Basis of presentation

 

The interim financial statements were prepared based on the historical cost and were adjusted to reflect: (i) the fair value measurement of certain financial assets and liabilities (including derivative instruments), as well as pension plan assets; and (ii) impairment losses.

 

When IFRS and CPCs allows the option between cost or another measurement criterion, the cost of acquisition criterion was used.

 

The preparation of these interim financial statements requires Management to use certain accounting estimates, judgments and assumptions that affect the application of Accounting Polices and the amounts reported on the balance sheet date of assets, liabilities, income, and expenses may differ from actual future results. The assumptions used are based on history and other factors considered relevant and are reviewed by the Company’s management.

 

The interim financial information has been prepared and is being presented in accordance with CPC 21 (R1) - “Interim Financial Reporting” and IAS 34 - “Interim Financial Reporting”, consistently with the standards issued by the CVM.

 

This interim financial information does not include all requirements of annual or full financial statements and, accordingly, should be read in conjunction with the Company’s financial statements for the year ended December 31, 2021.

 

Therefore, in this interim financial information the following notes are not repeated, either due to redundancy or to the materiality in relation to those already presented in the annual financial statements:

 

Note 11 - Basis of consolidation and investments

Note 13 - Intangible assets

Note 19 - Income tax and social contribution

Note 20 - Installment taxes

Note 21 - Tax, social security, labor, civil, environmental provisions and judicial deposits

Note 31 - Employee benefits

Note 32 - Commitments

 

The accounting policies, when applicable and relevant, are included in the respective explanatory notes and are consistent with the previous presented period.

 

The consolidated financial statements were approved by Board of Directors on October 31, 2022.

 

2.c)

Functional currency and presentation currency

 

The accounting records included in the interim financial statements of each of the Company’s subsidiaries are measured using the currency of the principal of the economic environment in which each subsidiary operates (“the functional currency”). The consolidated and parent company interim financial statements are presented in BRL(reais), which is the Company’s functional and reporting currency.

 

Foreign currency transactions are translated into the functional currency using the exchange rates prevailing on the transaction or valuation dates, in which the items are remeasured. The balances of the asset and liability accounts are converted using the exchange rate on the balance sheet date. As of September 30, 2022, US$1.00 was equivalent to BRL5.4066 (BRL5.5805 on December 31, 2021) and €1.00 was equivalent to BRL5.2904 (BRL6.3210 on December 31, 2021), according to the rates obtained from Central Bank of Brazil website

 

2.d)

Statement of value added

 

Pursuant to Law 11,638/07, the presentation of the statement of added value is required for all publicly held companies. These statements were prepared in accordance with CPC 09 - Added Value Statement, approved by CVM Resolution

557/08. The IFRS does not require the presentation of this statement and for IFRS purposes is presented as additional information.

 

3.

BUSINESS COMBINATION

 

Acquisition of the control of Metalgráfica Iguaçu S.A.

 

On September 06, 2022, Metalúrgica Prada, a subsidiary of the Company, acquired 100.00% of Metalgráfica Iguaçu S.A. The assets acquired are located in Paraná and Goiás. The operation is a strategic step to expand the production capacity of the Company's packaging division, improving the competitiveness of the business and strengthening the national chain, especially regarding substitute packaging.

 

The transaction consists of a business combination whereby Prada acquired control through the merger of Metalgráfica shares and, in exchange for the merger of shares, Metalgráfica shareholders received shares issued by Prada in substitution for Metalgráfica shares, according to the exchange ratio to be approved at an extraordinary general meeting of the companies.

 

(i) Determination of the purchase price

 

In accordance with CPC 15 (R1) / IFRS3, the purchase price is determined by the sum of the assets transferred, liabilities incurred, equity interest issued, non-controlling interest and the fair value of any interest held prior to the transaction. The table below summarizes the price considered for accounting purposes:

 

Item		Comment		BRL thousand		Reference
Equity interests issued		The Prada issued new shares that were delivered to Metalgrafica's shareholders		263		(a)
Equity interests issued		The Metalgrafica issued new shares which were acquired by Prada		133,100		(b)
Purchase price considered for the business combination				133,363

 

a) Company Prada approved a capital increase in the amount of BRL263 with the issuance of 571,251 common shares, paid up with Metalgráfica shares. The shares were issued at the equity value according to the Appraisal Report.

 

The valuation of the fair value of Metalgráfica's shares, transferred to Prada in the business combination, was performed using the discounted cash flow method, with the issue of an Economic Value Report prepared by independent appraisers and its results are presented in the table below:

 

Equity value - Metalgráfica	date base 03/31/2022
Discounted Cash Flow	59,353
Discounted residual value	33,973
Enterprise value	93,326
Indebtdness net	(109,133)
Non-operating assets/liabilities	16,070
Equity value	263

 

(b) Metalgráfica's Board of Directors approved on September 06, 2022, the capital increase in the amount of BRL133,100 through the issue of 122,110,092 shares subscribed by Prada.

 

(ii) Goodwill on acquisition of control

 

In accordance with item 32 of CPC15 (R1)/IFRS3, the acquirer must recognize goodwill for expected future profitability on the acquisition date, measured by the amount by which the purchase price exceeds the fair value of the assets and liabilities acquired (purchase price allocation). The transaction generated goodwill for expected future profitability of BRL96,472, as shown in the table below:

 

Item		BRL million		Reference
Purchase price considered		133,363		(i)
Fair value of the assets and liabilities acquired		36,891		(iii)
Goodwill based on expectations for future profitability (note 12)		96,472

 

The goodwill for expected future profitability is recorded in intangible assets and, since it does not have a defined useful life, it is not amortized, in accordance with CPC 04 (R1)/IAS 38.

 

(iii) Fair value of assets and liabilities acquired

 

The following table shows the allocation of the fair value of assets acquired and liabilities assumed at August 31, 2022, considering the direct and indirect interests, calculated based on independent appraisers' reports.

 

(BRL'000)		Accounting Balances		Fair value adjustment		Total fair value
Current Assets		23,924				23,924
Cash and cash equivalents		569				569
Trade receivables		7,249				7,249
Inventories		4,435				4,435
Other assets		713				713
Recoverable taxes and contributions		10,958				10,958
Non-current Assets		58,408		120,227		178,635
Recoverable taxes and contributions		38,649				38,649
Other assets		1,856				1,856
Investments		10				10
Property, plant and equipment		17,750		120,227		137,977
Intangibles		143				143
Total assets acquired		82,332		120,227		202,559
Current Liabilities		134,464				134,464
Borrowings and financing		89,852				89,852
Trade payables		17,114				17,114
Labor obligations		17,339				17,339
Taxes payable		181				181
Advances from customers		1,158				1,158
Installments		2,227				2,227
Other accounts		6,593				6,593
Non-current Liabilities		31,204				31,204
Borrowings and financing		21,844				21,844
Installments		6,462				6,462
Other accounts		2,898				2,898
Total liabilities assumed		165,668				165,668
Net equity acquired		(83,336)		120,227		36,891

 

The fair value allocation resulted in a gain totaling BRL120,227, distributed among Metalgráfica's main assets The following table shows the composition of the allocated amounts and a summary of its calculation methodology.

 

Assets acquired		Valuation method		Carrying amounts		Fair value adjustment		Total fair value
Property, plant and equipment		The values of fixed assets were adjusted by the difference between the revalued value of fixed assets and their respective net book value, according to a technical evaluation carried out by an independent appraiser for the groups of assets represented by buildings, vehicles, furniture and fixtures. The useful lives follow the terms disclosed in note 11		17,750		120,227		137,977
				17,750		120,227		137,977

 

The subsidiary Prada has engaged an independent company to prepare an appraisal report on the tangible and intangible assets and allocation of the excess price paid. As provided for in item 45 of CPC 15 (R1) / IFRS 3, the Company has up to 12 months to adjust the measurement of the amounts due to events not considered.

 

4.

CASH AND CASH EQUIVALENTS

 

			Consolidated				Parent Company
	09/30/2022		12/31/2021		09/30/2022		12/31/2021
Cash and banks
In Brazil	65,773		68,638		37,262		58,951
Abroad	7,864,532		10,007,399		377,507		1,438,851
	7,930,305		10,076,037		414,769		1,497,802
Investments
In Brazil	6,324,948		6,493,832		2,349,575		2,387,463
Abroad	64,120		76,611
	6,389,068		6,570,443		2,349,575		2,387,463
	14,319,373		16,646,480		2,764,344		3,885,265

 

Our investments are basically in private and public securities with yields linked to the variation of Interbank Deposit Certificates (CDI) and repo operations backed by National Treasury Notes respectively. The Company invests part of the funds through exclusive investment funds which have been consolidated in these financial statements.

 

Our investments abroad are in private securities in top-rated banks and are remunerated at pre-fixed rates.

 

5.

FINANCIAL INVESTMENTS

 

								Consolidated		Parent Company
		Current				Non-current				Current				Non-current
		09/30/2022		12/31/2021		09/30/2022		12/31/2021		09/30/2022		12/31/2021		09/30/2022		12/31/2021
Investments (1)		188,638		261,673		16,181		15,148		50,387		43,398
Usiminas shares (2)		1,288,977		2,383,059						1,288,977		2,383,059
Bonds (3)						136,167		132,523						136,167		132,523
		1,477,615		2,644,732		152,348		147,671		1,339,364		2,426,457		136,167		132,523

(1)

These are restricted financial investments and linked to a Bank Deposit Certificate (CDB) to guarantee a letter of guarantee from financial institutions and financial investments in Public Securities (LFT - Letras Financeiras do Tesouro) managed by their exclusive funds.

(2)

Part of the shares guarantees a portion of the Company's debt.

(3)

Bonds with Fibra bank due in February 2028 (see note 21.a).

 

 

6.

TRADE RECEIVABLES

 

			Consolidated				Parent Company
	09/30/2022		12/31/2021		09/30/2022		12/31/2021
Trade receivables
Third parties
Domestic market	1,871,479		1,218,179		1,119,361		751,616
Foreign market	1,011,231		1,472,190		141,882		236,882
	2,882,710		2,690,369		1,261,243		988,498
Allowance for doubtful debts	(232,164)		(236,927)		(123,558)		(133,227)
	2,650,546		2,453,442		1,137,685		855,271
Related parties (note 21 a)	83,160		144,396		965,591		1,520,241
	2,733,706		2,597,838		2,103,276		2,375,512

 

The composition of the gross balance of accounts receivable from third party customers is shown as follows:

 

				Consolidated				Parent Company
		09/30/2022		12/31/2021		09/30/2022		12/31/2021
Current		2,254,823		2,255,200		1,064,689		803,910
Past-due up to 30 days		304,878		164,019		29,539		44,135
Past-due up to 180 days		122,724		67,822		55,822		16,024
Past-due over 180 days		200,285		203,328		111,193		124,429
		2,882,710		2,690,369		1,261,243		988,498

 

The changes in estimated credit losses are as follows:

				Consolidated				Parent Company
		09/30/2022		12/31/2021		09/30/2022		12/31/2021
Opening balance		(236,927)		(228,348)		(133,227)		(143,735)
(Loss)/Reversal estimated		2,419		1,755		1,445		3,277
Recovery and write-offs of receivables		11,357		6,287		8,224		3,683
Drop down of Cements (note 10.c)								3,548
Consolidation of Elizabeth				(16,621)
Consolidation of CSN Cimentos Brasil		(8,782)
Consolidation of Metalgrafica Iguaçu		(231)
Closing balance		(232,164)		(236,927)		(123,558)		(133,227)

 

7.

INVENTORIES

 

			Consolidated				Parent Company
	09/30/2022		12/31/2021		09/30/2022		12/31/2021
Finished goods	3,790,587		4,457,842		2,003,362		2,570,354
Work in progress	3,511,687		2,710,149		2,249,439		1,695,075
Raw materials	3,134,792		3,638,952		2,332,563		2,799,869
Storeroom supplies	1,047,869		770,296		419,658		364,872
Advances to suppliers	16,632		121,519		11,010		92,439
Provision for losses	(124,812)		(98,730)		(60,264)		(14,426)
	11,376,755		11,600,028		6,955,768		7,508,183
Classified:
Current	10,428,521		10,943,835		6,955,768		7,508,183
Non-current (1)	948,234		656,193
	11,376,755		11,600,028		6,955,768		7,508,183

1.

Long-term iron ore inventories that will be used after the construction of the processing plant, which will produce pellet feed.

 

The changes in estimated losses on inventories are as follows:

 

				Consolidated				Parent Company
		09/30/2022		12/31/2021		09/30/2022		12/31/2021
Opening balance		(98,730)		(109,038)		(14,426)		(35,832)
(Estimated losses) / Reversal of inventories with low turnover and obsolescence		(24,698)		10,308		(45,838)		17,101
Drop down of Cements (note 10.c)								4,305
Consolidation of CSN Cimentos Brasil		(1,384)
Closing balance		(124,812)		(98,730)		(60,264)		(14,426)

 

 

8.

RECOVERABLE TAXES

 

			Consolidated				Parent Company
	09/30/2022		12/31/2021		09/30/2022		12/31/2021
State Value-Added Tax	1,102,369		1,162,900		791,034		895,880
Brazilian federal contributions (1)	1,275,558		1,352,100		686,929		980,316
Other taxes	269,668		105,375		129,987		70,787
	2,647,595		2,620,375		1,607,950		1,946,983
Classified:
Current	1,365,088		1,655,349		737,137		1,255,697
Non-current	1,282,507		965,026		870,813		691,286
	2,647,595		2,620,375		1,607,950		1,946,983

 

The accumulated tax credits arise basically from ICMS, PIS and COFINS credits on purchases of raw materials and fixed assets used in production. The realization of these credits normally occurs through offset with debits of these taxes, generated by sales operations and other taxed expenses.

 

9.

OTHER CURRENT AND NON-CURRENT ASSETS

 

Other current and non-current assets are as follows:

							Consolidated								Parent Company
	Current				Non-current				Current				Non-current
	09/30/2022		12/31/2021		09/30/2022		12/31/2021		09/30/2022		12/31/2021		09/30/2022		12/31/2021
Judicial deposits (note 19)					460,691		339,805						239,138		222,481
Prepaid expenses	349,517		225,036		57,292		74,503		291,386		185,968		38,564		62,233
Prepaid expenses with sea freight	147,560
Actuarial asset (note 21 a)					59,111		59,111						47,350		47,350
Trading securities	11,969		12,028						11,850		11,935
Loans with related parties (note 21)	5,391		4,511		1,346,260		1,143,228		5,391		4,511		1,582,484		1,290,295
Other receivables from related parties (note 21 a)	1,858		1,828		1,357,089		927,077		60,045		47,296		1,583,909		1,151,903
Eletrobrás compulsory loan (1)					902,059		859,607						899,324		858,876
Dividends receivables (note 21 a)	61,924		76,878						150,989		486,506
Employee debts	51,801		43,542						29,199		25,531
Receivables by indemnity (2)					970,435		534,896						970,435		534,896
Other (3)	163,897		120,297		205,578		427,528		67,812		28,976		192,738		147,077
	793,917		484,120		5,358,515		4,365,755		616,672		790,723		5,553,942		4,315,111

 

1.

This is a certain and due amount, arising from the res judicata favorable decision to the Company, which is irreversible and irrevocable, to apply the STJ's consolidated position on the subject, which culminated in the conviction of Eletrobrás to the payment of the correct interest and monetary adjustment of the Compulsory Loan. The res judicata decision, as well as the certainty about the amounts involved in the liquidation of the sentence (judicial procedure to request the satisfaction of the right), allowed the conclusion that the entry of this value is certain. In addition to this amount already recorded, the Company continues to seek alternatives for the recovery of additional credits and the estimate can reach an amount greater than BRL350 million.

 

2.

This is a net, certain and enforceable amount, resulting from the final and unappealable decision of the Court in favor of the Company in 2020, due to losses and damages resulting from the sinking of the voltage in the supply of energy in the periods from January / 1991 to June / 2002. Additionally, in the 3rd quarter of 2022, the uncontroversial amount of BRL422,254 was recognized in the same account, as a refund of the amounts overpaid for railroad freight from April 1994 to March 1994 and March 1996 to the company RFFSA, and that after its extinction, the Federal Government became a defendant

 

3.

In 2022 in non-current assets was recognized the escrow account made by Companhia Florestal do Brasil with Banco Fibra, equivalent to BRL8,366, as part of the negotiations for the acquisition of Companhia Estadual de Geração de Energia Elétrica (CEEE-G). On December 31, 2021 to the deposit in an Escrow Account with Banco Santander, in the amount of US$50 million, equivalent to BRL279 million updated on December 31, 2021, as part of the negotiations for the acquisition of LafargeHolcim.

 

10.

BASIS OF CONSOLIDATION AND INVESTMENTS

 

The information related to the activities of jointly controlled subsidiaries, joint operations, associates and other investments did not change in relation to what was disclosed in the Company's financial statements as of December 31, 2021. Therefore, Management decided not to repeat them in the accounting information interim of September 30, 2022.

 

	Number of shares held by CSN in units	Equity interests (%)
Companies		09/30/2022		12/31/2021		Core business
Direct interest in subsidiaries: full consolidation
CSN Islands VII Corp.	20,001,000	100.00		100.00		Financial transactions
CSN Inova Ventures	50,000	100.00		100.00		Equity interests and Financial transactions
CSN Islands XII Corp.	1,540	100.00		100.00		Financial transactions
CSN Steel S.L.U.	22,042,688	100.00		100.00		Equity interests and Financial transactions
TdBB S.A (*)	-	100.00		100.00		Equity interests
Sepetiba Tecon S.A.	254,015,052	99.99		99.99		Port services
Minérios Nacional  S.A.	141,719,295	99.99		99.99		Mining and Equity interests
Companhia Florestal do Brasil (1)	87,159,346	99.99		99.99		Reforestation
Estanho de Rondônia S.A.	195,454,162	99.99		99.99		Tin Mining
Companhia Metalúrgica Prada (2)	555,713,606	99.90		99.99		Manufacture of containers and distribution of steel products
CSN Mineração S.A.	4,374,779,493	79.75		78.24		Mining
CSN Energia S.A.	43,149	99.99		99.99		Sale of electric power
FTL - Ferrovia Transnordestina Logística S.A. (3)	550,871,212	92.71		92.71		Railroad logistics
Nordeste Logística S.A.	99,999	99.99		99.99		Port services
CSN Inova Ltd.	10,000	100.00		100.00		Advisory and implementation of new development projec
CBSI - Companhia Brasileira de Serviços de Infraestrutura	4,669,986	99.99		99.99		Equity interests and product sales and iron ore
CSN Cimentos S.A.	601,839,891	99.99		99.99		Manufacturing and sale of cement
Berkeley Participações e Empreendimentos S.A.	1,000	100.00		100.00		Electric power generation and equity interests
CSN Inova Soluções S.A.	999	99.99		99.99		Equity interests
CSN Participações I	999	99.99		99.99		Equity interests
Circula Mais Serviços de Intermediação Comercial S.A.(4)	1	0.01		99.99		Commercial intermediation for the purchase and sale of assets and materials in general
CSN Participações III	999	99.99		99.99		Equity interests
CSN Participações IV	999	99.99		99.99		Equity interests
CSN Participações V	999	99.99		99.99		Equity interests
Indirect interest in subsidiaries: full consolidation
Lusosider Projectos Siderúrgicos S.A.		100.00		100.00		Equity interests and product sales
Lusosider Aços Planos, S. A.		99.99		99.99		Steel and Equity interests
CSN Resources S.A.		100.00		100.00		Financial transactions and Equity interests
Companhia Brasileira de Latas		99.99		99.99		Sale of cans and containers in general and Equity interests
Companhia de Embalagens Metálicas MMSA		99.99		99.99		Production and sale of cans and related activities
Companhia de Embalagens Metálicas - MTM		99.99		99.99		Production and sale of cans and related activities
CSN Steel Holdings 1, S.L.U. (5)				100.00		Financial transactions, product sales and Equity interests
CSN Productos Siderúrgicos S.L.		100.00		100.00		Financial transactions, product sales and Equity interests
Stalhwerk Thüringen GmbH		100.00		100.00		Production and sale of long steel and related activities
CSN Steel Sections Polska Sp.Z.o.o		100.00		100.00		Financial transactions, product sales and Equity interests
CSN Mining Holding, S.L.U.		79.75		78.24		Financial transactions, product sales and Equity interests
CSN Mining GmbH		79.75		78.24		Financial transactions, product sales and Equity interests
CSN Mining Asia Limited		79.75		78.24		Commercial representation
Lusosider Ibérica S.A.		100.00		100.00		Steel, commercial and industrial activities and equity interests
CSN Mining Portugal, Unipessoal Lda.		79.75		78.24		Commercial and representation of products
Companhia Siderúrgica Nacional, LLC		100.00		100.00		Import and distribution/resale of products
Elizabeth Cimentos S.A.		99.98		99.98		Manufacturing and sale of cement
Elizabeth Mineração Ltda (2)				99.96		Mining
Santa Ana Energética S.A.(3)		100.00				Electric power generation
Topázio Energética S.A. (3)		100.00				Electric power generation
Brasil Central Energia Ltda. (3)		100.00				Electric power generation
Circula Mais Serviços de Intermediação Comercial S.A.(4)		99.99				Commercial intermediation for the purchase and sale of assets and materials in general
CSN Cimentos Brasil S.A. (8)		99.99				Manufacturing and sale of cement
Metalgráfica Iguaçu S.A (2)		100.00				Metal packaging manufacturing
Direct interest in joint operations: proportionate consolidation
Itá Energética S.A.	253,606,846	48.75		48.75		Electric power generation
Consórcio da Usina Hidrelétrica de Igarapava		17.92		17.92		Electric power consortium
Direct interest in joint ventures: equity method
MRS Logística S.A. (4)	63,377,198	18.64		18.64		Railroad transportation
Aceros Del Orinoco S.A. (*)		31.82		31.82		Dormant company
Transnordestina Logística S.A. (5)	24,670,093	47.26		47.26		Railroad logistics
Equimac S.A (11)	2,123	50.00		50.00		Rental of commercial and industrial machinery and equipment
Indirect interest in joint ventures: equity method
MRS Logística S.A. (4)		14.58		14.58		Railroad transportation
Direct interest in associates: equity method
Arvedi Metalfer do Brasil S.A.	57,224,882	20.00		20.00		Metallurgy and Equity interests
Exclusive funds: full consolidation
Diplic II  - Private credit balanced mutual fund		100.00		100.00		Investment fund
Caixa Vértice - Private credit balanced mutual fund		100.00		100.00		Investment fund
VR1 - Private credit balanced mutual fund		100.00		100.00		Investment fund

(*) Dormant companies.

