Integrated Report 2012 Integrated R Eport 2012 Integrated

Integrated Report 2012 Integrated R eport 2012 Integrated

Integrated Report 2012 Summary

06. Management Letter 90. Vision of the Future and Trends

08. Highlights of 2012 94. About the Report

12. Market Context 96. Audit Statement

16. Business Overview 97. Correlations with the UN Global Compact Principles 40. Our Identity 98. Assurance Report 48. Business Model and Performance 102. GRI Indices / Indicators

141. Financial Statements 86. Risk Management

150. Report Production How to Read this Report

GRI We present the first Report of Votorantim Cimentos (VC). The report also contains the detailed audited Financial 3.4,3.10, The aim of this document is to inform our stakeholders Statements (FS) as well as the opinion of our external 3.11 and society in general about our economic, social auditors and the declaration of assurance of independent and environmental performance, as well as our verification by an external entity. The Financial Statements commitments, strategies and practices. are also available at: http://www.vcimentos.com.br/