 

(1) On August 31, 2022, a capital increase in Companhia Florestal do Brasil in the total amount of BRL10,746 was approved, through the issuance of 15,988,065 new common shares, CSN now holds 87,159,346 common shares (in December 2021 it held 71,171,281 common shares);

 

(2) On September 6, 2022, an Extraordinary General Meeting held on the same date approved the merger of all shares issued by Metalúrgica Iguaçu S.A. ("Metalgráfica") by Companhia Metalúrgica Prada ("Prada"), as well as the increase of Prada's capital stock in the amount of BRL263, through the issuance of 571,251 new common shares, increasing the capital stock to BRL1,262,994, divided into 555,713,606 common shares (in December 2021 it held 555,142,354 common shares);

 

(3) On March 23, 2021, the Annual Meeting of the Board of Directors of FTL - Ferrovia Transnordestina Logística S.A. ("FTL") approved a capital increase in the amount of BRL10,860, through the issuance of 24,133,368 common shares. On August 11, 2022, an Ordinary Meeting of FTL's Board of Directors approved the rerratification of the capital stock as a result of the approval of the referred to increase, and FTL's capital stock became BRL502,961 divided into 550,871,212 common shares on September 30, 2022 (in December 2021 it held 510,726,198 common shares);

 

(4) On March 10, 2022, the change in the company's name from "CSN Participações II S.A." to "Circula Mais Serviços de Intermediação Comercial S.A."; the change in the corporate purpose from "equity investments" to "commercial intermediation for the purchase and sale of assets and materials in general" was approved at the Meeting. On the same date, as a result of share transfers, 99.99% of the shares became held by CSN Inova Soluções S.A. and 0.01% of the shares became held by the Company.

 

(5) CSN Steel Holdings 1, S.L.U. was incorporated by CSN Productos Siderúrgicos S.L

 

(6) On April 30, 2022, Elizabeth Mineração was merged into CSN Cimentos, so that, with the merger of the company and its respective extinction, CSN Cimentos became the legal successor by incorporation of the company, universally and for all legal purposes, with all its rights and obligations.

 

(7) On June 30, 2022, the Company's subsidiaries CSN Cimentos and CSN Energia acquired 100% of the shares of Santa Ana Energética S.A. and Topázio Energética S.A., which, in turn, holds 100% of the shares of Brasil Central Energia Ltda;

 

(8) On September 6, 2022, CSN Cimentos acquired 100% of LafargeHolcim’s Brasil S.A. shares and on the same date an Extraordinary General Meeting approved the name change, which was renamed CSN Cimentos Brasil S.A;

 

(9) On September 30, 2022, and December 31, 2021, the Company directly held 63,377,198 shares, of which 26,611,282 were common shares and 36,765,916 preferred shares, and its direct subsidiary CSN Mineração S.A. held 63,338,872 shares, of which 25,802,872 were common shares and 37,536,000 preferred shares, in MRS Logística S.A.

 

(10) On September 30, 2022, and December 31, 2021, the Company held 24,670,093, being 24,168,304 common shares and 501,789 Class B preferred shares, of the company Transnordestina Logística S.A.

 

(11) On May 9, 2022, a capital increase was approved for Equimac S.A. in the total amount of BRL10,158, through the issuance of 1,456 new shares, and CSN now holds 2,123 common shares (in December 2021 it held 1,395 common shares).

 

 

 

10.a)Investments

in joint ventures, joint operations, associates and other investments

 

The number of shares, the balances of assets and liabilities, shareholders’ equity and the profit / (loss) amounts for the period in those investees are as follows:

 

								09/30/2022						12/31/2021		09/30/2021
Companies		Participation in								Participation in
		Assets		Liabilities		Shareholders’ equity		Profit /(Loss) for the period		Assets		Liabilities		Shareholders’ equity		Profit /(Loss) for the period
Investments under the equity method
Subsidiaries
CSN Islands VII Corp.		518,179		3,253,548		(2,735,369)		21,105		533,108		3,289,583		(2,756,475)		(170,048)
CSN Inova Ventures		7,494,899		9,189,805		(1,694,906)		(370,320)		9,121,133		10,445,718		(1,324,585)		(445,293)
CSN Islands XII Corp.		769,122		4,181,286		(3,412,164)		(93,352)		2,569,183		5,887,995		(3,318,812)		(458,735)
CSN Steel S.L.U.		4,997,419		24,015		4,973,404		537,771		5,517,653		367,372		5,150,281		310,691
Sepetiba Tecon S.A.		821,844		523,814		298,030		(14,965)		812,701		499,706		312,995		6,625
Minérios NacionalS.A.		529,431		224,151		305,280		9,196		501,969		205,885		296,084		225,978
Valor Justo - Minérios Nacional						2,123,507								2,123,507
Estanho de Rondônia S.A.		159,564		225,155		(65,591)		(14,072)		125,066		176,554		(51,488)		(12,609)
Companhia Metalúrgica Prada		1,049,688		825,186		224,502		(41,573)		893,439		627,628		265,811		108,229
CSN Mineração S.A.		26,503,672		16,001,549		10,502,123		1,643,216		26,989,379		16,036,647		10,952,732		4,481,971
CSN Energia S.A.		102,671		35,790		66,881		(24,882)		133,967		42,204		91,763		10,274
FTL - Ferrovia Transnordestina Logística S.A.		530,844		360,927		169,918		(27,554)		489,628		292,156		197,472		(18,059)
Companhia Florestal do Brasil		59,521		3,907		55,614		(4,377)		51,308		2,063		49,245		(2,516)
Nordeste Logística		60		62		(2)		(1)		64		65		(1)		(4)
CBSI - Companhia Brasileira de Serviços de Infraestrutura		170,413		146,144		24,269		(859)		135,544		110,416		25,128		10,080
Goodwill - CBSI - Companhia Brasileira de Serviços de Infraestrutura						15,225								15,225
CSN Cimentos		10,463,631		3,914,653		6,548,978		190,285		4,676,213		617,457		4,058,756		150,805
CSN Participações I S.A.		1				1
Circula Mais Serv. de Interm. Comercial S/A		66		9		57		56
CSN Participações III S.A.		1				1
CSN Participações IV S.A.		1				1
CSN Participações V S.A.		1				1
CSN INOVA Soluções S.A		70		112		(42)		(42)
		54,171,098		38,910,113		17,399,718		1,809,632		52,550,355		38,601,449		16,087,638		4,197,389
Joint-venture and Joint-operation
Itá Energética S.A.		213,832		23,742		190,090		3,539		214,524		27,578		186,946		19,570
MRS Logística S.A.		2,714,242		1,693,769		1,020,474		116,897		2,524,062		1,620,565		903,497		118,054
Transnordestina Logística S.A.		5,181,952		4,091,051		1,090,901		(23,333)		4,885,994		3,771,760		1,114,234		(38,980)
Fair Value (*) - Transnordestina						271,116								271,116
Equimac S.A		31,588		14,452		17,136		2,590		20,155		11,727		8,428		168
		8,141,614		5,823,014		2,589,717		99,693		7,644,735		5,431,630		2,484,221		98,812
Associates
Arvedi Metalfer do Brasil		45,961		21,415		24,546		3,466		46,739		25,198		21,541		2,966
		45,961		21,415		24,546		3,466		46,739		25,198		21,541		2,966
Classified at fair value through profit or loss (note 14)
Panatlântica						162,343								190,321
						162,343								190,321
Other investments
Profits on subsidiaries' inventories						(96,443)		203,852						(300,295)		(213,197)
Investment Property						140,743								142,578
Others						63,536		460						63,545		8,112
						107,836		204,312						(94,172)		(205,085)
Total investments						20,284,160		2,117,103						18,689,549		4,094,082
Classification of investments in the balance sheet
Investments in assets						28,051,447								25,998,331
Investments with negative equity						(7,908,030)								(7,451,360)
						20,143,417								18,546,971
Investment Property						140,743								142,578
						20,284,160								18,689,549

(*) As of September 30, 2022, and December 31, 2021, the net balance of BRL271,116 refers to the Fair Value generated by the loss of control of Transnordestina Logística SA in the amount of BRL659,105 and impairment of BRL387,989.

 

10.b)

Changes in investments in subsidiaries, jointly controlled companies, joint operations, associates, and other investments

 

			Consolidated				Parent Company
	09/30/2022		12/31/2021		09/30/2022		12/31/2021
Opening balance of investments (assets)	3,849,647		3,535,906		25,998,331		19,401,494
Opening balance of loss provisions (liabilities)					(7,451,360)		(5,942,863)
Total net of investments/uncovered liabilities	3,849,647		3,535,906		18,546,971		13,458,631
Capital increase and (Decrease)/acquisition of shares (1)	1,484,362		58,178		2,316,088		3,894,624
Dividends (2)	(26)		(61,898)		(2,010,348)		(3,162,117)
Comprehensive income (3)	216		453		(798,420)		(519,638)
Update of shares measured at fair value through profit or loss (Note 14.d)	(27,977)		109,254		(27,977)		109,254
Sales of equity interest (note 10.c) (4)							(692,115)
Net gain due to increased capital and issued new shares in n investments (note 10.c) (5)							822,093
Equity in results of affiliated companies (6)	213,433		219,508		2,117,103		4,629,144
Amortization of fair value - investment MRS	(8,810)		(11,747)
Others	3,330		(7)				7,095
Total net of investments/uncovered liabilities	5,514,175		3,849,647		20,143,417		18,546,971
Closing balance of investments (assets)	5,514,175		3,849,647		28,051,447		25,998,331
Balance of provision for investments with negative equity (liabilities)					(7,908,030)		(7,451,360)

 

(1) Consolidated: Acquisition of shares in June 2022 of the companies Topázio Energética S.A., Santa Ana Energética S.A. and indirect acquisition of Brasil Central Energia Ltda., see note 10.c. In September 2022, shares in CSN Cimentos Brasil S.A. (formerly LafargeHolcim Brasil) and Metalgráfica Iguaçu S.A. were acquired, also described in note 10.c. In 2022, an investment was made in Alinea Health Holdings Ltda. In 2021, through CSN Inova Ventures, strategic investments were made in startups, as follows: 2D Materials, H2Pro Ltda., 1S1 Energy, Traive INC., OICO Holdings and Clarke Software, with a total amount invested of US$ 4,950, corresponding to BRL27,040.

 

Parent Company: In 2022, the amount refers mainly to the capital increase in CSN Cimentos, totaling BRL2,300,000. In 2021, it refers mainly to the capital increase in the subsidiary CSN Cimentos, in the amount of BRL2,956,094, resulting from the payment by CSN of net assets and liabilities (as described below, note 10.c). In 2021, refers mainly to the capital increase in the subsidiary CSN Cimentos, in the amount of BRL2,956,094, resulting from the payment by CSN of net acquis composed of certain assets and liabilities (as described below, note 10.c).

 

(2) Parent Company: refers mainly to dividends distributed by CSN Mineração, totaling BRL2,984,155 and BRL2,009,940.

 

(3) Refers to the conversion into presentation currency of investments abroad whose functional currency is not the Real, actuarial gain/(loss) and reflection and hedge of investments reflecting investments accounted for under the equity method.

 

(4) In 2021, refers to the disposal of part of the equity interest of the company CSN Mineração at the cost of disposal of shares (see note 10.c).

 

(5) In 2021, refers to gain on the change in the percentage of ownership interest in the subsidiary CSN Mineração, after the issue of shares.

 

(6) The reconciliation of equity in earnings of companies with shared control classified as joint ventures and associates and the amount presented in the income statement is presented below and results from the elimination of the results of CSN's transactions with these companies:

 

			Consolidated
	09/30/2022		09/30/2021
Equity in results of affiliated companies
MRS Logística S.A.	233,735		236,048
Transnordestina Logística S.A.	(23,333)		(38,980)
Arvedi Metalfer do Brasil S.A.	3,466		2,966
Equimac S.A.	2,590		168
Others	(3,025)		2,089
	213,433		202,291
Eliminations
To cost of sales	(56,965)		(54,466)
To taxes	19,368		18,518
Others
Amortizated at fair value - Investment in MRS	(8,810)		(8,810)
Others			6,022
Equity in results	167,026		163,555

 

10.c)

Main events occurred in the subsidiaries in 2021 e 2022

 

·      CSN MINERAÇÃO

 

IPO of CSN MINERAÇÃO

 

Headquartered in Congonhas, in the State of Minas Gerais, CSN Mineração SA has as its main objective the production, purchase and sale of iron ore, and has the commercialization of products in the foreign market as its focal point. As of November 30, 2015, CSN Mineração SA started to centralize CSN’s mining operations, including the establishments of the Casa de Pedra mine, the TECAR port and an 18.63% stake in MRS. CSN Mineração publicly held corporation and its shares are listed on the São Paulo Stock Exchange, B3 - Brasil, Bolsa, Balcão.

 

The interest held by CSN in this subsidiary is 79.75% at September 30, 2022 and 78.24% at December 31, 2021.

 

Below as the main transactions occurred in the subsidiary is 2021:

 

a)

Initial Public Offering (IPO)

 

On February 17, 2021, the subsidiary CSN Mineração concluded its initial public offering at B3 – Brasil, Bolsa, Balcão. The final prospectus of the public offering consisted of: (i) primary distribution of 161,189,078 shares (“Primary Offering”); and (ii) secondary distribution of 422,961,066 shares, being initially 372,749,743 shares (“Secondary Offering”), increased by 50,211,323 supplementary shares held by CSN (“Supplementary Shares”).

 

The price per share was fixed at BRL8.50 after the collection of intention of investments collected from institutional buyers in Brasil and abroad.

 

Upon conclusion of the offering, the Company’s interest in the subsidiary CSN Mineração changed from 87.52% to 78.24%.

 

i.

Primary Distribution of Shares

 

Upon the primary distribution, CSN Mineração issued 161,189,078 shares (“Primary Offering”) and capitalized the total amount of BRL1,370,107 (BRL1,347,862 net of transaction costs).

 

The issuance of 161,189,078 shares diluted the Company’s interest in the capital of CSN Mineração and, accordingly, the Company recognized in other comprehensive income a gain from the change of ownership percentage.

 

The impact of the transaction is presented below:

 

Gain on participation in the capital increase	1,060,530
Loss due to dilution of participation with issue of new shares	(231,044)
Equity adjustment by dilution of share percentage	(7,393)
Net gain from the transaction	822,093

 

ii.

Secondary Distribution of Shares

 

Upon the secondary distribution of shares, the Companhia Siderúrgica Nacional sold 327,593,584 common shares of CSN Mineração and, additionally, in March 2021 sold supplementary 50,211,323 common shares, totaling 377,804,907 or 9.3% of shares previously held, in the total amount of BRL3,211,342 (BRL3,164,612 net of transaction costs). The gain for the sale was recognized as Other Operating Income.

 

The main impacts of the transaction are presented as follows:

 

Equity in the transaction		9,947,525
Number of share before initial public offering		5,430,057,060
Cost per share		R$ 1.83
Number of shares sold by CSN		377,804,907
Price per share		R$ 8.50
(+) Net cash generated in the transaction		3,211,342
(-) Transaction cost		(46,730)
(=) net cash reveivable (a)		3,164,612
(-) Cost of shares(b)		(692,115)
(=) Net gain from the transaction (a)+(b)		2,472,497

b)

Shares repurchase programs of subsidiary CSN Mineração

 

On March 24, 2021, November 3, 2021, and May 18,2022, the Board of Directors of CSN Mineração approved the Share Repurchase Plans, to remain in treasury and subsequent disposal or cancellation, pursuant to CVM Instruction 567/2015, described below.

 

On May 18, 2022, the cancellation of 105,907,300 nominative common shares without a nominal value, repurchased and held in treasury, was approved at a Board of Directors' Meeting. On September 30, 2022 the subsidiary CSN Mineração had no treasury shares.

 

Program

Board’s Authorization

Authorized quantity

Program period

Average buyback price

Minimum and maximum buyback price

Number bought back

Share cancelation

Treasury balance

1º

03/24/2021

58,415,015

from 3/25/2021 to 9/24/2021

R$6.1451

R$5.5825 and R$6.7176

52,940,500

52,940,500

2º

11/03/2021

53,000,000

from 11/04/2021 to 9/24/2022

R$6.1644

R$5.0392 and R$6.1208

52,466,800

105,907,300

05/18/2022

Not applicable

Not applicable

105,907,300

3º

05/18/2022

106,000,000

from 05/19/2022 to 5/18/2023

105,407,300

105,907,300

 

·      Events in CSN Cimentos S.A

 

The acquirer CSN Cimentos S.A. has engaged an independent company to prepare an appraisal report of the tangible and intangible assets and allocation of the excess price paid of the acquisitions below to be completed in the fourth quarter of 2022. As provided for in item 45 of CPC 15 (R1) / IFRS 3, the Company has up to 12 months to adjust the measurement of the amounts due to events not considered.

 

Acquisition of Santa Ana Energética and Topázio Energética

 

On June 30, 2022, the Company's subsidiaries CSN Cimentos and CSN Energia acquired 100% of the shares of Santa Ana Energética S.A. ("Santa Ana"), and of Topázio Energética S.A. ("Topázio"), which, in turn, holds 100% of the shares of Brasil Central Energia Ltda. ("BCE"), a subsidiary of Topázio, which holds the concession to operate the Sacre II Small Hydroelectric Power Plant ("PCH Sacre" and, together with PCH Santa Ana, the "PCHs"), provided for in the Agreement for the Purchase and Sale of Shares and Other Covenants entered into on April 8, 2022.

 

The transaction value included a payment by CSN Cimentos on June 30, 2022, in the amount of BRL466,153, initially classified under the investment account and which will be used as a starting point for the purchase price identification process.

 

Acquisition of CSN Cimentos Brasil S.A. (formerly LafargeHolcim Brasil)

 

On September 9, 2021, CSN Cimentos entered into the Agreement for the Sale and Purchase of the Shares in LafargeHolcim (Brasil) S.A., to acquire 100% of the shares issued by LafargeHolcim (Brasil) S.A. ("LafargeHolcim "), with the Company as guarantor of its obligations. The deal was valued at a base value of US$1.025 billion, subject to price adjustment and the amount withheld in an Escrow Account, in addition to the other terms and conditions provided for in the respective agreement, including approval by CADE. On the same date, the Company deposited in an Escrow Account with Banco Santander the amount of US$50 million as part of the negotiations of this operation.

 

On August 17, 2022 the operation was approved by CADE and on September 6, 2022 the acquisition of 100% (one hundred percent) of the shares issued by LafargeHolcim was concluded. Upon completion of the transaction, LafargeHolcim Brasil, which was renamed "CSN Cimentos Brasil S.A.", became a subsidiary of CSN Cimentos.

 

The amount of the transaction was BRL5,014,543 concluded on September 6, 2022, initially classified under the investment caption.

 

Drop down - Cement

 

The cement activities had been carried out as a business unit of CSN and, recently, the Company chose to segregate these activities to its subsidiary CSN Cimentos. This segregation was approved at an Extraordinary General Meeting of CSN Cimentos, held on January 31, 2021, which, among other matters, approved a capital increase in CSN Cimentos in the amount of BRL2,956,094, with the issuance of 2,956,094,491 new common shares, which were fully subscribed and paid up on the same date by the Company, upon checking of the net assets, liabilities, goods, rights and obligations related to CSN's cement segment, as described in detail in the Appraisal Report, also approved at the aforementioned meeting

 

Find below the breakdown of the net assets contributed:

 

		12/31/2020		01/31/2021
Assets		Appraisal reports		Close balance
Trade receivables		37,171		54,684
Inventories		134,309		164,460
Other assets		29,186		30,228
Property, plant and equipment		3,151,349		3,129,161
Intangíible assets		8,086		8,086
Liabilities
Trade payables		(253,186)		(278,538)
Other payables current		(42,074)		(34,301)
Lease liabilities		(42,257)		(24,430)
Other provisions		(66,490)		(64,125)
Net assets		2,956,094		2,985,225

 

Acquisition of control of the companies Elizabeth Cimentos and Elizabeth Mineração.

 

On August 31, 2021, CSN Cimentos acquired 99.97% of the total capital stock of Elizabeth Mineração and 99.99% of the shares of Elizabeth Cimentos, with 88.746% of direct equity interest and 11.254% of indirect equity interest (through Elizabeth Mineração). The assets acquired are located in the northeast region of Brazil. Upon completion of the transaction, CSN Cimentos expects relevant operational, logistical, management and commercial synergies, a better product mix and expansion of its customer’s base.

 

 

 

a)

Determination of the purchase price

 

In accordance with CPC15 (R1) / IFRS3, the purchase price is determined by the sum of the assets acquired, liabilities assumed, equity interests issued, non-controlling interest and the fair value of any interest held prior to the transaction. The table below summarizes the price considered for accounting purposes:

 

Item		Comment		Elizabeth Cimentos		Elizabeth Mineração		Reference
Assets transferred		A payment in the amount of R$201 milion is being carried out in the transaction.		77,768		123,947		(i)
Assets transferred		Refers to financial adjustment of working capital and debt.		(3,914)		(5,116)		(i)
Equity interests issued		Shares issued by Elizabeth Cimentos and acquired by CSN Cimentos.		526,037				(ii)
Purchase price considered for the business combination				599,891		118,831

 

(i) The transaction included payments by CSN Cimentos of BRL77,768 and BRL123,947 on August 31, 2021, for each Elizabeth entity, and an adjustment receivable in the amount of BRL3,914 and BRL5,1116 in December 2021 related to working capital adjustment provided for in the sale agreement.

 

(ii) In August 2021 the Elizabeth Cimentos performed a primary issuance of 2,382,758,512 new common shares, nominatives and without nominal value, which were fully acquired by CSN Cimentos.

 

b)

Goodwill on acquisition of control of Elizabeth Cimentos and Elizabeth Mineração

 

In accordance with item 32 of CPC15(R1) / IFRS3, the acquirer must recognize goodwill based on expected future profitability on the acquisition date, measured by the amount the purchase price exceeds the fair value of the assets acquired and liabilities assumed (purchase price allocation). The acquisition of Elizabeth Cimentos generated goodwill for expected future profitability of BRL83,266, as shown in the table below.

 

Item		Reference		Elizabeth Cimentos		Elizabeth Mineração
Purchase price considered		item (i) and (ii)		599,891		118,831
Fair value of the assets and liabilities acquired				516,625		118,831
Goodwill for future profitability expected				83,266		-

 

The goodwill for expected future earnings is recorded under intangible assets and, since it does not have a determinable useful life, it is not amortized in accordance with CPC04(R1)/IAS38.

 

In the acquisition of Elizabeth Mineração, the price paid was fully allocated to the assets acquired, with no goodwill for future profitability generated.

 

(i)

Fair value of assets acquired and liabilities assumed

 

The following table shows the fair value allocation of the assets acquired and liabilities assumed on August 31, 2021, considering the direct and indirect interests, calculated based on independent appraisers' reports.

 

		Elizabeth Cimentos						Elizabeth Mineração
		Carrying amounts		Fair value adjustments		Total fair value		Carrying amounts		Fair value adjustments		Total fair value
Cash and cash equivalents		52,571				52,571		2,197				2,197
Trade receivables		27,571				27,571		1,027				1,027
Receivables from related parties		96,374				96,374		9,035				9,035
Inventories		44,157				44,157		1,017				1,017
Recoverable taxes		18,616				18,616		931				931
Short-term investments		14,689				14,689
Other assets		17,733				17,733		673				673
Investment								40,653		24,845		65,498
Property, plant and equipment		373,574		161,367		534,941		15,092		77,089		92,181
Intangíible assets		798		59,456		60,254		500		269,385		269,885
Total assets acquired		646,083		220,823		866,906		71,125		371,319		442,444
Borrowings and financing		198,778				198,778		182,402				182,402
Trade payables		22,735				22,735		446				446
Taxes payable		19,202				19,202		37,158				37,158
Debits with related parties								96,350				96,350
Other payables		44,052				44,052		7,257				7,257
Total liabilities assumed		284,767				284,767		323,613				323,613
Net equity acquired		361,316		220,823		582,139		(252,488)		371,319		118,831
Indirect investiment		(40,663)		(24,851)		(65,514)
Net equity acquired		320,653		195,972		516,625		(252,488)		371,319		118,831

 

The fair value allocation resulted in a total gain of BRL567,297, distributed among Elizabeth Cimentos and Elizabeth Mineração's main assets. The following table shows the composition of the allocated amounts and a summary of its measurement methodology.

 

 

Assets acquired		Valuation method		Carrying amounts		Fair value adjustment		Total fair value
Property, plant and equipment		Valued using the "MARKET APPROACH" method, where the fair value of the asset is estimated by comparing it with similar or comparable assets that have been sold or listed for sale in the primary or secondary market.		388,666		238,456		627,122
Mining rights		Evaluated by the MPEEM method that measures the present value of future income to be generated during the remaining useful life of a given asset. Using the analysis of the company's projected results as a reference, the pre-tax cash flows directly attributable to the asset are calculated, as of the base date stipulated in the evaluation.		500		269,385		269,885
Licenses		Valued using the WITH / WITHOUT method, which estimates the intangible value by the difference between discounted cash flow models with and without the asset.		798		59,456		60,254
				389,964		567,297		957,261

 

The subsidiary CSN Cimentos has hired an independent appraiser to prepare an appraisal report of the tangible and intangible assets and allocation of the excess price paid. As provided for in item 45 of CPC15(R1) / IFRS3, the Company has up to 12 months to adjust the measurement of amounts, due to unknown events at the acquisition date. After the conclusion of the appraisal report, the Company reclassified the amount of BRL27,667 from goodwill for future profitability to goodwill allocated to licenses and mining rights.

 

10.d)Joint

ventures and joint operations financial information

 

The balance sheet and income statement balances of the companies whose control is shared are shown below and refer to 100% of the companies’ results:

 

								09/30/2022								12/31/2021
		Joint-Venture						Joint-Operation		Joint-Venture						Joint-Operation
Equity interest (%)		MRS Logística		Transnordestina Logística		Equimac S.A.		Itá Energética		MRS Logística		Transnordestina Logística		Equimac S.A.		Itá Energética
		37.27%		47.26%		50.00%		48.75%		37.27%		47.26%		50.00%		48.75%
Balance sheet
Current Assets
Cash and cash equivalents		1,468,493		1,798		11,946		64,024		1,836,612		1,259		2,077		42,500
Advances to suppliers		30,866		2,165		1,201		1,255		44,011		11,486		407		1,254
Other current assets		1,106,270		64,559		10,598		21,888		1,065,913		55,334		8,862		18,453
Total current assets		2,605,629		68,522		23,745		87,167		2,946,536		68,079		11,346		62,207
Non-current Assets
Other non-current assets		892,719		108,365		1,587		19,461		980,861		124,776				19,578
Investments, PP&E and intangible assets		11,063,507		10,787,609		37,844		332,002		9,614,144		10,145,422		28,964		358,265
Total non-current assets		11,956,226		10,895,974		39,431		351,463		10,595,005		10,270,198		28,964		377,843
Total Assets		14,561,855		10,964,496		63,176		438,630		13,541,541		10,338,277		40,310		440,050
Current Liabilities
Borrowings and financing		887,853		126,226		6,818				767,992		228,769		4,041
Lease liabilities		454,470				724				383,323
Other current liabilities		1,354,088		151,679		5,145		29,860		1,513,799		157,946		4,063		40,473
Total current liabilities		2,696,411		277,905		12,687		29,860		2,665,114		386,715		8,104		40,473
Non-current Liabilities
Borrowings and financing		3,606,068		7,021,144		14,402				3,551,278		6,665,700		15,351
Lease liabilities		2,048,539				463				1,718,366
Other non-current liabilities		736,016		1,357,208		1,352		18,842		759,538		928,254				16,098
Total non-current liabilities		6,390,623		8,378,352		16,217		18,842		6,029,182		7,593,954		15,351		16,098
Shareholders’ equity		5,474,821		2,308,239		34,272		389,928		4,847,245		2,357,608		16,855		383,479
Total liabilities and shareholders’ equity		14,561,855		10,964,496		63,176		438,630		13,541,541		10,338,277		40,310		440,050

 

		01/01/2022 a 09/30/2022								01/01/2021 a 09/30/2021
		Joint-Venture						Joint-Operation				Joint-Venture				Joint-Operation
Equity interest (%)		MRS Logística		Transnordestina Logística		Equimac S.A.		Itá Energética		MRS Logística		Transnordestina Logística		Equimac S.A.		Itá Energética
		37.27%		47.26%		50.00%		48.75%		33.22%		47.26%		50.00%		48.75%
Statements of Income
Net revenue		4,118,869		309		28,351		140,165		3,355,759		138		7,600		172,000
Cost of sales and services		(2,585,717)				(17,480)		(73,053)		(2,129,256)				(6,096)		(60,167)
Gross profit		1,533,152		309		10,871		67,112		1,226,503		138		1,504		111,833
Operating (expenses) income		(182,821)		(30,798)		(2,535)		(56,903)		(58,259)		(67,612)		(1,238)		(50,905)
Financial income (expenses), net		(489,263)		(18,881)		(2,256)		1,162		(209,883)		(15,003)		2		(10)
Income before income tax and social contribution		861,068		(49,370)		6,080		11,371		958,361		(82,477)		268		60,918
Current and deferred income tax and social contribution		(233,918)				(900)		(4,111)		(325,005)						(20,774)
Profit / (loss) for the period		627,150		(49,370)		5,180		7,260		633,356		(82,477)		268		40,144

 

 

10.e)

TRANSNORDESTINA LOGÍSTICA SA (“TLSA”)

 

It is in the pre-operational phase and should remain so until the completion of Mesh II. The approved schedule, which provided for the completion of the work for January 2017, is currently under discussion with the responsible bodies. Its Management understands that new deadlines for the completion of the project will not substantially negatively imply the expected return on investment.

 

Management relies on resources from its shareholders and third parties to complete the work, which it expects to be available, based on previously concluded agreements and recent discussions between the parties involved. After evaluating this matter, Management concluded that the use of the project’s business continuity accounting basis in the preparation of the interim financial statements was considered appropriate.

 

10.f)Intention

and/or acquire companies

 

- Acquisition of Companhia Estadual e Geração de Energia Elétrica ("CEEE-G")

 

On July 29, 2022, the Company, through its subsidiary Companhia Florestal do Brasil S.A., was the winner of the auction bidding procedure carried out in the form of Edital no. 01/2022, ("Edital") and promoted by the Government of the State of Rio Grande do Sul in the context of the CEEE-G privatization process, for the acquisition of shares representing 66.23% of the capital stock of CEEE-G, for the amount of BRL928,000. On October 21, 2022, the subsidiary Companhia Florestal do Brasil concluded the acquisition of shares representing 66.23% of the CEEE-g’s capital, for BRL928,000.

 

- Acquisition of Companhia Energética Chapecó - CEC

 

On July 25, 2022, the Company and its subsidiary CSN Mineração entered into a Private Instrument of Assignment of Rights and Obligations. Through this Assignment Instrument, in order to support and strengthen the strategy to expand the mining business, CSN assigned and transferred to CSN Mineração the rights and obligations arising from the Share Purchase and Sale Agreement ("Purchase and Sale Agreement") signed on July 1, 2022 between CSN, together with CSN Energia, Astra Infraestrutura I Fundo de Investimento em Participação Multiestratégia and BMPI Infra S. A. A. In this Purchase and Sale Agreement, CSN Energia and CSN committed to acquire 100% of the shares of Companhia Energética Chapecó - CEC, holder of the concession for the Usina Hidrelétrica Quebra-Queixo, which has an installed capacity of 120MW, for the base price of BRL427,518

 

10.g)

Investment properties:

 

The balance of investment properties is shown below:

 

						Consolidated				Parent Company
		Land		Buildings		Total		Land		Buildings		Total
Balance at December 31, 2021		101,542		60,639		162,181		94,286		48,292		142,578
Cost		101,542		87,977		189,519		94,286		74,392		168,678
Accumulated depreciation				(27,338)		(27,338)				(26,100)		(26,100)
Balance at December 31, 2021		101,542		60,639		162,181		94,286		48,292		142,578
Depreciation (note 25)				(2,304)		(2,304)				(1,805)		(1,805)
Write-off		(30)				(30.00)		(30)				(30)
Balance at September 30, 2022		101,512		58,335		159,847		94,256		46,487		140,743
Cost		101,512		87,977		189,489		94,256		74,392		168,648
Accumulated depreciation				(29,642)		(29,642)				(27,905)		(27,905)
Balance at September 30, 2022		101,512		58,335		159,847		94,256		46,487		140,743

 

The Company's management estimate of the fair value of the investment properties was realized for December 31, 2021.

The fair value of investment property in the consolidated balance of September 30, 2022, and December 31, 2021, is BRL2,055,976 and in the parent company BRL1,992,956.

 

The average estimated useful lives for the period are as follows (in years):

 

			Consolidated				Parent Company
	09/30/2022		12/31/2021		09/30/2022		12/31/2021
Buildings	27		27		28		28

 

11.

PROPERTY, PLANT AND EQUIPMENT

 

	Consolidated
	Land		Buildings and Infrastructure		Machinery, equipment and facilities		Furniture and fixtures		Construction in progress		Right of use (i)		Other (*)		Total
Balance at December 31, 2021	349,495		3,019,934		13,800,888		29,037		3,643,682		581,824		106,274		21,531,134
Cost	349,495		5,358,388		29,348,048		190,847		3,643,682		754,606		445,870		40,090,936
Accumulated depreciation			(2,338,454)		(15,547,160)		(161,810)				(172,782)		(339,596)		(18,559,802)
Balance at December 31, 2021	349,495		3,019,934		13,800,888		29,037		3,643,682		581,824		106,274		21,531,134
Effect of foreign exchange differences	(16,890)		(27,700)		(88,164)		(1,034)		(10,616)		(1,697)		(323)		(146,424)
Acquisitions			24,007		191,813		5,278		2,099,469		24,501		54,854		2,399,922
Capitalized interest (1) (notes 27 and 30)									97,490						97,490
Write-offs (note 26)			32,093		(10,762)		(30)		(31,646)		(754)		(432)		(11,531)
Depreciation (note 25)			(142,968)		(1,680,155)		(4,827)				(67,446)		(47,798)		(1,943,194)
Transfers to other asset categories	(70,522)		7,872		1,698,061		240		(1,646,058)				10,407
Transfers to intangible assets									(75,499)						(75,499)
Right of use - Remesurement											69,756				69,756
Consolidation of Topázio Energética, Santa Ana e Brasil Central (note 10.c)	544		76,042		21,870				909		233				99,598
Consolidation of Metalgrafica Iguaçu	11,579				125,309		126				726		238		137,978
Consolidation of CSN Cimentos Brasil	103,659		932,064		1,857,496		7,073		105,519		42,313		137,851		3,185,975
Others			110		1,717		194				(36)				1,985
Balance at September 30, 2022	377,865		3,921,454		15,918,073		36,057		4,183,250		649,420		261,071		25,347,190
Cost	377,865		7,339,511		34,356,302		275,203		4,183,250		1,026,084		856,553		48,414,768
Accumulated depreciation			(3,418,057)		(18,438,229)		(239,146)				(376,664)		(595,482)		(23,067,578)
Balance at September 30, 2022	377,865		3,921,454		15,918,073		36,057		4,183,250		649,420		261,071		25,347,190

 

		Parent Company
		Land		Buildings and Infrastructure		Machinery, equipment and facilities		Furniture and fixtures		Construction in progress		Right of use (i)		Other (*)		Total
Balance at December 31, 2021		25,618		281,942		6,416,890		9,089		740,688		15,996		18,619		7,508,842
Cost		25,618		497,690		14,085,249		97,544		740,688		35,633		127,281		15,609,703
Accumulated depreciation				(215,748)		(7,668,359)		(88,455)				(19,637)		(108,662)		(8,100,861)
Balance at December 31, 2021		25,618		281,942		6,416,890		9,089		740,688		15,996		18,619		7,508,842
Acquisitions						104,584		523		850,860		2,300		1,600		959,867
Capitalized interest (1) (notes 27 and 30)										29,358						29,358
Write-offs (note 26)						(1,035)										(1,035)
Depreciation (note 25)				(13,886)		(755,121)		(1,298)				(5,259)		(4,411)		(779,975)
Transfers to other asset categories				5,560		643,016				(649,678)				1,102		-
Transfers to intangible assets										(570)						(570)
Right of use - Remesurement												201				201
Others						(58)				(1)						(59)
Balance at September 30, 2022		25,618		273,616		6,408,276		8,314		970,657		13,238		16,910		7,716,629
Cost		25,618		501,387		14,834,659		98,006		970,657		38,134		129,489		16,597,950
Accumulated depreciation				(227,771)		(8,426,383)		(89,692)				(24,896)		(112,579)		(8,881,321)
Balance at September 30, 2022		25,618		273,616		6,408,276		8,314		970,657		13,238		16,910		7,716,629

 

(*) Refer substantially to: i) in the consolidated table: assets for railway use, such as yards, rails, mines, and sleepers; and ii) in the parent company's table: improvements to third-party assets, vehicles and hardware.

 

(1)

The capitalized borrowing costs are basically determined for the projects in Steelmaking and Mining refer substantially to:

- CSN: Technological updates and acquisition of new equipment for maintenance of the production capacity of UPV Plant (RJ);

- CSN Mineração: Expansion of Casa de Pedra (MG) and TECAR (RJ).

 

(i)

Right of use

 

Below the movements of the right of use:

 

									Consolidated
	Land		Buildings and Infrastructure		Machinery, equipment and facilities		Others		Total
Balance at December 31, 2021	439,285		68,145		53,759		20,635		581,824
Cost	500,826		94,196		99,103		60,483		754,608
Accumulated depreciation	(61,541)		(26,051)		(45,344)		(39,848)		(172,784)
Balance at December 31, 2021	439,285		68,145		53,759		20,635		581,824
Effect of foreign exchange differences			(26)		(1,010)		(661)		(1,697)
Addition	857				7,193		16,451		24,501
Consolidation of Topázio Energética, Santa Ana e Brasil Central (note 10.c)					233				233
Consolidation of Metalgrafica Iguaçu	726								726
Consolidation of CSN Cimentos Brasil S.A.	366				41,947				42,313
Remesurement	20,009		6,157		41,455		2,135		69,756
Depreciation	(12,780)		(6,095)		(39,969)		(8,602)		(67,446)
Write-offs					(754)				(754)
Transfers to other asset categories	(87)		(380)		(188)		655
Others			1		(37)				(36)
Balance at September 30, 2022	448,376		67,802		102,629		30,613		649,420
Cost	526,782		99,955		320,760		78,593		1,026,090
Accumulated depreciation	(78,406)		(32,153)		(218,131)		(47,980)		(376,670)
Balance at September 30, 2022	448,376		67,802		102,629		30,613		649,420

 

								Parent Company
		Land		Machinery, equipment and facilities		Others		Total
Balance at December 31, 2021		15,543		40		413		15,996
Cost		33,307		137		2,189		35,633
Accumulated depreciation		(17,764)		(97)		(1,776)		(19,637)
Balance at December 31, 2021		15,543		40		413		15,996
Addition				2,300				2,300
Remesurement		201						201
Depreciation		(3,061)		(2,074)		(124)		(5,259)
Balance at September 30, 2022		12,683		266		289		13,238
Cost		33,508		2,437		2,189		38,134
Accumulated depreciation		(20,825)		(2,171)		(1,900)		(24,896)
Balance at September 30, 2022		12,683		266		289		13,238

 

The average estimated useful lives are as follows (in years):

 

			Consolidated				Parent Company
	09/30/2022		12/31/2021		09/30/2022		12/31/2021
Buildings and Infrastructure	34		34		31		31
Machinery, equipment and facilities	18		18		20		21
Furniture and fixtures	12		12		13		13
Others	9		10		12		12

 

 

12.

INTANGIBLE ASSETS

 

													Consolidated		Parent Company
	Goodwill		Customer relationships		Software		Trademarks and patents		Rights and licenses (*)		Others		Total		Software		Total
Balance at December 31, 2021	3,729,236		207,912		66,440		213,609		3,437,883		1,970		7,657,050		59,729		59,729
Cost	3,969,643		816,206		221,712		213,609		3,484,778		1,970		8,707,918		167,771		167,771
Accumulated amortization	(131,077)		(608,294)		(155,272)				(46,895)				(941,538)		(108,042)		(108,042)
Adjustment for accumulated recoverable value	(109,330)												(109,330)
Balance at December 31, 2021	3,729,236		207,912		66,440		213,609		3,437,883		1,970		7,657,050		59,729		59,729
Effect of foreign exchange differences			(32,479)		(689)		(34,827)				(323)		(68,318)
Acquisitions					686				1,247				1,933
Consolidation of Metalgrafica Iguaçu	96,472				143								96,615
Consolidation of CSN Cimentos Brasil					4,973				2,456				7,429
Transfer of property, plant and equipment					4,506				70,993				75,499		570		570
Amortization (note 25)			(43,747)		(10,989)				(30,156)				(84,892)		(8,360)		(8,360)
Balance at September 30, 2022	3,825,708		131,686		65,070		178,782		3,482,423		1,647		7,685,316		51,939		51,939
Cost	4,484,085		681,940		267,098		178,782		3,560,935		1,647		9,174,487		168,343		168,343
Accumulated amortization	(549,047)		(550,254)		(202,028)				(78,512)				(1,379,841)		(116,404)		(116,404)
Adjustment for accumulated recoverable value	(109,330)												(109,330)
Balance at September 30, 2022	3,825,708		131,686		65,070		178,782		3,482,423		1,647		7,685,316		51,939		51,939

(*) Composed mainly of mining rights. Amortization is based on production volume.

 

The average useful life by nature is as follows (in years):

 

			Consolidated				Parent Company
	09/30/2022		12/31/2021		09/30/2022		12/31/2021
Software	9		9		10		9
Customer relationships	13		13

 

12.a)

Goodwill impairment test

 

Goodwill arising from expected future profitability of acquired companies and intangible assets with indefinite useful lives (brands) were allocated to CSN’s cash generating units (CGUs) which represent the lowest level of assets or group of assets of the Company. According to CPC 01 (R1) / IAS36, when a CGU has an intangible asset with no defined useful life allocated, the Company must perform an impairment test.

 

The assumptions used for impairment assessment in December 2021 remain in place and there is no event that would justify recording impairment on September 30, 2022.

 

13.

BORROWINGS AND FINANCING

 

The balances of loans, financing and debentures that are recorded at amortized cost are as follows:

 

									Consolidated		Parent Company
			Current Liabilities				Non-current Liabilities				Current Liabilities			Non-current Liabilities
			09/30/2022		12/31/2021		09/30/2022		12/31/2021		09/30/2022		12/31/2021	09/30/2022		12/31/2021
Foreign Debt
Floating Rates:
Prepayment			996,608		1,626,521		6,332,913		3,875,713		485,919		1,557,329	1,694,158		1,099,080
Fixed Rates:
Bonds, Perpetual bonds, Facility, CCE and ACC			720,085		678,239		16,596,645		15,380,392		54,066
Intercompany											55,992		61,018	8,515,534		8,218,041
Fixed interest in EUR
Intercompany											34,866		600	1,748,282		1,312,209
Facility			222,457		550,460		22,484		79,013
			1,939,150		2,855,220		22,952,042		19,335,118		630,843		1,618,947	11,957,974		10,629,330
Debt agreements in Brazil
Floating Rate Securities in BRL:
BNDES/FINAME/FINEP, Debentures, NCE and CCB			3,106,217		2,677,516		9,683,301		7,886,796		2,587,723		2,269,603	4,490,906		5,977,676
			3,106,217		2,677,516		9,683,301		7,886,796		2,587,723		2,269,603	4,490,906		5,977,676
Total Borrowings and Financing			5,045,367		5,532,736		32,635,343		27,221,914		3,218,566		3,888,550	16,448,880		16,607,006
Transaction Costs and Issue Premiums			(64,806)		(45,877)		(436,593)		(201,251)		(23,500)		(24,322)	(25,411)		(38,390)
Total Borrowings and Financing + Transaction cost			4,980,561		5,486,859		32,198,750		27,020,663		3,195,066		3,864,228	16,423,469		16,568,616

 

13.a)

Borrowing and amortization, financing, and debentures

 

The following table shows amortization and funding during the period:

 

				Consolidated				Parent Company
		09/30/2022		12/31/2021		09/30/2022		12/31/2021
Opening balance		32,507,522		35,270,653		20,432,844		28,282,246
New debts		13,391,585		12,915,332		5,884,255		5,699,542
Repayment		(8,211,226)		(17,639,178)		(6,381,841)		(14,280,369)
Payments of charges		(1,631,139)		(2,137,782)		(719,792)		(819,648)
Accrued charges (note 27)		1,884,051		2,140,961		925,321		759,955
Acquisition of Elizabeth				372,123
Consolidation of Metalgrafica Iguaçu		81,978
Others (1)		(843,460)		1,585,413		(522,252)		791,118
Closing balance		37,179,311		32,507,522		19,618,535		20,432,844

 

1.

Including unrealized exchange and monetary variations and funding cost.

 

The Company entered into new debt agreements and amortized borrowings, financing and debentures during 2022, as shown below:

 

						Consolidated
						09/30/2022
Nature		New debts		Repayment		Interest payment
Prepayment		2,131,171		(458,083)		(83,152)
Bonds, Perpetual bonds, ACC, CCE and Facility (1)		5,926,241		(2,799,319)		(669,120)
BNDES/FINAME, Debentures, NCE and CCB (2)		5,334,173		(4,953,824)		(878,867)
		13,391,585		(8,211,226)		(1,631,139)

(1) In the first quarter of 2022, the Company, through its subsidiary CSN Resources, issued debt securities in the foreign market in the amount of US$500 million, equivalent to BRL2.6 billion, maturing in 2032 ("Notes"). Additionally, it used part of the funds in the

amount of US$300 million, equivalent to BRL1.5 billion in the "Tender Offer" for the Notes issued by CSN Resources, maturing in 2026. These Notes are unconditionally and irrevocably guaranteed by the Company. In the first quarter of 2022, the Company contracted a loan in the amount of US$115 million equivalent to BRL605 million through its subsidiary CSN Cimentos, maturing between 2025 and 2027.

 

In the second quarter of 2022 the subsidiary CSN Mineração contracted a prepayment of US$445 million equivalent to BRL2.1 billion, with maturity between 2025 and 2032.

 

(2) In the first quarter of 2022 The Company, through its subsidiary CSN Cimentos, issued 1,200 debentures in the total amount of BRL1.2 billion, maturing between 2030 and 2032. The CSN contracted a loan in the amount of BRL600 million from Banco do Brasil maturing in May 2022.

 

In the third quarter the Company issued the second debentures of its subsidiary CSN Mineração in the total amount of BRL1.4 billion, with maturities ranging from 2032 to 2037. The subsidiary CSN Cimentos S.A. also issued debentures, in the total amount of BRL675 million. Maturities are scheduled from 2025 to 2027.

 

13.b)Maturities

of loans, financing and debentures presented in current and non-current liabilities

 

						Consolidated						Parent Company
						09/30/2022						09/30/2022
		Borrowings and financing in foreign currency		Borrowings and financing in national currency		Total		Borrowings and financing in foreign currency		Borrowings and financing in national currency		Total
Average rate		in Dollar 5.53% in Euro 1.95%		in Real 15.25%				in Dollar 2.74% in Euro 3.38%		in Real 15.29%
2022		806,940		1,313,426		2,120,366		221,052		1,052,500		1,273,552
2023		1,375,036		2,340,807		3,715,843		825,861		1,881,533		2,707,394
2024		482,149		984,881		1,467,030		5,737,040		723,115		6,460,155
2025		1,438,120		948,102		2,386,222		1,534,218		653,108		2,187,326
2026		2,551,495		1,089,812		3,641,307		560,693		803,108		1,363,801
2027 a 2030		10,059,971		2,561,990		12,621,961		834,509		1,790,989		2,625,498
After 2030		8,177,481		3,550,500		11,727,981		2,875,444		174,276		3,049,720
		24,891,192		12,789,518		37,680,710		12,588,817		7,078,629		19,667,446

 

·      Covenants

 

The Company maintains contracts that provide for the fulfillment of certain non-financial obligations, as well as the maintenance of certain parameters and performance indicators, such as the equity ratio disclosure of its audited financial statements according to regulatory deadlines or payment of commission for risk assumption, if the indicator of net debt to EBITDA reaches the levels foreseen in those contracts.

 

To the moment, the Company is compliant with the financial and non-financial obligations (covenants) of its existing contracts.

 

14.

FINANCIAL INSTRUMENTS

 

14.a)

- Identification and valuation of financial instruments

 

The Company may operate with several financial instruments, with emphasis on cash and cash equivalents, including financial investments, marketable securities, accounts receivable from customers, accounts payable to suppliers and borrowings and financing. Additionally, we may also operate with derivative financial instruments, such as swap exchange rate, swap interest and derivatives with commodities.

 

Considering the nature of the instruments, the fair value is basically determined by the use of quotations in the capital markets in Brazil and the Mercantile and Futures Exchange. The amounts recorded in current assets and liabilities have immediate liquidity. Considering the term and characteristics of these instruments, fair values do not differ from the recorded amounts.

 

 

·

Classification of financial instruments

 

														Consolidated
Consolidated								09/30/2022						12/31/2021
		Notes		Fair value through profit or loss		Measured at amortized cost		Balances		Fair value through profit or loss		Measured at amortized cost		Balances
Assets
Current
Cash and cash equivalents		4				14,319,373		14,319,373				16,646,480		16,646,480
Short-term investments		5		1,288,977		188,638		1,477,615		2,383,059		261,673		2,644,732
Trade receivables		6				2,733,706		2,733,706				2,597,838		2,597,838
Dividends and interest on equity		9				61,924		61,924				76,878		76,878
Trading securities		9		11,969				11,969		12,028				12,028
Loans - related parties		9				5,391		5,391				4,511		4,511
Total				1,300,946		17,309,032		18,609,978		2,395,087		19,587,380		21,982,467
Non-current
Investments		5				152,348		152,348				147,671		147,671
Other trade receivables		9				5,155		5,155				2,345		2,345
Eletrobrás compulsory loan		9				902,059		902,059				859,607		859,607
Receivables by indemnity		9				970,435		970,435				534,896		534,896
Loans - related parties		9				1,346,260		1,346,260				1,143,228		1,143,228
Investments		10		162,343				162,343		190,321				190,321
Total				162,343		3,376,257		3,538,600		190,321		2,687,747		2,878,068
Total Assets				1,463,289		20,685,289		22,148,578		2,585,408		22,275,127		24,860,535
Liabilities
Current
Borrowings and financing		13				5,045,367		5,045,367				5,532,736		5,532,736
Leases		15				168,134		168,134				119,047		119,047
Trade payables		16				6,259,680		6,259,680				6,446,999		6,446,999
Trade payables -drawee risk		17				5,506,326		5,506,326				4,439,967		4,439,967
Dividends and interest on capital		17				454,520		454,520				1,206,870		1,206,870
Total						17,434,027		17,434,027				17,745,619		17,745,619
Non-current
Borrowings and financing		13				32,635,343		32,635,343				27,221,914		27,221,914
Leases		15				525,108		525,108				492,504		492,504
Trade payables		16				40,188		40,188				98,625		98,625
Derivative financial instruments		17		90,928				90,928		101,822				101,822
Total				90,928		33,200,639		33,291,567		101,822		27,813,043		27,914,865
Total Liabilities				90,928		50,634,666		50,725,594		101,822		45,558,662		45,660,484

 

 

 

 

		Parent Company
Parent Company								09/30/2022						12/31/2021
		Notes		Fair value through profit or loss		Measured at amortized cost		Balances		Fair value through profit or loss		Measured at amortized cost		Balances
Assets
Current
Cash and cash equivalents		4				2,764,344		2,764,344				3,885,265		3,885,265
Short-term investments		5		1,288,977		50,387		1,339,364		2,383,059		43,398		2,426,457
Trade receivables		6				2,103,276		2,103,276				2,375,512		2,375,512
Dividends and interest on equity		9				150,989		150,989				486,506		486,506
Trading securities		9		11,850				11,850		11,935				11,935
Loans - related parties		9				5,391		5,391				4,511		4,511
Total				1,300,827		5,074,387		6,375,214		2,394,994		6,795,192		9,190,186
Non-current
Investments		5				136,167		136,167				132,523		132,523
Other trade receivables		9				1,003		1,003				1,003		1,003
Eletrobrás compulsory loan		9				899,324		899,324				858,876		858,876
Receivables by indemnity		9				970,435		970,435				534,896		534,896
Loans - related parties		9				1,582,484		1,582,484				1,290,295		1,290,295
Investments		10		162,343				162,343		190,321				190,321
Total				162,343		3,589,413		3,751,756		190,321		2,817,593		3,007,914
Total Assets				1,463,170		8,663,800		10,126,970		2,585,315		9,612,785		12,198,100
Liabilities
Current
Borrowings and financing		13				3,218,566		3,218,566				3,888,550		3,888,550
Leases		15				8,524		8,524				7,602		7,602
Trade payables		16				4,006,546		4,006,546				4,710,811		4,710,811
Trade payables -drawee risk		17				5,328,002		5,328,002				4,439,967		4,439,967
Dividends and interest on capital		17				455,002		455,002				1,125,359		1,125,359
Total						13,016,640		13,016,640				14,172,289		14,172,289
Non-current
Borrowings and financing		13				16,448,880		16,448,880				16,607,006		16,607,006
Derivative financial instruments		17		69,394				69,394		101,822				101,822
Leases		15				6,567		6,567				10,339		10,339
Trade payables		16				18,642		18,642				43,396		43,396
Total				69,394		16,474,089		16,543,483		101,822		16,660,741		16,762,563
Total Liabilities				69,394		29,490,729		29,560,123		101,822		30,833,030		30,934,852

 

·

Fair value measurement

 

The table below shows the financial instruments recorded at fair value through profit or loss, classifying them according to the fair value hierarchy:

 

Consolidated						09/30/2022						12/31/2021
		Level 1		Level 2		Balances		Level 1		Level 2		Balances
Assets
Current
Financial investments		1,288,977				1,288,977		2,383,059				2,383,059
Trading securities		11,969				11,969		12,028				12,028
Non-current
Investments		162,343				162,343		190,321				190,321
Total Assets		1,463,289				1,463,289		2,585,408				2,585,408
Liabilities
Non-current
Derivative financial instruments				90,928		90,928				101,822		101,822
Total Liabilities				90,928		90,928				101,822		101,822

Level 1 - Data prices are quoted in an active market for items identical to the assets and liabilities being measured.

 

Level 2 - Consider inputs observable in the market, such as interest rates, exchange rates, etc., but are not prices negotiated in active markets.

 

There are no assets or liabilities classified as level 3.

 

14.b)

- Financial risk management:

 

The Company uses risk management strategies with guidance on the risks incurred by us. The nature and general position of financial risks are regularly monitored and managed in order to assess results and the financial impact on cash flow. Credit limits and hedge quality of counterparties are also reviewed periodically.

 

Market risks are hedged when we consider necessary to support the corporate strategy or when it is necessary to maintain the level of financial flexibility.

 

We are exposed to exchange rate, interest rate, market price and liquidity risks.

 

The Company may manage some of the risks through the use of derivative instruments not associated with any speculative trading or short selling.

 

·

Exchange rate risk:

 

The exposure arises from the existence of assets and liabilities denominated in Dollar or Euro, since the Company’s functional currency is substantially the Real and is referred as natural exchange exposure. The net exposure is the result of the offsetting of the natural exchange exposure by the instruments of hedge adopted by CSN.

 

The consolidated net exposure as of September 30, 2022, is shown below:

 

				09/30/2022
Foreign Exchange Exposure		(Amounts in US$’000)		(Amounts in €’000)
Cash and cash equivalents overseas		1,354,053		63,059
Trade receivables		156,466		3,973
Financial investments		25,185
Borrowings and financing		(4,499,027)		(4,250)
Trade payables		(513,619)		(23,490)
Other liabilities		(87,977)		(2)
Natural Gross Foreign Exchange Exposure (assets - liabilities)		(3,564,919)		39,290
Cash flow hedge accounting		3,964,600
Exchange rate swap CDI x Dollar		(67,000)
Exchange rate swap Real x Dollar		(115,000)
Net foreign exchange exposure		217,681		39,290

 

CSN uses Hedge Accounting strategy, as well as derivative financial instruments to protect future cash flows.

 

Sensitivity analysis of Derivative Financial Instruments and Consolidated Foreign Exchange Exposure

 

The Company considered scenarios 1 and 2 to be 25% and 50% deterioration for currency volatility, using the exchange rate closing rate as of September 30, 2022, as a reference.

 

The currencies used in the sensitivity analysis and their respective scenarios are shown below:

 

								09/30/2022
Currency		Exchange rate		Probable scenario		Scenario 1		Scenario 2
USD		5.4066		5.2824		6.7583		8.1099
EUR		5.2904		5.1451		6.6130		7.9356
USD x EUR		0.9785		0.9740		1.2231		1.4678

 

The effects on the result, considering scenarios 1 and 2 are shown below:

 

										09/30/2022
Instruments		Notional		Risk		Probable scenario (*) BRL		Scenario 1 BRL		Scenario 2 BRL
Gross exchange position		(3,564,919)		Dollar		442,763		(4,818,523)		(9,637,046)
Cash flow hedge accounting		3,964,600		Dollar		(492,403)		5,358,752		10,717,503
Exchange rate swap CDI x Dollar		(67,000)		Dollar		8,321		(90,561)		(181,121)
Exchange rate swap Real x Dollar		(115,000)		Dollar		14,283		(155,440)		(310,880)
Net exchange position		217,681		Dollar		(27,036)		294,228		588,456
Net exchange position		39,290		Euro		(5,709)		51,965		103,930

(*) The probable scenarios were calculated considering the following variations for risks: Real x Dollar –valuation of the Real by 3.70% / Real x Euro - valuation of the Real by 3.97% / Euro x Dollar - devaluation of Euro by 0.29%. Source: Central Bank of Brazil and European Central Bank quotations on October 14,2022.

 

·

Interest rate risk:

 

This risk arises from financial investments, borrowings and financing and debentures linked to the fixed and floating interest rates of the CDI, TJLP and LIBOR, exposing these financial assets and liabilities to interest rate fluctuations as shown in the sensitivity analysis table below.

 

With the modification of the global financial market in recent years and in line with the recommendations of international regulatory agencies, the market has transitioned from the Libor rate (London Interbank Offered Rate) to the SOFR (Secured Overnight Financing Rate) as of 2022. Therefore, the Company is now exposed to some foreign currency borrowings by SOFR.

 

Sensitivity analysis of changes in interest rates

 

We present below the sensitivity analysis for interest rate risks. The Company considered scenarios 1 and 2 to be 25% and 50% deterioration for interest rate volatility using the closing rate as of September 30, 2022, as a reference.

 

The interest rates used in the sensitivity analysis and their respective scenarios are shown below:

 

						09/30/2022
Interest		Interest rate		Scenario 1		Scenario 2
CDI		13.65%		17.06%		20.48%
TJLP		7.01%		8.76%		10.52%
LIBOR		3.66%		4.58%		5.49%

 

The effects on profit and loss, considering scenarios 1 and 2 are shown below:

 

												Consolidated
Changes in interest rates		% p.a		Assets		Liabilities		Probable scenario (*)		Scenario 1		Scenario 2
CDI		13.65		6,212,024		(10,876,482)		(5,301,156)		(5,460,331)		(5,619,505)
TJLP		7.01				(1,047,055)		(1,120,454)		(1,138,804)		(1,157,153)
Libor		3.66				(7,197,807)		(7,461,289)		(7,527,160)		(7,593,031)

(*) The sensitivity analysis is based on the premise of maintaining the market values as of September 30, 2022, as a probable scenario recorded in the company’s assets and liabilities.

 

 

·

Market price risk:

 

The Company is also exposed to market risks related to the volatility of commodity and input prices. In line with its risk management policy, risk mitigation strategies involving commodities can be used to reduce cash flow volatility. These mitigation strategies may incorporate derivative instruments, predominantly forward transactions, futures, and options.

 

Below are the instruments for price risk protection:

 

a) Cash flow hedge accounting - "Platts" index

 

The Company had derivative operations for iron ore, contracted by the subsidiary CSN Mineração, with the objective of reducing the volatility of its exposure to the commodity. In 2022, derivative operations were contracted and fully settled on May 31, 2022.

 

In order to better reflect the accounting effects of the Platts hedge strategy in the result, CSN Mineração opted to make the formal designation of the hedge and consequently adopted hedge accounting of the iron ore derivative as a hedge accounting instrument of its highly probable future iron ore sales. With this, the mark-to-market resulting from the volatility of Platts will be temporarily recorded in shareholders' equity and will be taken to the result when the referred sales occur according to the contracted period of assessment, thus allowing the recognition of the volatility of Platts on the sales of iron ore to be recognized at the same moment.

 

The table below shows the result of the derivative instrument until September 30, 2022:

 

			09/30/2022		09/30/2021		09/30/2022		09/30/2021
			Other income and expenses (note 25)				Exchange variation
Maturity		Notional
02/02/2021 to 10/02/2021 (Settled)		Platts			(27,728)				16,790
05/31/2022 (Settled)		Platts	23,374				(1,087)
			23,374		(27,728)		(1,087)		16,790

 

The changes in the amounts related to cash flow hedge accounting - Platts index recorded in shareholders' equity on September 30, 2022, are shown as follows:

 

	12/31/2021		Movement		Realization		09/30/2022
Cash flow hedge accounting–“Platts”			(23,374)		23,374
Income tax and social contribution on cash flow hedge accounting			7,947		(7,947)
Fair Value of cash flow accounting - Platts, net			(15,427)		15,427

 

The cash flow hedge accounting - Platts index - has been fully effective since the derivative instruments were contracted.

 

To support the above-mentioned designations, the Company prepared formal documentation indicating how the designation of cash flow hedge accounting - Platts index is aligned with CSN's risk management objective and strategy, identifying the hedge instruments used, the hedge object, the nature of the risk to be protected and demonstrating the expectation of high effectiveness of the relations designated. Iron ore derivative instruments ("Platts" index) were designated in amounts equivalent to the portion of future sales, comparing the amounts designated with the amounts expected and approved in the Management and Board budgets.

 

b) Cash flow hedge accounting - Foreign Exchange

 

The Company and its subsidiary CSN Mineração formally designates relations of hedge of cash flows to protect highly probable future flows exposed to the dollar related to sales made in dollars.

 

With the objective of better reflecting the accounting effects of the hedge exchange rate in the result, CSN designated part of its dollar liabilities as an instrument of future hedge exports. As a result, the exchange rate variation resulting from the designated liabilities will be transiently recorded in shareholders’ equity and will be reflected in the income statement when said exports occur, thus allowing the recognition of dollar fluctuations on liabilities and on exports to

be recorded at the same time. It is noteworthy that the adoption of this accounting hedge does not imply the contracting of any financial instrument.

 

The table below presents a summary of the relations of hedge as of September 30, 2022:

 

																		09/30/2022
Designation Date		Hedging Instrument		Hedged item		Type of hedged risk		Hedged period		Exchange rate on designation		Designated amounts (US$’000)		Amortizated part (USD'000)		Effect on Result (*) (BRL'000)		Impact on Shareholders' equity (BRL'000)
07/23/2015		Export prepayments in US$ to third parties		Part of the highly probable future monthly iron ore exports		Foreign exchange - BRL vs. US$ spot rate		August 2018 - October 2022		3.2850		30,000		(24,000)				(12,730)
07/24/2015		Export prepayments in US$ to third parties		Part of the highly probable future monthly iron ore exports		Foreign exchange - BRL vs. US$ spot rate		August 2018 - October 2022		3.3254		100,000		(100,000)				(39,382)
07/27/2015		Export prepayments in US$ to third parties		Part of the highly probable future monthly iron ore exports		Foreign exchange - BRL vs. US$ spot rate		August 2018 - October 2022		3.3557		25,000		(24,150)				(1,743)
07/27/2015		Export prepayments in US$ to third parties		Part of the highly probable future monthly iron ore exports		Foreign exchange - BRL vs. US$ spot rate		August 2018 - October 2022		3.3557		70,000		(56,000)				(28,713)
07/27/2015		Export prepayments in US$ to third parties		Part of the highly probable future monthly iron ore exports		Foreign exchange - BRL vs. US$ spot rate		August 2018 - October 2022		3.3557		30,000		(24,000)				(20,351)
07/28/2015		Export prepayments in US$ to third parties		Part of the highly probable future monthly iron ore exports		Foreign exchange - BRL vs. US$ spot rate		August 2018 - October 2022		3.3815		30,000		(24,000)				(12,151)
8/3/2015		Export prepayments in US$ to third parties		Part of the highly probable future monthly iron ore exports		Foreign exchange - BRL vs. US$ spot rate		July 2018 - October 2022		3.3940		355,000		(343,000)				(24,151)
4/2/2018		Bonds		Part of the highly probable future monthly iron ore exports		Foreign exchange - BRL vs. US$ spot rate		July 2018 - February 2023		3.3104		1,170,045		(924,045)		(60,790)		(659,178)
07/31/2019		Bonds and Export prepayments in US$ to third parties		Part of the highly probable future monthly iron ore exports		Foreign exchange - BRL vs. US$ spot rate		January 2020 - April 2026		3.7649		1,342,761		(770,061)		(682,259)		(940,202)
1/10/2020		Bonds with no maturity date and Export prepayments in US$ to third parties		Part of the highly probable future monthly iron ore exports		Foreign exchange - BRL vs. US$ spot rate		March 2020 - December 2050		4.0745		1,416,000		(1,287,000)		(67,766)		(1,386,441)
1/28/2020		Bonds		Part of the highly probable future monthly iron ore exports		Foreign exchange - BRL vs. US$ spot rate		March 2027 - January 2028		4.2064		1,000,000						(1,200,200)
6/1/2022		Bonds and Export prepayments in US$ to third parties		Part of the highly probable future monthly iron ore exports		Foreign exchange - BRL vs. US$ spot rate		June 2022 - April 2032		4.7289		1,145,300		(37,600)		(19,317)		(750,687)
6/1/2022		Export prepayments in US$ to third parties		Part of the highly probable future monthly iron ore exports		Foreign exchange - BRL vs. US$ spot rate		June 2022 - May 2033		4.7289		878,640		(14,290)		(8,511)		(585,770)
Total												7,592,746		(3,628,146)		(838,643)		(5,661,699)

 

(*) On September 30, 2022, the amount of (BRL838,643) was recorded under Other Operating Expenses in Consolidated and the amount of (BRL830,132) in the Parent Company. On September 30, 2021, the amount of (BRL317,472) was recorded under Other Operating Expenses in Consolidated and in the Parent Company.

 

In the hedging relationships described above, the amounts of the debt instruments were fully designated for equivalent iron ore export portions.

 

The realization of Hedge accounting cash flow is recognized in Other operating income and expenses, note 26.

 

As of September 30, 2022, the hedging relationships established by the Company were effective according to the retrospective and prospective tests performed. Thus, no reversal for hedge accounting ineffectiveness was recognized.

 

c)Net investment hedge in foreign subsidiaries

 

The information related to the net investment hedge did not change in relation to that disclosed in the Company's accounts as of December 31, 2021. The balance recorded on September 30, 2022, and December 31, 2021, is BRL6,293.

 

d) Hedge Accounting Movements

 

The changes in the amounts related to cash flow hedge accounting recorded in equity on September 30, 2022 are shown as follows:

 

							Consolidated
	12/31/2021		Movement		Realization		09/30/2022
Cash flow hedge accounting	5,763,401		736,941		(838,643)		5,661,699
Income tax and social contribution on cash flow hedge accounting	(1,959,556)		(250,560)		285,139		(1,924,977)
Fair Value of cash flow accounting, net taxes	3,803,845		486,381		(553,504)		3,736,722
							Parent Company
	12/31/2021		Movement		Realization		09/30/2022
Cash flow hedge accounting	5,763,401		142,660		(830,132)		5,075,929
Income tax and social contribution on cash flow hedge accounting	(1,959,556)		(48,504)		282,245		(1,725,815)
Fair Value of cash flow accounting, net taxes	3,803,845		94,156		(547,887)		3,350,114

 

·

Credit risk

 

The exposure to credit risks of financial institutions complies with the parameters established in the financial policy. The Company practices a detailed analysis of the financial position of its customers and suppliers, the determination of a credit limit and the permanent monitoring of its outstanding balance.

 

With regards to financial investments, the Company only invests in institutions with low credit risk assessed by credit rating agencies. Since part of the funds is invested in repo operations that are backed by Brazilian government bonds, there is also exposure to the credit risk of the country.

 

As for the exposure to credit risk in accounts receivable and other receivables, the Company has a credit risk committee, in which each new customer is analyzed individually regarding their financial condition, before granting the credit limit and payment terms, and periodically reviewed based on procedures and circumstances of each business area.

 

·

Liquidity risk

 

It is the risk that the Company may not have sufficient net funds to settle its financial commitments, as a result of the mismatch of term or volume between expected receipts and payments.

 

Future receipt and payment premises are established to manage cash liquidity in domestic and foreign currencies, which are monitored on a day-to-day basis by the Treasury Department. The payment schedules for long-term installments of borrowings and financing and debentures are presented in note 13.

 

The following are the contractual maturities of financial liabilities including interest.

 

									Consolidated
At September 30, 2022	Less than one year		From one to two years		From two to five years		Over five years		Total
Borrowings, financing and debentures (note 13)	5,045,367		2,257,863		6,027,529		24,349,951		37,680,710
Lease Liabilities (note 15)	168,134		161,726		141,466		221,916		693,242
Derivative financial instruments (note 14 a)			90,928						90,928
Trade payables (note 16)	6,259,680		37,263		2,925				6,299,868
Trade payables - Drawee Risk (note 17)	5,506,326								5,506,326
Dividends and interest on equity (note 17)	454,520								454,520
	17,434,027		2,547,780		6,171,920		24,571,867		50,725,594

 

IV – Fair values of assets and liabilities in relation to the book value

 

Financial assets and liabilities measured at fair value through profit or loss are recorded in current and non-current assets and liabilities and gains and losses are recorded as financial income and expenses, respectively.

 

The amounts are recorded in the financial statements at their amortized cost, which are substantially similar to those that would be obtained if they were traded on the market. The fair values of other long-term assets and liabilities do not differ significantly from their book values, except for the amounts below.

 

The estimated fair value for certain consolidated long-term borrowings and financing was calculated at current market rates, considering the nature, term and risks similar to those of the registered contracts, as follows:

 

			09/30/2022				12/31/2021
	Closing Balance		Fair value		Closing Balance		Fair value
Fixed Rate Notes	16,254,520		12,806,846		15,617,091		15,700,276

 

14.c)

Instruments protection: Derivatives and Hedge accounting cash flow and net investment hedge in foreign subsidiaries

 

· Derivative financial instruments portfolio position

 

Swap exchange rate Dollar x Euro

 

The subsidiary Lusosider Produtos Siderurgicos S/A: has derivative transactions to hedge its dollar exposure against the euro. The operation was settled in 2021.

 

Swap exchange rate CDI x Dollar

 

The Company has derivative transactions with Banco Bradesco to protect its debt in NCE raised in September 2019 with maturity in October 2023 in the amount of US$67 million (equivalent to BRL278 million) at a cost compatible with that usually practiced by the Company.

 

Swap exchange rate Real x Dollar

 

The subsidiary CSN Cimentos, after borrowing in foreign currency, contracted derivative operations to protect its exposure to the dollar, maturing on June 10, 2027.

 

Swap exchange rate CDI x IPCA

 

The subsidiaries CSN Mineração and CSN Cimentos issued debentures during 2021 and 2022, respectively, and entered derivative transactions to hedge their exposure to the IPCA. CSN Mineração's contracts have maturities scheduled from 2031 to 2037, while CSN Cimentos' contracts mature in 2032.

 

Below is the position of the derivatives:

 

														09/30/2022		09/30/2021
								Appreciation (BRL)				Fair value (market)		Impact on financial income (expenses) (note 27)
Instrument		Maturity		Functional Currency		Notional amount		Asset position		Liability position		Amounts receivable / (payable)
Exchange rate swap
Exchange rate swap Dollar x Euro		Settled		Dollar												19,638
Exchange rate swap Dollar x Real		Settled		Dollar										176,992		37,322
Exchange rate swap CDI x Dollar		10/02/2023		Dollar		67,000		287,516		(356,910)		(69,394)		32,428		(7,151)
Exchange rate swap Real x Dollar		6/10/2027		Dollar		115,000		652,191		(673,725)		(21,534)		(21,535)
Total Swap						182,000		939,707		(1,030,635)		(90,928)		187,885		49,809
Interest rate swap
Interest rate (Debentures) CDI x IPCA		07/15/2031		Real		576,448		613,358		(630,602)		(17,244)		(48,073)		(15,380)
Interest rate (Debentures) CDI x IPCA		07/15/2032		Real		745,000		814,759		(821,669)		(6,910)		(6,910)
Interest rate (Debentures) CDI x IPCA		07/15/2036		Real		423,552		453,554		(478,151)		(24,597)		(7,164)		(17,035)
Interest rate (Debentures) CDI x IPCA		07/15/2037		Real		655,382		681,762		(692,466)		(10,704)		(10,704)
Interest rate (Debentures) CDI x IPCA		02/16/2032		Real		600,000		661,675		(649,362)		12,313		(3,348)
Interest rate (Debentures) CDI x IPCA		2/12/2032		Real		600,000		639,261		(624,092)		15,169		(23,535)
Total interest rate (Debentures) CDI x IPCA						3,600,382		3,864,369		(3,896,342)		(31,973)		(99,734)		(32,415)
								4,804,076		(4,926,977)		(122,901)		88,151		17,394

·

Classification of derivatives in the balance sheet and income

 

						09/30/2022		09/30/2021
Instruments		Liabilities				Financial income (expenses), net (note 27)
		Non-current		Total
Exchange rate swap (NDF) Dollar x real (settled)						176,992		37,322
Exchange rate swap Dollar x Euro (Settled)								19,638
Exchange rate swap Real x Dollar		(21,534)		(21,534)		(21,535)
Exchange rate swap CDI x Dollar		(69,394)		(69,394)		32,428		(7,151)
Interest rate swap CDI x IPCA		(31,973)		(31,973)		(99,734)		(32,415)
		(122,901)		(122,901)		88,151		17,394

 

 

14.d)

- Investments in securities valued at fair value through profit or loss

 

The Company has common shares (USIM3), preferred shares (USIM5) of Siderúrgica de Minas Gerais (“Usiminas”) and shares of Panatlântica SA (PATI3), which are designated as fair value through profit or loss.

 

Usiminas shares are classified as current assets in financial investments and Panatlântica shares are classified as non-current assets under the investment item. They are recorded at fair value, based on the market price quote in B3.

 

In accordance with the Company’s policy, the gains and losses arising from the variation in the share price are recorded directly in the income statement as financial result in the case of financial investments, or as other operating income and expenses in the case of long-term investments.

 

Class of shares		09/30/2022								12/31/2021								09/30/2022		09/30/2021
		Quantity		Equity interest (%)		Share price		Closing Balance		Quantity		Equity interest (%)		Share price		Closing Balance		Profit or loss (notes 26 and 27)
USIM3		106,620,851		15.12%		8.20		874,291		106,620,851		15.12%		14.51		1,547,069		(672,778)		7,418
USIM5		55,144,456		10.07%		7.52		414,686		55,144,456		10.07%		15.16		835,990		(421,303)		559,829
								1,288,977								2,383,059		(1,094,081)		567,247
PATI3		2,705,726		11.31%		60.00		162,343		2,705,726		11.31%		70.34		190,321		(27,977)		124,542
								1,451,320								2,573,380		(1,122,058)		691,789

 

·

- Stock market price risk

 

The Company is exposed to the risk of changes in the stock price due to the investments valued at fair value through profit or loss that have their quotations based on the market price on the B3.

 

Sensitivity analysis for stock price risks

 

We present below the sensitivity analysis for the stock price risks. The Company considered scenarios 1 and 2 with 25% and 50% devaluation in the stock price using as reference the closing price on September 30, 2022. The probable scenario considered a 5% devaluation in the stock price.

 

The effects on the result, considering probable scenarios, 1 and 2 are demonstrated below:

 

				09/30/2022
Class of shares		Probable scenario		Scenario 1		Scenario 2
		5%		25%		50%
USIM3		(43,715)		(218,573)		(437,145)
USIM5		(20,734)		(103,672)		(207,343)
PATI3		(8,117)		(40,586)		(81,172)

 

14.e)

- Capital management

 

The Company seeks to optimize its capital structure in order to reduce its financial costs and maximize the return to its shareholders. The table below shows the evolution of the Company’s consolidated capital structure, with financing by equity and third-party capital:

 

Thousands of reais		09/30/2022		12/31/2021
Shareholder's equity (equity)		23,790,514		23,374,389
Borrowings and Financing (Third-party capital)		37,179,311		32,507,522
Gross Debit/Shareholder's equity		1.56		1.39

 

 

15.

LEASE LIABILITIES

 

Lease liabilities are shown below:

 

			Consolidated				Parent Company
	09/30/2022		12/31/2021		09/30/2022		12/31/2021
Leases	1,933,793		1,790,193		16,559		20,113
Present value adjustment - Leases	(1,240,551)		(1,178,642)		(1,469)		(2,172)
	693,242		611,551		15,090		17,941
Classified:
Current	168,134		119,047		8,523		7,602
Non-current	525,108		492,504		6,567		10,339
	693,242		611,551		15,090		17,941

 

The Company has lease agreements for port terminals in Itaguaí, the Solid Bulk Terminal - TECAR, used for loading and unloading coal and iron ores and the Container Terminal - TECON, with remaining terms of 25 and 29 years, respectively, and lease agreement for railway operation using the Northeast network with a remaining term of 7 years.

 

Additionally, the Company has operating equipment lease agreements, used mainly in the mining and steel operations, and real estate, used as operating facilities and administrative and sales offices, in several locations where the Company operates, with remaining terms of 1 to 13 years.

 

The present value of the future obligations was measured using the implicit rate observed in the contracts and for the contracts that did not have a rate, the Company applied the incremental borrowing rate - IBR, both in nominal terms.

 

The movement of lease liabilities is shown in the table below:

 

			Consolidated				Parent Company
	09/30/2022		12/31/2021		09/30/2022		12/31/2021
Opening balance	611,551		530,131		17,941		67,107
New leases	27,789		69,379		2,808		1,216
Present Value Adjustments - New leases	(3,288)		(7,273)		(508)		(104)
Contract review	69,426		109,860		201		(1,331)
Write-off	(781)		(38,626)				(17,073)
Payments	(106,934)		(114,303)		(6,584)		(9,502)
Interest appropriated	51,714		62,470		1,232		2,058
Drop down of Cements (note 10.c)							(24,430)
Acquisition of PCH Santa Ana e Sacre	259
Acquisition of Metalgráfica Iguaçu	720
Acquisition of CSN Cimentos Brasil	44,373
Exchange variation	(1,587)		(87)
Net balance	693,242		611,551		15,090		17,941

 

The estimated future minimum payments for the lease agreements include determinable variable payments, which are certain to occur, based on minimum performance and contractually fixed rates.

 

As of September 30, 2022, the expected minimum payments are the following:

 

							Consolidated
	Less than one year		Between one and five years		Over five years		Total
Leases	175,440		430,441		1,327,912		1,933,793
Present value adjustment - Leases	(7,306)		(127,363)		(1,105,882)		(1,240,551)
	168,134		303,078		222,030		693,242

 

·

Recoverable PIS / COFINS

 

Lease liabilities were measured at the amount of consideration with suppliers, that is, without considering the tax credits incurred after payment. The potential right of PIS and COFINS embedded in the lease liability is shown below.

 

			Consolidated				Parent Company
	09/30/2022		12/31/2021		09/30/2022		12/31/2021
Leases	1,870,790		1,777,209		15,596		18,847
Present value adjustment - Leases	(1,239,021)		(1,177,668)		(1,390)		(2,036)
Potencial PIS and COFINS credit	173,048		164,392		1,443		1,743
Present value adjustment – Potential PIS and COFINS credit	(114,609)		(108,934)		(129)		(188)

 

·

Lease payments not recognized as a liability:

 

The Company chose not to recognize lease liabilities in contracts with a term of less than 12 months and for low value assets. Payments made for these contracts are recognized as expenses when incurred.

 

The Company has contracts for the right to use ports (TECAR) and railways (FTL) which, even if they establish minimum performance, it is not possible to determine its cash flow since these payments are fully variable and will only be known when they occur. In such cases, payments will be recognized as expenses when incurred.

 

The expenses related to payments not included in the measurement of the lease liability during the year are:

 

							Consolidated
	Nine months ended				Three months ended
	09/30/2022		09/30/2021		09/30/2022		09/30/2021
Contract less than 12 months	905		64		66		64
Lower Assets value	2,548		2,636		644		1,091
Variable lease payments	259,739		403,699		81,037		113,410
	263,192		406,399		81,747		114,565
							Parent Company
	Nine months ended				Three months ended
	09/30/2022		09/30/2021		09/30/2022		09/30/2021
Lower Assets value	927		211		416		86
Variable lease payments	955		7,372		147		2,822
	1,882		7,583		563		2,908

 

In accordance with the guidelines of CPC 06 (R2) / IFRS 16, the Company uses the discounted cash flow technique to measure and remeasure liabilities and use rights, without considering the projected inflation in the flows to be discounted.

 

16.

TRADE PAYABLES

 

			Consolidated				Parent Company
	09/30/2022		12/31/2021		09/30/2022		12/31/2021
Trade payables	6,388,222		6,657,702		4,094,856		4,842,146
(-) Adjustment present value	(88,354)		(112,078)		(69,668)		(87,939)
	6,299,868		6,545,624		4,025,188		4,754,207
Classified:
Current	6,259,680		6,446,999		4,006,546		4,710,811
Non-current	40,188		98,625		18,642		43,396
	6,299,868		6,545,624		4,025,188		4,754,207

 

The Company classifies drawee risk operations and forfaiting with suppliers in other liabilities as per note 17 – other payables. As of September 30, 2022, Consolidated and Parent Company had, respectively, a balance of BRL5,506,326 and BRL4,439,967 (as of December 31, 2021, in Consolidated and Parent Company BRL4,439,967). These are negotiated with financial institutions, by which suppliers anticipate receivables and, on the other hand, extend our payment terms. The effective prepayment of receivables depends on acceptance by the suppliers, given that their participation is not mandatory. The Company is not reimbursed and / or benefited by the financial institution for discounts for payment executed before the maturity date agreed with the supplier, there is no change in the degree of subordination of the security in the event of judicial execution, nor changes in the existing commercial conditions between Company and its suppliers.

 

17.

OTHER PAYABLES

 

The other obligations classified in current and non-current liabilities have the following composition:

 

							Consolidated		Parent Company
	Current				Non-current				Current				Non-current
	09/30/2022		12/31/2021		09/30/2022		12/31/2021		09/30/2022		12/31/2021		09/30/2022		12/31/2021
Payables to related parties (note 21 a)	32,014		50,624		51,570		66,607		380,638		314,260		65,402		128,849
Derivative financial instruments (note 14 a)					90,928		101,822						69,394		101,822
Dividends and interest on capital	454,520		1,206,870						455,002		1,125,359
Advances from customers	1,543,448		2,140,783		1,081,494		947,896		121,321		148,822
Taxes in installments	68,659		51,999		223,210		152,420		13,957		9,173		57,445
Profit sharing - employees	186,187		223,885						93,991		138,860
Taxes payable					10,928		10,378						36,003		35,453
Provision for consumption and services	222,722		216,692						116,855		100,735
Third party materials in our possession	208,429		418,084						190,174		402,071
Trade payables - Drawee Risk and forfaiting (note 16)	5,506,326		4,439,967						5,328,002		4,439,967
Trade payables (note 16)					40,188		98,625						18,642		43,396
Lease Liabilities (note 15)	168,134		119,047		525,108		492,504		8,524		7,602		6,567		10,339
Other payables	43,590		36,703		387,695		77,912		13,937		9,308
	8,434,029		8,904,654		2,411,121		1,948,164		6,722,401		6,696,157		253,453		319,859

 

Advances from customers: Refers to iron ore supply contracts signed by the subsidiary CSN Mineração with an important international player. As of September 30, 2022, the balance in advance refers to the supply of 10.4 million tons of iron ore, to be delivered over the next three years. In September 2022, the company closed an advance payment transaction and received, in advance, the amount of BRL400 million referring to the commercialization contract of approximately 360 MWm/year of electric energy for a period of 8 years, signed with national operators in the sector. The subsidiary CSN Cimentos in June 2022, received in advance the total amount of BRL372 million related to an electric energy supply contract signed with a major national player, to be executed within 7 years.

 

18.

INCOME TAX AND SOCIAL CONTRIBUTIONS

 

18.a)Tax

of income and social contribution recognized in profit or loss:

 

The income tax and social contribution recognized in net income for the period are as follows:

 

							Consolidated
	Nine months ended				Three months ended
	09/30/2022		09/30/2021		09/30/2022		09/30/2021
Income tax and social contribution income (expense)
Current	(1,563,960)		(3,659,481)		(293,759)		(704,738)
Deferred	(584,923)		(286,915)		(277,035)		(706,547)
	(2,148,883)		(3,946,396)		(570,794)		(1,411,285)
							Parent Company
	Nine months ended				Three months ended
	09/30/2022		09/30/2021		09/30/2022		09/30/2021
Income tax and social contribution income (expense)
Current	(195,974)		(427,045)		41,423		(183,678)
Deferred	(512,722)		(469,233)		(207,637)		(815,045)
	(708,696)		(896,278)		(166,214)		(998,723)

 

The reconciliation of income and social contribution expenses and income of the consolidated and parent company and the product of the current tax rate on income before income tax and social contribution are shown below:

 

							Consolidated
	Nine months ended				Three months ended
	09/30/2022		09/30/2021		09/30/2022		09/30/2021
Profit before income tax and social contribution	4,119,789		16,481,021		808,426		2,735,937
Tax rate	34%		34%		34%		34%
Income tax and social contribution at combined statutory rate	(1,400,728)		(5,603,547)		(274,865)		(930,219)
Adjustment to reflect the effective rate:
Equity in results of affiliated companies	71,375		58,606		36,225		33,294
Difference Tax Rate in companies abroad	(146,918)		(333,105)		(153,729)		(218,593)
Tax loss carryforwards without recognizing deferred taxes	(18,631)		(24,175)		(4,677)		(25,796)
Indebtdness limit	(6,382)		(5,623)		(2,058)
Unrecorded deferred taxes on temporary differences	(13,658)		28,380		(14,116)		23,992
Reversal of provision for deferred income tax and social contribution losses			1,603,085				(611,636)
Income taxes and social contribution on foreign profit	11,803				11,803
Tax incentives	30,411		68,761		9,679		38,741
Recognition/(reversal) of tax credits	(696,590)				(179,915)
Other permanent exclusions (additions) (i)	20,435		261,222		859		278,932
Income tax and social contribution in net income for the period	(2,148,883)		(3,946,396)		(570,794)		(1,411,285)
Effective tax rate	52%		24%		71%		52%
							Parent Company
	Nine months ended				Three months ended
	09/30/2022		09/30/2021		09/30/2022		09/30/2021
Profit before income tax and social contribution	2,245,815		12,251,601		299,605		2,148,260
Tax rate	34%		34%		34%		34%
Income tax and social contribution at combined statutory rate	(763,577)		(4,165,544)		(101,866)		(730,408)
Adjustment to reflect the effective rate:
Equity in results of affiliated companies	719,815		1,391,988		100,741		44,990
Indebtdness limit	(6,382)		(5,623)		(2,058)
Reversal of provision for deferred income tax and social contribution losses			1,603,085				(611,636)
Income taxes and social contribution on foreign profit	11,803				11,803
Tax incentives	4,702		29,702		(1,327)		23,927
Recognition/(reversal) of tax credits	(696,590)				(179,915)
Other permanent exclusions (additions) (i)	21,533		250,114		6,408		274,404
Income tax and social contribution in net income for the period	(708,696)		(896,278)		(166,214)		(998,723)
Effective tax rate	32%		7%		55%		46.5%

(i) In September 2021 the Company recognized a credit for the unconstitutionality of the incidence of IRPJ and CSLL on amounts referring to the SELIC rate received due to the repetition of undue tax payment.

 

18.b)

Deferred income tax and social contribution

 

Deferred income tax and social contribution balances are as follows:

 

												Consolidated
		Opening balance		Movement								Closing balance
		12/31/2021		Shareholders' Equity		P&L		Others		Acquisition of companies		09/30/2022
Deferred
Income tax losses		1,537,623				(76,916)				833,204		2,293,911
Social contribution tax losses		583,845				(36,521)				299,953		847,277
Temporary differences		2,447,543		(10,276)		(471,486)		(417)		(313,392)		1,651,972
- Provision for tax. social security, labor, civil and environmental risks		265,328				(13,189)				186,964		439,103
- Asset impairment losses		283,266				3,735				57,464		344,465
- (Gains)/losses on financial instruments		6,484				386,938						393,422
- Actuarial liability (pension and healthcare plan)		210,009								2,349		212,358
- Accrued supplies and services		163,620				15,233						178,853
- Unrealized exchange variation (1)		1,026,302				(774,159)				(17)		252,126
- Gain upon loss of control in Transnordestina		(92,180)										(92,180)
- Cash flow hedge accounting		1,959,557		(34,577)								1,924,980
- Acquisition at fair value of SWT and CBL		(178,160)		12,092		16,663						(149,405)
- Deferred taxes not computed		(248,605)				29,191				(629,806)		(849,220)
- Business Combination		(1,338,674)				10,938				69,539		(1,258,197)
- Others		390,596		12,209		(146,836)		(417)		115		255,667
Total		4,569,011		(10,276)		(584,923)		(417)		819,765		4,793,160
Total Deferred Assets		5,072,092										5,072,047
Total Deferred Liabilities		(503,081)										(278,887)
Total Deferred		4,569,011										4,793,160

 

 

								Parent Company
		Opening balance		Movement				Closing balance
		12/31/2021		Shareholders' Equity		P&L		09/30/2022
Deferred tax assets
Income tax losses		1,419,151				(84,277)		1,334,874
Social contribution tax losses		531,472				(29,538)		501,934
Temporary differences		2,893,030		(233,740)		(398,907)		2,260,383
- Provision for tax. social security, labor, civil and environmental risks		184,336				(3,781)		180,555
- Asset impairment losses		113,506				16,426		129,932
- (Gains)/losses on financial instruments		6,483				376,660		383,143
- Actuarial liability (pension and healthcare plan)		211,019						211,019
- Accrued supplies and services		149,486				15,934		165,420
- Unrealized exchange variation (1)		1,031,889				(786,864)		245,025
- (Gain) in control loss on Transnorderstina		(92,180)						(92,180)
- Cash flow hedge accounting		1,959,556		(233,740)				1,725,816
- Business Combination		(721,992)						(721,992)
- Others		50,927				(17,282)		33,645
Total		4,843,653		(233,740)		(512,722)		4,097,191
Total Deferred Assets		5,710,808						5,710,808
Total Deferred Liabilities		(867,155)						(1,613,617)
Total Deferred		4,843,653						4,097,191

 

(1) The Company taxes exchange variations on a cash basis to calculate income tax and social contribution on net income.

 

The Company has in its corporate structure subsidiaries abroad, whose income are taxed by the income tax in the respective countries where they were constituted at rates lower than those in force in Brazil. In the period between 2018 and 2022, these subsidiaries generated income in the amount of BRL471,514. If the Brazilian tax authorities understand that these profits are subject to additional taxation in Brazil for income tax and social contribution, these, if due, would reach approximately BRL163,315. The Company, based on the position of its legal advisors, assessed only the likelihood of loss as possible in the event of possible tax questioning and, therefore, no provision was recognized in the financial statements.

 

In addition, management evaluated the precepts of IFRIC 23 - “Uncertainty Over Income Tax Treatments” and recognized in 2021 the credit for the unconstitutionality of the incidence of the IRPJ and CSLL on the amounts of default interest referring to the SELIC rate received due to the repetition of tax undue payment.

 

A sensitivity analysis of consumption of tax credits was carried out considering a variation in macroeconomic assumptions, operating performance, and liquidity events. Thus, considering the results of the study carried out, which indicates that it is probable the existence of taxable profit to use the balance of deferred income tax and social contribution.

 

18.c)

Income tax and social contribution recognized in equity:

 

Income tax and social contribution recognized directly in equity are shown below:

 

			Consolidated				Parent Company
	09/30/2022		12/31/2021		09/30/2022		12/31/2021
Income tax and social contribution
Actuarial gains on defined benefit pension plan	104,229		104,533		105,689		105,689
Exchange differences on translating foreign operations	(325,350)		(325,350)		(325,350)		(325,350)
Cash flow hedge accounting	1,884,656		1,959,556		1,725,816		1,959,556
	1,663,535		1,738,739		1,506,155		1,739,895

 

19.

PROVISIONS FOR TAX, SOCIAL SECURITY, LABOR, CIVIL, ENVIRONMENTAL RISKS AND JUDICIAL DEPOSITS

 

Claims of different nature are being challenged at the appropriate courts. Details of the accrued amounts and related judicial deposits are as follows:

 

 

								Consolidated		Parent Company
		Accrued liabilities				Judicial deposits				Accrued liabilities				Judicial deposits
		09/30/2022		12/31/2021		09/30/2022		12/31/2021		09/30/2022		12/31/2021		09/30/2022		12/31/2021
Tax		151,480		111,572		168,356		78,260		40,215		38,857		54,247		54,633
Social security		473		1,270						473		1,270
Labor		296,683		304,744		240,897		218,200		188,523		210,670		171,570		154,827
Civil		625,722		139,824		27,788		17,869		106,111		104,340		12,311		12,017
Environmental		21,891		16,942		2,764		2,739		14,941		13,719		1,010		1,004
Deposit of a guarantee						20,886		22,737
		1,096,249		574,352		460,691		339,805		350,263		368,856		239,138		222,481
Classified:
Current		58,627		66,047						30,033		35,571
Non-current		1,037,622		508,305		460,691		339,805		320,230		333,285		239,138		222,481
		1,096,249		574,352		460,691		339,805		350,263		368,856		239,138		222,481

 

The changes in tax, social security, labor, civil and environmental provisions in the period ended on September 30, 2022, can be summarized as follows:

 

												Consolidated
		Current + Non-current
Nature		12/31/2021		Additions		Accrued charges		Consolidation of companies		Net utilization of reversal		09/30/2022
Tax		111,572		14,050		8,625		28,847		(11,614)		151,480
Social security		1,270		4		14				(815)		473
Labor		304,744		25,091		36,357		12,411		(81,920)		296,683
Civil		139,824		36,103		19,666		473,430		(43,301)		625,722
Environmental		16,942		6,784		1,040				(2,875)		21,891
		574,352		82,032		65,702		514,688		(140,525)		1,096,249

 

										Parent Company
		Current + Non-current
Nature		12/31/2021		Additions		Accrued charges		Net utilization of reversal		09/30/2022
Tax		38,857		207		1,203		(52)		40,215
Social security		1,270		3		14		(814)		473
Labor		210,670		15,108		23,764		(61,019)		188,523
Civil		104,340		727		14,018		(12,974)		106,111
Environmental		13,719		5,605		244		(4,627)		14,941
		368,856		21,650		39,243		(79,486)		350,263

 

The provision for tax, social security, labor, civil and environmental risks was estimated by Management and is mainly based on the legal counsel’s assessment. Only lawsuits for which the risk is classified as probable loss are provisioned. Additionally, tax liability from actions initiated by the Company is included in this provision and is subject to SELIC (Central Bank’s policy rate).

 

§

Administrative and judicial proceedings

 

The Company does not make provisions for lawsuits, which Management’s expectation, based on the opinion of legal counsel, is a possible loss. The following table shows a summary of the balance of the main matters classified as possible risk compared to the balance on September 30, 2022, and December 31,2021.

 

 

				Consolidated
		09/30/2022		12/31/2021
Assessment Notice and imposition of fine (AIIM) / Tax Enforcement - Income tax and social contribution - Capital gain on sale of NAMISA's shares		13,861,096		13,015,938
Assessment Notice and Imposition of fine (AIIM) / Tax Enforcement - Income tax and Social contribution - Disallowance of deductions of goodwill generated in the reverse incorporation of Big Jump by NAMISA.		4,803,412		4,242,051
Assessment Notice and Imposition of fine (AIIM) / Tax Enforcement- Income tax and Social contribution - Disallowance of interest on prepayment arising from supply contracts of iron ore and port services		2,332,937		2,017,602
Assessment Notice and imposition of fine (AIIM) - Income tax and social contribution due to profits from foreign subsidiaries for years 2008, 2010, 2011, 2012, 2014, 2015 and 2016.		4,350,389		4,137,519
ICMS - SEFAZ/RJ - Electricity Credits		936,097		867,521
Offset of taxes that were not approved by the Federal Revenue Service - IRPJ/CSLL, PIS/COFINS and IPI		2,099,513		1,660,888
ICMS - SEFAZ/RJ- Disallowance of the ICMS credits - Transfer of iron ore		652,660		614,528
ICMS - Refers to the transfer of imported raw material at an amount lower than the price disclosed in the import documentation		348,709		326,361
Disallowance of the tax loss and negative basis of social contribution arising from the adjustments in the SAPLI		646,620		600,895
Assessment Notice and imposition of fine (AIIM)/ Action for annulment - IRRF- Capital Gain of CFM vendors located abroad		283,245		266,649
CFEM – difference of understanding between CSN and ANM on the calculation basis		1,114,270		1,079,951
ICMS - SEFAZ/RJ - Assessment Notice -questions about sales for incentive area		1,224,695		1,142,386
Other tax lawsuits (federal, state, and municipal) (1)		5,575,227		3,877,976
Assessment Notice and imposition of fine (AIIM) -Charge of IRRF- RFB- Business Combinations of CSN Mineração held in 2015.		959,682		889,179
ICMS - SEFAZ/RJ - Disallowance of credits on acquisitions of Intermediate Products		606,956		562,307
Assessment Notice and imposition of fine (AIIM) - RFB -Disallowance of credits PIS/COFINS of inputs and freight		1,204,734		1,116,228
Social security lawsuits		307,174		214,323
Action to discuss the balance of the construction contract – Tebas		560,638		507,719
Action related to power supply payment’s charge - Light		379,670		324,371
Enforcement action applied by Brazilian antitrust authorities (CADE)		106,372		98,740
Civil Public Action - Districts / School / Nursery relocation-CdP Dam				14,876
Other civil lawsuits (1)		1,158,801		845,043
Labor and social security lawsuits (1)		1,683,579		1,536,967
Tax foreclosures – Fine – Volta Redonda IV		120,800		104,400
ACP landfill Márcia		306,389		306,389
Other environmental lawsuits (1)		532,985		424,143
		46,156,649		40,794,950

(1)In the third quarter of 2022, after the respective approvals by the Administrative Council for Economic Defense, the acquisitions of CSN Cimentos Brasil (formerly LafargeHolcim (Brasil) S.A.) and Metalgráfica Iguaçu S.A. were concluded and became part of the CSN group. In processes of estimated possible loss, CSN Cimentos Brasil represents BRL1,934,276 and Metalgráfica Iguaçu BRL18,878.

 

In the first quarter of 2021, the Group was notified of an arbitration procedure based on an alleged unfulfillment of iron ore supply contracts. The counterparty asks for approximately US$1 billion, and the Company has no knowledge of the bases used in the allegations presented, as well as has no knowledge of the basis for the estimates of the amount asked. As opposed, the Company understands to be a creditor in the contracts. Finally, the Company informs that has responded the arbitration requirements in conjunction with its legal counselors and is currently at the initial stage of its defense. The Company expects the arbitration will be concluded in 2 to 3 years. The relevance of the arbitration to the Company is related to the amount attributed to the cause and its eventual financial impact. The discussion involves arbitration disputes initiated by both parties.

 

 

 

The Company has been offering judicial guarantees (Guarantee Insurance / Letter of Guarantee) in the total amount updated to September 30, 2022, of BRL5,026,396 (December 31,2021 BRL4,732,009), as determined by the procedural legislation in force.

 

The assessments made by legal advisors define these administrative and judicial proceedings as a possible risk of loss and, consequently, no loss provisions have been recognized in accordance with Management’s judgment and with the Accounting Practices adopted in Brazil.

 

20.

PROVISION FOR ENVIRONMENTAL LIABILITIES AND ASSET RETIREMMENT OBLIGATIONS

 

The calculation information and assumptions remain the same as disclosed in the December 31, 2021, financial statements. The balance of provisions for environmental liabilities and deactivation of assets can be shown as follows:

 

			Consolidated				Parent Company
	09/30/2022		12/31/2021		09/30/2022		12/31/2021
Environmental liabilities	214,823		173,647		167,382		159,254
Asset retirement obligations	719,558		724,950
	934,381		898,597		167,382		159,254

 

21.

RELATED-PARTY BALANCES AND TRANSACTIONS

 

21.a)Transactions

with subsidiaries, joint ventures, associates, exclusive founds and other related parties

 

·

Consolidated

 

		Consolidated
		09/30/2022								12/31/2021
		Subsidiaries and associates		Joint-ventures and Joint Operation		Other related parties		Total		Subsidiaries and associates		Joint-ventures and Joint Operation		Other related parties		Total
Assets
Current Assets
Investments	(1)					1,433,442		1,433,442						2,579,990		2,579,990
Trade receivables (note 6)	(2)	37,297		1,814		44,049		83,160		8,159		1,667		134,570		144,396
Dividends receivable (note 9)	(3)			61,924				61,924				61,898		14,980		76,878
Loans (note 9)	(4)			5,391				5,391				4,511				4,511
Other receivables from related parties (note 9)		30				1,828		1,858						1,828		1,828
		37,327		69,129		1,479,319		1,585,775		8,159		68,076		2,731,368		2,807,603
Non-current Assets
Investments	(1)					136,167		136,167						132,523		132,523
Loans (note 9)	(4)	124,794		1,221,466				1,346,260		3,626		1,139,602				1,143,228
Actuarial asset (note 9)						59,111		59,111						59,111		59,111
Other receivables from related parties (note 9)	(5)			1,357,089				1,357,089				927,077				927,077
		124,794		2,578,555		195,278		2,898,627		3,626		2,066,679		191,634		2,261,939
		162,121		2,647,684		1,674,597		4,484,402		11,785		2,134,755		2,923,002		5,069,542
Liabilities
Current Liabilities
Trade payables				155,366		31,445		186,811		21		62,730		14,712		77,463
Accounts payable				22,767				22,767				28,442				28,442
Provision for consumption				9,247				9,247				22,182				22,182
				187,380		31,445		218,825		21		113,354		14,712		128,087
Non-current Liabilities
Accounts payable				51,570				51,570				66,606				66,606
				51,570				51,570				66,606				66,606
				238,950		31,445		270,395		21		179,960		14,712		194,693
		Consolidated
		09/30/2022								09/30/2021
		Subsidiaries and associates		Joint-ventures and Joint Operation		Other related parties		Total		Subsidiaries and associates		Joint-ventures and Joint Operation		Other related parties		Total
P&L
Sales		168,475		22,308		1,926,149		2,116,932		37,438		779		2,610,969		2,649,186
Cost and expenses		(66)		(1,114,540)		(151,952)		(1,266,558)		(159)		(978,445)		(55,055)		(1,033,660)
Financial income (expenses)
Interest (note 27)				104,851		23,031		127,882				27,796		24,039		51,835
Financial investments (1)						(1,094,081)		(1,094,081)						237,915		237,915
		168,409		(987,381)		703,147		(115,825)		37,279		(949,870)		2,817,868		1,905,276

 

 

·

Parent Company

		Parent Company
		09/30/2022								12/31/2021
		Subsidiaries and associates		Joint-ventures and Joint Operation		Other related parties and exclusive funds		Total		Subsidiaries and associates		Joint-ventures and Joint Operation		Other related parties and exclusive funds		Total
Assets
Current Assets
Investments	(1)					1,535,966		1,535,966						2,674,193		2,674,193
Trade receivables (note 6)	(2)	921,899				43,692		965,591		1,385,970				134,271		1,520,241
Loans (note 9)	(4)			5,391				5,391				4,511				4,511
Dividends receivable (note 9)	(3)	114,559		36,430				150,989		435,504		36,022		14,980		486,506
Other receivables from related parties (note 9)		58,216				1,829		60,045		45,467				1,829		47,296
		1,094,674		41,821		1,581,487		2,717,982		1,866,941		40,533		2,825,273		4,732,747
Non-current Assets
Investments	(1)					136,167		136,167						132,523		132,523
Loans (note 9)	(4)	332,403		1,250,081				1,582,484		243,131		1,047,164				1,290,295
Actuarial asset (note 9)						47,350		47,350						47,350		47,350
Other receivables from related parties (note 9)	(5)	226,820		1,357,089				1,583,909		224,827		927,076				1,151,903
		559,223		2,607,170		183,517		3,349,910		467,958		1,974,240		179,873		2,622,071
		1,653,897		2,648,991		1,765,004		6,067,892		2,334,899		2,014,773		3,005,146		7,354,818
Liabilities
Current Liabilities
Intercompany Loans (note 13)	(6)	90,858						90,858		61,618						61,618
Trade payables		327,843		141,726		30,536		500,105		331,074		26,111		13,849		371,034
Accounts payable		101,469						101,469		101,588						101,588
Provision for consumption		269,922		9,247				279,169		196,490		16,182				212,672
		790,092		150,973		30,536		971,601		690,770		42,293		13,849		746,912
Non-current Liabilities
Intercompany Loans (note 13)	(6)	10,263,816						10,263,816		9,530,250						9,530,250
Accounts payable		65,402						65,402		128,849						128,849
		10,329,218						10,329,218		9,659,099						9,659,099
		11,119,310		150,973		30,536		11,300,819		10,349,869		42,293		13,849		10,406,011
		Parent Company
		09/30/2022								09/30/2021
		Subsidiaries and associates		Joint-ventures and Joint Operation		Other related parties and exclusive funds		Total		Subsidiaries and associates		Joint-ventures and Joint Operation		Other related parties and exclusive funds		Total
Net revenue and cost
Sales		3,295,037		284		1,925,793		5,221,114		2,228,618				2,628,242		4,856,860
Cost and expenses		(2,088,264)		(396,557)		(131,310)		(2,616,131)		(3,607,736)		(315,867)		(58,498)		(3,982,101)
Financial income (expenses)
Interest (note 27)		(52,236)		103,958		3,391		55,113		(189,515)		34,350		22,617		(132,548)
Exclusive funds (note 27)						9,753		9,753						41,985		41,985
Financial investments (1)		362,843						362,843						237,915		237,915
Exchange rate variations andmonetary, net						(1,075,238)		(1,075,238)		(295,224)						(295,224)
		1,517,380		(292,315)		732,389		1,957,454		(1,863,857)		(281,517)		2,872,261		726,887

 

Consolidated and Parent Company Information:

 

1) Financial Investments: Refers mainly to investments in Usiminas shares, cash and cash equivalents and Bonds with Banco Fibra and government bonds and CDBs with the exclusive funds.

 

(2) Accounts receivable: refers mainly to sales transactions of steel products from the Parent Company to related parties.

 

(3) Dividends receivable: In Consolidated, dividends from MRS Logística S.A. amounting to BRL61,924 (BRL61,898 on December 31, 2021).

 

(4) Loans (Assets):

 

Long-term: In Consolidated refers mainly to loan agreements with Transnordestina Logística BRL1,205,569 (BRL1,123,375 on December 31, 2021) with an average rate of 125.0% to 130.0% of CDI.

 

(5) Others (Assets): In Consolidated, advance for future capital increase with Transnordestina Logística S.A. of BRL1,357,088 on September 30, 2022 (BRL927,076 on December 31, 2021).

 

(6) Borrowings (Liabilities):

 

Foreign currency: In the Parent Company these are intercompany contracts amounting to BRL10,354,674 as of September 30, 2022 (BRL9,591,868 as of December 31, 2021).

 

 

21.b)

Key management personal

 

The key management personnel with authority and responsibility for planning, directing, and controlling the Company’s activities include members of the Board of Directors and statutory officers. The following is information on the compensation of such personnel and the related balances as of September 30, 2022, and 2021.

 

		09/30/2022		09/30/2021
		P&L
Short-term benefits for employees and officers		47,196		41,715
Post-employment benefits		195		129
		47,391		41,844

 

21.c)

Guarantees

 

The Company is liable for guarantees of its subsidiaries and joint ventures as follows:

 

	Currency		Maturities		Borrowings				Tax foreclosure				Others				Total
					09/30/2022		12/31/2021		09/30/2022		12/31/2021		09/30/2022		12/31/2021		09/30/2022		12/31/2021
Transnordestina Logísitca	R$		Up to 09/19/2056 and Indefinite		2,196,487		2,486,926		9,365		12,627		3,733		3,384		2,209,585		2,502,937
Controladas do Grupo	R$		Up to 12/21/2024 and indefinite				771		197		197		10,584		2,754		10,781		3,722
CSN Mineração	R$		Up to 12/21/2024		693,615		846,284										693,615		846,284
Total in BRL					2,890,102		3,333,981		9,562		12,824		14,317		6,138		2,913,981		3,352,943
CSN Inova Ventures	US$		01/28/2028		1,300,000		1,300,000										1,300,000		1,300,000
CSN Resources	US$		Up to 04/17/2026		1,150,000		1,450,000										1,150,000		1,450,000
CSN Cimentos	US$		Indefinite		115,000										1,025,000		115,000		1,025,000
Total in US$					2,565,000		2,750,000								1,025,000		2,565,000		3,775,000
Lusosider Aços Planos	EUR		Indefinite										75,000		75,000		75,000		75,000
Total in EUR													75,000		75,000		75,000		75,000
Total in BRL					13,867,929		15,346,375						396,780		479,795		14,264,709		21,540,463
					16,758,031		18,680,356		9,562		12,824		411,097		485,933		17,178,690		24,893,406

 

22.

SHAREHOLDERS´ EQUITY

 

22.a)

Paid-in capital

 

The fully subscribed and paid-in capital on September 30, 2022, was BRL10,240 million is divided into 1,326,093,947 common and book-entry shares ( in December 2021 BRL10,240 million is divided into 1,387,524,047 common and book-entry shares), with no par value. Each common share entitles its holder to one vote in the resolutions of the General Meetings.

 

22.b)Authorized

capital

 

The Company’s bylaws in effect on September 30, 2022, define that the share capital may be increased to up to 2,400,000,000 shares, independently of statutory reform.

 

 

22.c)

Legal Reserve

 

It will be applied 5% of the net profit calculated in each fiscal year , before any other allocation, in accordance with art. 193 of Law nº 6404/76, which will not exceed 20% of the capital stock.

 

22.d)

Ownership structure

 

As of September 30, 2022, and December 31, 2021, the Company’s ownership structure was as follows:

 

 

						09/30/2022						12/31/2021
		Number of common shares		% of total shares		% of voting capital		Number of common shares		% of total shares		% of voting capital
Vicunha Aços S.A. (*)		679,522,254		51.00%		51.24%		679,522,254		48.97%		50.65%
Rio Iaco Participações S.A. (*)		45,706,242		3.00%		3.45%		45,706,242		3.29%		3.41%
NYSE (ADRs)		249,053,040		19.00%		18.78%		250,564,538		18.06%		18.67%
Other shareholders		351,812,411		27.00%		26.53%		365,941,013		26.38%		27.27%
Outstanding shares		1,326,093,947		100.00%		100.00%		1,341,734,047		96.70%		100.00%
Treasury shares								45,790,000		3.30%
Total shares		1,326,093,947		100.00%				1,387,524,047		100.00%

(*) Controlling group companies.

 

22.e)

Treasury shares

 

As of September 30, 2022, the position of treasury shares was as follows:

 

Program

Board’s Authorization

Authorized quantity

Program period

Average buyback price

Minimum and maximum buyback price

Number bought back

Share cancelation

Sale of shares

Balance in treasury

04/20/2018

30,391,000

From 4/20/2018 to 4/30/2018

Not applicable

Not applicable

22,981,500

7,409,500

1º

06/21/2021

24,154,500

From 06/22/2021 to 12/22/2021

R$ 21.82

BRL20.06 and BRL23.22

24,082,000

31,491,500

2º

12/6/2021

30,000,000

From 12/07/2021 to 6/30/2022

R$ 25.00

BRL17.20 and BRL26.76

29,938,600

61,430,100

05/18/2022

Not applicable

Not applicable

61,430,100

3º

05/18/2022

58,000,000

From 05/19/2022 to 05/18/2023

 

At a Board of Directors Meeting held on May 18, 2022, the Company approved (i) (i) the closing of the share repurchase program, (ii) cancellation of 61,430,100 common shares held in treasury with no change in the Company's capital stock, which is now represented by 1,326,093,947 (one billion, three hundred and twenty-six million, ninety-three thousand, nine hundred and forty-seven) common book-entry shares without nominal value

 

22.f)

Earnings per share

 

The earnings per share are shown below:

 

							Parent Company
	Nine months ended				Three months ended
	09/30/2022		09/30/2021		09/30/2022		09/30/2021
	Common Shares				Common Shares
Profit for the period	1,537,119		11,355,323		133,391		1,149,537
Weighted average number of shares	1,327,343,593		1,380,114,547		1,326,093,947		1,380,114,547
Basic and diluted earnings per share	1.15804		8.22781		0.10059		0.83293

 

23.

COMPENSATION TO SHAREHOLDERS

 

At the Annual General Meeting held on April 29, 2022, the Company approved the distribution of BRL2,911,424 and that of the total amount of dividends declared by the AGO:(i) BRL1,750,000 have already been distributed to shareholders, as resolved by the Board of Directors in a meeting held on July 27, 2021; (ii) BRL256,952 have already been paid on May 20, 2022, as interest on equity, as deliberated by the Board of Directors in a meeting held on December 29, 2021; and (iii) BRL904,472, corresponding to the amount of BRL0.681594305290377 per share, to be paid in local currency, by the Company, without monetary restatement, in 2 (two) equal installments, in the amount of BRL452,236 each, corresponding to BRL0.340797152645188 per share, based on the shareholders' positions as of April 29, 2022, with the first installment already paid to shareholders residing in Brazil as of May 20, 2022, and the second installment will be available on a date to be defined in due course by the Management.

 

24.

NET REVENUE FROM SALES

 

Net sales revenue is as follows:

 

								Consolidated
		Nine months ended				Three months ended
		09/30/2022		09/30/2021		09/30/2022		09/30/2021
Gross revenue
Domestic market		22,801,754		22,687,744		8,231,980		7,675,068
Foreign market		15,417,709		20,058,561		4,406,455		4,319,001
		38,219,463		42,746,305		12,638,435		11,994,069
Deductions
Sales returns, discounts and rebates		(207,894)		(121,492)		(86,469)		(55,226)
Taxes on sales		(4,778,732)		(5,073,739)		(1,654,917)		(1,692,670)
		(4,986,626)		(5,195,231)		(1,741,386)		(1,747,896)
Net revenue		33,232,837		37,551,074		10,897,049		10,246,173
								Parent Company
		Nine months ended				Three months ended
		09/30/2022		09/30/2021		09/30/2022		09/30/2021
Gross revenue
Domestic market		20,086,467		20,834,681		7,008,557		6,937,778
Foreign market		3,049,264		2,286,231		859,699		1,425,822
		23,135,731		23,120,912		7,868,256		8,363,600
Deductions
Sales returns, discounts and rebates		(214,104)		(209,860)		(82,692)		(43,081)
Taxes on sales		(3,909,675)		(4,386,460)		(1,311,201)		(1,447,225)
		(4,123,779)		(4,596,320)		(1,393,893)		(1,490,306)
Net revenue		19,011,952		18,524,592		6,474,363		6,873,294

 

25.

EXPENSES BY NATURE

 

								Consolidated
		Nine months ended				Three months ended
		09/30/2022		09/30/2021		09/30/2022		09/30/2021
Raw materials and inputs		(11,122,342)		(7,760,865)		(3,952,017)		(2,319,930)
Outsourcing material		(2,412,410)		(3,743,717)		(776,390)		(1,134,933)
Labor cost		(2,338,496)		(1,978,782)		(846,490)		(628,903)
Supplies		(2,513,231)		(1,563,729)		(1,003,132)		(486,692)
Maintenance cost (services and materials)		(835,269)		(881,843)		(258,475)		(297,080)
Outsourcing services		(1,497,304)		(1,484,657)		(522,485)		(508,481)
Freight		(859,024)		(171,619)		(328,143)		(50,915)
Distribution freight		(911,468)		(1,162,010)		(441,280)		(422,152)
Depreciation, amortization and depletion		(1,967,394)		(1,491,507)		(689,033)		(533,346)
Others		(786,320)		(1,137,820)		(339,907)		(321,558)
		(25,243,258)		(21,376,549)		(9,157,352)		(6,703,990)
Classified as:
Cost of sales		(23,206,660)		(19,231,398)		(8,358,934)		(5,941,522)
Selling expenses		(1,595,871)		(1,706,395)		(647,943)		(603,615)
General and administrative expenses		(440,727)		(438,756)		(150,475)		(158,853)
		(25,243,258)		(21,376,549)		(9,157,352)		(6,703,990)

								Parent Company
		Nine months ended				Three months ended
		09/30/2022		09/30/2021		09/30/2022		09/30/2021
Raw materials and inputs		(10,429,422)		(8,430,603)		(3,745,471)		(3,035,040)
Labor cost		(1,066,444)		(854,213)		(364,421)		(252,837)
Supplies		(1,767,188)		(1,143,419)		(706,007)		(393,294)
Maintenance cost (services and materials)		(326,588)		(432,122)		(73,592)		(142,102)
Outsourcing services		(864,895)		(588,290)		(297,196)		(193,152)
Freight		(197,216)		(22,059)		(86,624)		(9,254)
Distribution freight		(453,814)		(328,717)		(168,348)		(135,139)
Depreciation, amortization and depletion		(784,510)		(632,406)		(271,431)		(221,572)
Others		(305,978)		(167,273)		(146,668)		(58,448)
		(16,196,055)		(12,599,102)		(5,859,758)		(4,440,838)
Classified as:
Cost of sales		(15,317,359)		(11,910,176)		(5,555,003)		(4,176,175)
Selling expenses		(708,561)		(517,200)		(244,946)		(210,412)
General and administrative expenses		(170,135)		(171,726)		(59,809)		(54,251)
		(16,196,055)		(12,599,102)		(5,859,758)		(4,440,838)

 

The depreciation, amortization and depletion additions for the period were distributed as follows.

 

							Consolidated
	Nine months ended				Three months ended
	09/30/2022		09/30/2021		09/30/2022		09/30/2021
Production costs (1)	(1,934,833)		(1,463,535)		(677,360)		(524,251)
Selling expenses	(10,121)		(8,063)		(3,681)		(2,331)
General and administrative expenses	(22,440)		(19,909)		(7,992)		(6,764)
	(1,967,394)		(1,491,507)		(689,033)		(533,346)
Other operational (2)	(57,571)		(74,315)		(19,335)		(22,971)
	(2,024,965)		(1,565,822)		(708,368)		(556,317)
							Parent Company
	Nine months ended				Three months ended
	09/30/2022		09/30/2021		09/30/2022		09/30/2021
Production costs (1)	(768,100)		(617,557)		(265,913)		(216,593)
Selling expenses	(6,263)		(4,987)		(2,142)		(1,570)
General and administrative expenses	(10,147)		(9,862)		(3,376)		(3,409)
	(784,510)		(632,406)		(271,431)		(221,572)
Other operational	(5,172)		(4,896)		(1,932)		(1,480)
	(789,682)		(637,302)		(273,363)		(223,052)

 

(1)The cost of production includes PIS and COFINS credits on lease agreements on September 30, 2022, in the amount of BRL5,426 (BRL4,071 on September 30, 2021) in the consolidated and BRL458 (BRL535 on September 30, 2021) in the parent company.

 

(2)They mainly refer to the depreciation of investment properties, paralyzed equipment and amortization of the SWT Client Portfolio, see note 26.

 

26.

OTHER OPERATING INCOME AND EXPENSES

 

								Consolidated
		Nine months ended				Three months ended
		09/30/2022		09/30/2021		09/30/2022		09/30/2021
Other operating income
Receivables by indemnity (1)		152,437		5,127		143,406		3,411
Rentals and leases		8,826		9,364		4,304		2,758
Dividends received				15,409				15,409
Contractual fines		2,437		1,235		418		330
Updated shares – Fair value through profit or loss (note 14)		(27,977)		124,542		(25,623)		(35,558)
Net gain in shares sale (note 10.c) (2)				2,472,497
Other revenues		87,178		76,945		50,780		22,572
		222,901		2,705,119		173,285		8,922
		-		-		-		-
Other operating expenses
Taxes and fees (3)		(115,514)		(55,830)		(56,358)		(14,116)
Expenses/reversal with environmental liabilities, net		(356)		(6,654)		(1,096)		(5,994)
Write-off/(Provision) of judicial lawsuits		(61,962)		14,011		(17,319)		6,712
Depreciation and amortization (note 25)		(57,571)		(74,315)		(19,335)		(22,971)
Write-offs and estimated losses of PPE, intangible assets and investment properties, net of reversal (notes 11 and 12)		(11,561)		(43,172)		(4,949)		(730)
Estimated (Loss)/reversal in inventories		(179,169)		(140,054)		(60,947)		(46,236)
Idleness in stocks and paralyzed equipment (3)		(113,093)		(30,979)		(18,465)		(30,979)
Studies and project engineering expenses		(40,893)		(46,424)		(15,008)		(14,574)
Research and development expenses		(296)		(253)		(89)		(93)
Healthcare plan expenses		(63,918)		(81,017)		(12,759)		(16,805)
Cash flow hedge accounting realized (note 14) (4)		(815,269)		(345,200)		(417,613)		244,528
Other expenses		(466,372)		(268,307)		(255,485)		(65,473)
		(1,925,974)		(1,078,194)		(879,423)		33,269
Other operating income (expenses), net		(1,703,073)		1,626,925		(706,138)		42,191
								Parent Company
		Nine months ended				Three months ended
		09/30/2022		09/30/2021		09/30/2022		09/30/2021
Other operating income
Receivables by indemnity (1)		150,777		4,711		143,398		3,001
Rentals and leases		6,907		9,022		2,731		2,643
Dividends received				15,407				15,407
Contractual fines		1,654		517		342		55
Updated shares – Fair value through profit or loss (note 14)		(27,977)		124,542		(25,623)		(35,558)
Net gain in shares sale (note 10.c) (2)				2,472,497
Other revenues		70,858		23,954		43,779
		202,219		2,650,650		164,627		(14,452)
Other operating expenses
Taxes and fees (3)		(81,542)		(44,013)		(47,618)		(7,658)
Expenses with environmental liabilities, net		1,501		(6,218)		(13)		(5,728)
Write-off/(Provision) of judicial lawsuits		(26,236)		24,892		478		13,267
Depreciation of investment property, equipment paralyzed and amortization of intangible assets (note 25)		(5,172)		(4,896)		(1,932)		(1,480)
Write-offs and estimated losses of PPE, intangible assets and investment properties, net of reversal (notes 11 and 12)		(1,065)		(17,073)		(783)
Estimated (Loss)/reversal in inventories		(128,673)		(61,576)		(51,218)		(15,547)
Idleness in stocks and paralyzed equipment (3)		(11,169)		(10,057)		(11,169)		(10,057)
Studies and project engineering expenses		(15,794)		(14,117)		(6,313)		(5,858)
Research and development expenses		(296)		(253)		(89)		(93)
Healthcare plan expenses		(63,355)		(80,437)		(12,702)		(16,690)
Cash flow hedge accounting realized (note 14) (4)		(830,132)		(317,472)		(409,102)		(65,222)
Other expenses		(362,692)		(189,766)		(232,335)		(51,122)
		(1,524,625)		(720,986)		(772,796)		(166,188)
Other operating income (expenses), net		(1,322,406)		1,929,664		(608,169)		(180,640)

 

(1) In the 3rd quarter of 2022 the undisputed amount of BRL134,611 was recognized as restitution of the amounts overpaid for railway freight from April 1994 to March 1996 to the company RFFSA, which after extinction became part of the Union's liabilities;

 

(2) Refers to the public offering of CSN Mineração shares (see note 10.c);

 

(3) In 2022, it is the unused capacity due to lower than usual production volume, because of the intense rains during the ore extraction operation;

 

(4) This refers to the effects of foreign exchange cash flow hedge (BRL838,643) and cash flow hedge of the Platts index - BRL23,374, totaling in Consolidated (BRL815,269) and (BRL830,132) in the Parent Company;

 

On September 30, 2021, it deals with the effects of the Exchange cash flow hedge (BRL317,472) and cash flow hedge of the Platts index (BRL27,728), totaling in the Consolidated (BRL345,200) and (BRL317,472) in the Parent Company.

27.

FINANCIAL INCOME (EXPENSES)

 

								Consolidated
		Nine months ended				Three months ended
		09/30/2022		09/30/2021		09/30/2022		09/30/2021
Financial income
Related parties (note 21 a)		135,427		60,888		54,726		30,021
Income from financial investments		566,209		194,000		251,163		88,712
Updated shares – Fair value through profit or loss (note 14.d)		(1,094,081)		567,247		(63,379)		(594,012)
Other income		133,226		257,275		42,247		177,349
		(259,219)		1,079,410		284,757		(297,930)
Financial expenses
Borrowings and financing - foreign currency (note 13)		(935,326)		(1,306,019)		(335,108)		(495,577)
Borrowings and financing - local currency (note 13)		(948,725)		(293,571)		(362,934)		(138,652)
Related parties		(7,545)		(9,053)		(2,669)		(3,018)
Lease liabilities		(48,535)		(42,891)		(16,951)		(15,552)
Capitalised interest (note 11)		97,490		60,996		34,627		24,163
Interest and fines		(408,609)		(140,482)		(161,349)		(77,433)
(-) Adjustment present value of trade payables		(329,713)		(185,795)		(107,304)		(69,715)
Commission, bank fees, Guarantee and bank fees		(106,056)		(117,426)		(1,237)		(40,045)
PIS/COFINS over financial income		(103,979)		(66,139)		(47,007)		(30,340)
Other financial expenses		(270,972)		(324,538)		(83,181)		(47,209)
		(3,061,970)		(2,424,918)		(1,083,113)		(893,378)
Others financial items, net
Foreign exchange and monetary variation, net		899,295		(155,870)		467,697		299,837
Gains and (losses) on exchange derivatives (*)		88,151		17,394		12,165		(51,955)
		987,446		(138,476)		479,862		247,882
		(2,074,524)		(2,563,394)		(603,251)		(645,496)
Financial income (expenses), net		(2,333,743)		(1,483,984)		(318,494)		(943,426)
(*) Statement of gains and (losses) on derivative transactions (note 14.c)
Dollar - to - real NDF		176992		37,322		131,831
Exchange rate swap Real x Dollar		(21,535)				3,703
Exchange rate swap Dollar x Euro				19,638				6,205
Interest rate swap CDI x IPCA		(99,734)		(32,415)		(109,353)		(32,415)
Exchange rate swap CDI x Dollar		32,428		(7,151)		(14,016)		(25,745)
		88,151		17,394		12,165		(51,955)
								Parent Company
		Nine months ended				Three months ended
		09/30/2022		09/30/2021		09/30/2022		09/30/2021
Financial income
Related parties (note 21 a)		146,767		106,576		47,965		35,463
Income from financial investments		173,264		93,111		75,955		22,987
Updated shares – Fair value through profit or loss (note 14.d)		(1,094,081)		567,247		(63,379)		(594,012)
Other income		168,836		247,816		56,122		174,209
		(605,214)		1,014,750		116,663		(361,353)
Financial expenses
Borrowings and financing - foreign currency (note 13)		(108,292)		(90,677)		(39,393)		(31,129)
Borrowings and financing - local currency (note 13)		(735,128)		(254,644)		(261,197)		(116,003)
Related parties (note 13)		(81,901)		(197,139)		(40,021)		(22,152)
Lease liabilities		(1,115)		(1,510)		(347)		(407)
Capitalised interest (note 11)		29,358		18,007		11,831		4,090
Interest and fines		(346,360)		(78,635)		(146,082)		(40,510)
(-) Adjustment present value of trade payables		(283,040)		(136,763)		(91,299)		(50,132)
Commission, bank fees, Guarantee and bank fees		(71,106)		(96,236)		(20,996)		(32,165)
PIS/COFINS over financial income		(32,267)		(30,900)		(19,487)		(1,836)
Other financial expenses		(52,028)		(120,087)		(27,385)		(19,686)
		(1,681,879)		(988,584)		(634,376)		(309,930)
Others financial items, net
Foreign exchange and monetary variation, net		875,571		283,350		514,287		461,145
Gains and (losses) on exchange derivatives (*)		46,743		(7,151)		299		(25,745)
		922,314		276,199		514,586		435,400
Financial income (expenses), net		(1,364,779)		302,365		(3,127)		(235,883)
(*) Statement of gains and (losses) on derivative transactions (note 14.c)
Dollar - to - real NDF		14,315				14,315
Exchange rate swap CDI x Dollar		32,428		(7,151)		(14,016)		(25,745)
		46,743		(7,151)		299		(25,745)

 

28.

SEGMENT INFORMATION

 

Results by segment

 

For the purpose of preparing and presenting the information by business segment, Management decided to maintain the proportional consolidation of the joint ventures as historically presented. For purposes of reconciliation of the consolidated result, the amounts recorded by these companies are not included in the "Corporate expenses/elimination" column.

 

		Nine months ended
																09/30/2022
P&L		Steel		Mining		Logistics				Energy		Cement		Corporate expenses/elimination		Consolidated
						Port		Railroads
Net revenues
Domestic market		16,087,365		1,364,074		221,754		1,703,843		139,310		1,638,512		(3,114,101)		18,040,757
Foreign market		7,199,082		7,631,901										361,097		15,192,080
Cost of sales and services (note 25)		(18,041,998)		(5,227,045)		(162,504)		(1,124,867)		(148,765)		(1,074,036)		2,572,555		(23,206,660)
Gross profit		5,244,449		3,768,930		59,250		578,976		(9,455)		564,476		(180,449)		10,026,177
General and administrative expenses (note 25)		(973,837)		(212,919)		(23,986)		(101,708)		(26,520)		(237,802)		(459,826)		(2,036,598)
Other operating (income) expenses, net (note 26)		(653,472)		(247,544)		(12,760)		13,816		(1,346)		(37,657)		(764,110)		(1,703,073)
Equity in results of affiliated companies (note 10)														167,026		167,026
Operating result before Financial Income and Taxes		3,617,140		3,308,467		22,504		491,084		(37,321)		289,017		(1,237,359)		6,453,532
Sales by geographic area
Asia				6,462,994										361,097		6,824,091
North America		1,757,243														1,757,243
Latin America		332,801														332,801
Europe		5,107,972		1,168,907												6,276,879
Others		1,066														1,066
Foreign market		7,199,082		7,631,901										361,097		15,192,080
Domestic market		16,087,365		1,364,074		221,754		1,703,843		139,310		1,638,512		(3,114,101)		18,040,757
Total		23,286,447		8,995,975		221,754		1,703,843		139,310		1,638,512		(2,753,004)		33,232,837
		Three months ended
																09/30/2022
P&L		Steel		Mining		Logistics				Energy		Cement		Corporate expenses/elimination		Consolidated
						Port		Railroads
Net revenues
Domestic market		5,654,870		437,502		68,566		653,161		47,853		777,535		(1,090,586)		6,548,901
Foreign market		2,043,519		2,089,469										215,160		4,348,148
Cost of sales and services (note 25)		(6,426,119)		(1,800,015)		(54,345)		(397,365)		(52,590)		(501,272)		872,772		(8,358,934)
Gross profit		1,272,270		726,956		14,221		255,796		(4,737)		276,263		(2,654)		2,538,115
General and administrative expenses (note 25)		(333,724)		(63,493)		(6,693)		(36,793)		(9,613)		(100,372)		(247,730)		(798,418)
Other operating (income) expenses, net (note 26)		(321,627)		(48,557)		(2,833)		(10,344)		(442)		(14,222)		(308,113)		(706,138)
Equity in results of affiliated companies (note 10)														93,361		93,361
Operating result before Financial Income and Taxes		616,919		614,906		4,695		208,659		(14,792)		161,669		(465,136)		1,126,920
Sales by geographic area
Asia				1,764,373										215,160		1,979,533
North America		565,374														565,374
Latin America		160,355														160,355
Europe		1,317,790		325,096												1,642,886
Foreign market		2,043,519		2,089,469										215,160		4,348,148
Domestic market		5,654,870		437,502		68,566		653,161		47,853		777,535		(1,090,586)		6,548,901
Total		7,698,389		2,526,971		68,566		653,161		47,853		777,535		(875,426)		10,897,049

 

		Nine months ended
																09/30/2021
P&L		Steel		Mining		Logistics				Energy		Cement		Corporate expenses/elimination		Consolidated
						Port		Railroads
Net revenues
Domestic market		16,434,208		2,666,413		225,332		1,395,521		175,986		1,007,460		(4,127,453)		17,777,467
Foreign market		6,009,455		12,975,586										788,566		19,773,607
Cost of sales and services (note 25)		(14,985,211)		(6,037,086)		(160,353)		(923,770)		(107,292)		(624,073)		3,606,387		(19,231,398)
Gross profit		7,458,452		9,604,913		64,979		471,751		68,694		383,387		267,500		18,319,676
General and administrative expenses (note 25)		(834,843)		(265,122)		(26,196)		(92,653)		(23,616)		(118,544)		(784,177)		(2,145,151)
Other operating (income) expenses, net (note 26)		(406,069)		(208,629)		(1,736)		44,147		(1,420)		(39,288)		2,239,920		1,626,925
Equity in results of affiliated companies (note 10)														163,555		163,555
Operating result before Financial Income and Taxes		6,217,540		9,131,162		37,047		423,245		43,658		225,555		1,886,798		17,965,005
Sales by geographic area
Asia				10,506,640										788,566		11,295,206
North America		1,214,905														1,214,905
Latin America		402,472														402,472
Europe		4,392,078		2,468,946												6,861,024
Foreign market		6,009,455		12,975,586										788,566		19,773,607
Domestic market		16,434,208		2,666,413		225,332		1,395,521		175,986		1,007,460		(4,127,453)		17,777,467
Total		22,443,663		15,641,999		225,332		1,395,521		175,986		1,007,460		(3,338,887)		37,551,074
		Three months ended
																09/30/2021
		Steel		Mining		Logistics				Energy		Cement		Corporate expenses/elimination		Consolidated
						Port		Railroads
Net revenues
Domestic market		5,508,200		970,763		69,794		508,208		66,298		387,259		(1,490,651)		6,019,871
Foreign market		2,118,450		1,832,952										274,900		4,226,302
Cost of sales and services (note 25)		(4,735,813)		(1,883,465)		(52,853)		(325,187)		(37,724)		(228,718)		1,322,238		(5,941,522)
Gross profit		2,890,837		920,250		16,941		183,021		28,574		158,541		106,487		4,304,651
General and administrative expenses (note 25)		(302,141)		(69,738)		(6,562)		(33,513)		(8,573)		(60,648)		(281,293)		(762,468)
Other operating (income) expenses, net (note 26)		(97,136)		249,074		1,022		55,487		(480)		(14,385)		(151,391)		42,191
Equity in results of affiliated companies (note 10)														94,989		94,989
Operating result before Financial Income and Taxes		2,491,560		1,099,586		11,401		204,995		19,521		83,508		(231,208)		3,679,363
Sales by geographic area
Asia				848,061										274,900		1,122,961
North America		502,258														502,258
Latin America		126,789														126,789
Europe		1,489,403		984,891												2,474,294
Foreign market		2,118,450		1,832,952										274,900		4,226,302
Domestic market		5,508,200		970,763		69,794		508,208		66,298		387,259		(1,490,651)		6,019,871
Total		7,626,650		2,803,715		69,794		508,208		66,298		387,259		(1,215,751)		10,246,173

 

29.

INSURANCE

 

In order to adequately mitigate risks and in view of the nature of its operations, the Company contract several different types of insurance policy. The policies are taken out in line with the Risk Management policy and are similar to the insurance taken out by other companies in the same industry in which CSN and its subsidiaries operate. The coverage of these policies includes National Transport, International Transport, Life and Personal Accident Insurance, Health, Vehicle Fleet, D&O (Administrators Liability Insurance), General Liability, Engineering Risks, Export Credit, Insurance Warranty and Civil Liability Port Operator.

 

The Company's insurance is contracted together with the insurance of its subsidiaries, but there is no joint or subsidiary responsibility between the Company and companies of its economic group with CSN Mineração.

 

In 2022, after negotiations with insurers and reinsurers in Brazil and abroad, an Operational Risk Insurance Policy for Property Damage and Business Interruption was issued, effective from July 01, 2022, to June 30, 2023. Under the policy, the Maximum Indemnity Limit is US$475 million for the locations with Company activities combined for Property Damage and loss of profits, and the deductible is US$210 million for material damages and 45 days for loss of profits. The policy's maximum indemnity limit is shared with other insured establishments.

 

The risk assumptions adopted, given their nature, are not part of the scope of the review of the interim financial statements, and consequently, they have not been reviewed by our independent auditors.

 

30.

ADDITIONAL INFORMATION TO CASH FLOWS

 

The following table presents additional information on transactions related to the statement of cash flows:

 

			Consolidated				Parent Company
	09/30/2022		09/30/2021		09/30/2022		09/30/2021
Income tax and social contribution paid	3,028,030		1,943,877		278,919
Addition to PP&E with interest capitalization (notes 11 and 27)	97,490		60,996		29,358		18,007
Remeasurement and addition – Right of use (note 11 i)	94,257		145,845		2,501		(760)
Addition to PP&E without adding cash	19,970		69,789
	3,239,747		2,220,507		310,778		17,247

 

31.

COMPREHENSIVE INCOME STATEMENT

 

 

32.

SUBSEQUENT EVENTS

 

- Issuance of Debentures

 

On October 11, 2022, the parent company CSN signed the Private Instrument of Deed of the 12th (Twelfth) Issue of Simple Debentures, not convertible into shares, unsecured, in a single series, for public distribution, with firm distribution guarantee, of CSN. The base value of the issue is BRL1.5 billion, corresponding to 1,500,000 debentures, maturing on December 20, 2027. The par value will be subject to interest payable semi-annually starting on December 20, 2022.

 

- Acquisition of Companhia Energética Chapecó - CEC

 

On October 7, 2022, the subsidiaries CSN Mineração and CSN Energia S.A concluded the acquisition of 100% of the shares of Companhia Energética Chapecó - CEC, holder of the concession for the Usina Hidrelétrica Quebra-Queixo ("Chapecó") hydroelectric plant, which has an installed capacity of 120 MW, for the base price of BRL427. 518, as provided for in the Agreement for the Purchase and Sale of Shares and Other Covenants and in the Private Instrument of Assignment of Rights and Obligations entered into on July 1, 2022 and July 25, 2022, respectively.

 

- Acquisition of Companhia Estadual e Geração de Energia Elétrica ("CEEE-G")

 

On October 21, 2022, the subsidiary Companhia Florestal do Brasil concluded the acquisition of 66.23% of CEEE-G shares, for BRL928,000. The acquisition of CEEE-G shares by Companhia Florestal do Brasil aims to support and strengthen the business expansion strategy of CSN and its subsidiaries, through investments in renewable energy, seeking self-sufficiency in electricity to improve the competitiveness of its business.

 

As part of this acquisition, CEEE-G will pay the union for the concession of the hydroelectric plants over a 30-year period the amount, initially foreseen in the bid notice, of BRL1.66 billion.

 

11.1 Projections

 

The Company clarifies that the information disclosed in this item represents a mere estimation, with hypothetical data and in no way constitute a promise of performance on behalf of the Company and/or its directors. The projections presented below involve market factors beyond the Company's control and, therefore, may change.

 

a)     Projection object.

The Company estimates the following variables below:

 

Projections	2022	2023E		2022-2026 E
Leverage (Net Debt / Adjusted EBITDA)	1.75x – 1.95x	1.75x – 1.95x		-
Capex expansion (BRL million) - Mining	-	-		BRL 12,000
Capex (BRL million) - Steel	-	-		BRL 6,300
Capex (BRL million) - Consolidated	BRL 3,000	-		-
Sales volume Steel (kton) - Steel	5,104	-		-
EBITDA/ton (USD/ton) - Steel	-	$165		-
Iron Ore Production Volume (kton) - Mining	34,000	-		-
Cash Cost Mining (USD/ton)	$ 20.0 - $22.00	-		-

 

b)

Projected period and the validity of the projection.

The projected period and expiration dates can be viewed in the table above in item 11.1 a), and the numbers are always presented at the end of the fiscal year and duly published in the Standardized Financial Statements (DFP) of each fiscal year.

 

c)

Assumptions of the projection, with the indication of which ones can be influenced by the administration of the issuer and which escape its control.

 

All the premises of the projections mentioned above are subject to external influence factors, which are outside the control of the Company's management. Therefore, in the event of any material change in these assumptions, the Company may revise its estimates, changing them compared to those originally presented.

 

The main premise that can be influenced by the Company's management would be its production and sales volumes, along with the associated costs.

 

The volume of ore production always considers our 2022 mining plan, with increased pellet feed production. However, key factors such as sales prices and raw material inputs are outside the Company's control.

 

d)

Values of the indicators that are the subject of the forecast.

The values can be found above in item 11.1 a).

11.2 In the event that the issuer has disclosed, during the last 3 fiscal years, projections on the evolution of its indicators:

 

a) inform which ones are being replaced by new projections included and which are being repeated.

Estimates maintained:

 

Projections	2022	2023E		2022-2026 E
Capex expansion (BRL million) - Mining	-	-		BRL 12,000
Capex (BRL million) - Steel	-	-		BRL 6,300
EBITDA/ton (USD/ton) - Steel	-	$165		-

 

 

 

 

Estimates replaced in the last 3 fiscal years:

 

CSN replaced in Dec/20 the projection of reaching 3.0 x to 2.5 x in the Net Debt/Adjusted EBITDA Indicator at the end of the 2020 annual Balance Sheet.

 

CSN replaced in Dec/20 the projection of reaching 2.5 x to 2.0 x the Net Debt/Adjusted EBITDA Indicator at the end of the annual Balance Sheet of 2021.

 

CSN replaced in Dec/20 the projection of reaching a Net Debt of BRL23 billion by BRL20 billion at the end of the 2020 annual Balance Sheet.

 

CSN replaced in Dec/20 the projection of achieving a Consolidated Adjusted EBITDA of BRL9.75 billion by BRL11.2 billion at the end of the 2020 annual Balance Sheet.

 

CSN replaced in Dec/20 the projection to achieve a Mining segment EBITDA of BRL7.3 billion by BRL7.65 billion at the end of the 2020 annual Balance Sheet.

 

CSN replaced in Dec/20 the projection of reaching a Steel segment EBITDA of BRL1.6 billion by BRL2.3 billion at the end of the 2020 annual Balance Sheet.

 

CSN replaced in Dec/20 the projection of reaching a Consolidated CAPEX of BRL1.5 billion for BRL1.6 billion at the end of the 2020 annual Balance Sheet.

 

CSN replaced in Dec/20 the estimated iron ore production volume in 2020 of 33Mton, against previous expectation of 33-36Mton.

 

CSN replaced in Dec/21 the estimated volume of iron ore production in 2021 to 36-37Mton, against previous expectation of 38-40Mton.

 

CSN replaced in Dec/21 Mining Cash Cost in 2021 to $19.00, against a previous expectation of $16.00.

 

CSN replaced in Dec/21 Mining Expansion Capex in 2021 to BRL560 million, against a previous expectation

of BRL1,000 million.

 

CSN replaced in Dec/21 the estimated Mining Expansion Capex between 2022-2026 to BRL12,000 million, against a previous expectation of BRL14,000 million between 2021-2025.

 

CSN replaced in Dec/21 the Steel Capex estimates between 2022-2026 to BRL6,300 million, against a previous expectation of BRL6.100 million between 2021-2025.

 

CSN replaced in Aug/22 Mining Cash Cost in 2022 between $20.00 - $22.00, against a previous expectation of $18.00.

 

CSN replaced in Aug/22 estimated volume of iron ore production in 2022 to 36-38Mton, against previous expectation of 39-41Mton.

 

The Company replaced in October/22 estimated Consolidated CAPEX in 2022 to the amount of R$3,000 million, against a previous expectation of R$ 4,100 million.

 

The Company replaced in October/22 the leverage projection, measured by the Indicator Adjusted Net Debt/EBITDA from 1.0x in 2022 to a level between 1.75x and 2.0x between the closings of the annual balance sheets for 2022 and 2023.

 

The Company replaced in October/22 estimated iron ore production volume in 2022 to 34Mton, against previous expectation of 36-38Mton.

 

 

 

 

 

b) regarding the projections related to periods already elapsed, compare the projected data with the effective performance of the indicators, clearly indicating the reasons that led to deviations in the projections.

 

2020

 

¹MINING EBITDA – the variation of BRL541 million above expected was due to the higher iron ore price during 4Q20.

²Production Volume – the negative variation of 2.3Mton was due to rainfall, pandemic impacts and lower availability of iron ore compared to expected.

Below is a summary table about the evolution of projections during the last exercises, in line with the clarifications provided above:

 

Net Revenue	2016	2017	2018	2019	2020
Estimated	n.a.	18,000	22,230	n.a.	n.a.
Hit	17,149	18,525	22,969	n.a.	n.a.
Change %	n.a.	3%	3%	-	-
Adjusted EBITDA	2016	2017	2018	2019	2020
Estimated	n.a.	5,000	5,574	7,500	BRL 11,200
Hit	4,075	4,645	5,849	7,251	BRL 11,473
Change %	n.a.	-7%	5%	-3%	BRL 273
Leverage	2016	2017	2018	2019	2020
Estimated	n.a.	5.00x	n.a.	3.00x	2.5x
Hit	6.32x	5.66x	4.55x	3.74X	2.23x
Change %	n.a.	13%	n.a.	0.74x	- 0.27 x
Iron Ore Production Volume	2016	2017	2018	2019	2020
Estimated	n.a.	n.a.	28,500	33,000	33,000-36,000
Hit	32,174	29,921	27,875	32,090	30,666
Change %	n.a.	n.a.	-2%	-3%	-7.07%
Iron Ore Sales Volume	2016	2017	2018	2019	2020
Estimated	n.a.	n.a.	n.a.	40,000	n.a.
Hit	n.a.	n.a.	n.a.	38,545	n.a.
Change %	n.a.	n.a.	n.a.	-4%	n.a.
*E = estimated
**n.a. = not rated

 

2021

 

Regarding the major deviations above and below the expectation, our evaluations are as follows:

 

The increase in net debt, in millions of reais, compared to the guidance was mainly tied by the share repurchase programs, in addition to the exchange variation observed in the period. However, even with the increase in net debt, the company's leverage was still below the 1.0x Net Debt/EBITDA level.

 

The steel Sales Volume was impacted by the lower sales volume during the third quarter, which was marked by the commercial strategy of prioritizing price, without the application of discounts, to the detriment of the sold volume. This strategy proved to be assertive for the Company's financial results.

 

The company's dollarized Cash Cost annual average was $2.6/t, worse than the guidance presented due to a one-off pressure in November, impacted by the scheduled halts and heavy rainfall in the period, causing a lower dilution of the mine’s and port’s fixed cost. If we discount the month of November from the calculation of the average of the year, the average cash cost would be $19.00, which is in line with what was expected by The Company.

 

c) as of projections for periods still in progress, to inform whether the projections remain valid on the date of delivery of the form and, where appropriate, to explain why they were abandoned or replaced.

Current and valid estimates:

 

Projections	2022	2023E		2022-2026 E
Leverage (Net Debt / Adjusted EBITDA)	1.75x – 1.95x	1.75x – 1.95x		-
Capex expansion (BRL million) - Mining	-	-		BRL 12,000
Capex (BRL million) - Steel	-	-		BRL 6,300
Capex (BRL million) - Consolidated	BRL 3,000	-		-
Sales volume Steel (kton) - Steel	5,104	-		-
EBITDA/ton (USD/ton) - Steel	-	$165		-
Iron Ore Production Volume (kton) - Mining	34,000	-		-
Cash Cost Mining (USD/ton)	$ 20.0 - $22.00	-		-

 

Monitoring and changes in projections disclosed

 

Replaced estimates:

 

CSN replaced in Aug/22 Mining Cash Cost in 2022 between $20.00 - $22.00, against a previous expectation of $18.00.

 

CSN replaced in Aug/22 estimated volume of iron ore production in 2022 to 36-38Mton, against previous expectation of 39-41Mton.

 

The Company replaced in October/22 estimated Consolidated CAPEX in 2022 to the amount of R$3,000 million, against a previous expectation of R$ 4,100 million.

 

The Company replaced in October/22 the leverage projection, measured by the Indicator Adjusted Net Debt/EBITDA from 1.0x in 2022 to a level between 1.75x and 2.0x between the closings of the annual balance sheets for 2022 and 2023.

 

The Company replaced in October/22 estimated iron ore production volume in 2022 to 34Mton, against previous expectation of 36-38Mton.

 

 

 

Independent Auditor’s Report on the Financial Information

 

 

 

 

 

 

Opinions and Statements / Officers Statement on the Financial Statement

 

 

As Executive Officers of Companhia Siderúrgica Nacional, we declare pursuant to Article 27, paragraph 1º, item VI of CVM Instruction 80, of March 29, 2022, that we reviewed, discussed and agreed with the Company’s Financial Statements for the quarter ended September 30,2022.

 

 

 

 

São Paulo, October 31, 2022.

 

 

Benjamin Steinbruch

CEO

 

 

 

Marcelo Cunha Ribeiro

Executive Officer – CFO and Investors Relations

 

 

 

Luis Fernando Barbosa Martinez

Executive Officer

 

 

 

David Moise Salama

Executive Officer

 

 

 

Eduardo Guardiano Leme Gotilla

Executive Officer

 

 

 

Milton Picinini Filho

Executive Officer

 

 

 

Stephan Heinz Josef Victor Weber

Executive Officer

 

 

 

Opinions and Statements / Officers Statement on Auditor’s Report

 

As Executive Officers of Companhia Siderúrgica Nacional, we declare pursuant to Article 27, paragraph 1º, item V of CVM Instruction 80, of March 29,2022, that we reviewed, discussed and agreed with the opinion expressed on the Independent Auditors’ Report related to the Company’s Financial Statements for the quarter ended September 30,2022.

 

 

 

 

São Paulo, October 31, 2022.

 

 

 

Benjamin Steinbruch

CEO

 

 

 

Marcelo Cunha Ribeiro

Executive Officer – CFO and Investors Relations

 

 

 

Luis Fernando Barbosa Martinez

Executive Officer

 

 

 

David Moise Salama

Executive Officer

 

 

 

Eduardo Guardiano Leme Gotilla

Executive Officer

 

 

 

Milton Picinini Filho

Executive Officer

 

 

 

Stephan Heinz Josef Victor Weber

Executive Officer

 

 

 

 

 

This press release may contain forward-looking statements. These statements are statements that are not historical facts, and are based on management's current view and estimates of future economic circumstances, industry conditions, company performance and financial results. The words "anticipates", "believes", "estimates", "expects", "plans" and similar expressions, as they relate to the company, are intended to identify forward-looking statements. Statements regarding the declaration or payment of dividends, the implementation of principal operating and financing strategies and capital expenditure plans, the direction of future operations and the factors or trends affecting financial condition, liquidity or results of operations are examples of forward-looking statements. Such statements reflect the current views of management and are subject to a number of risks and uncertainties. There is no guarantee that the expected events, trends or results will actually occur. The statements are based on many assumptions and factors, including general economic and market conditions, industry conditions, and operating factors. Any changes in such assumptions or factors could cause actual results to differ materially from current expectations.

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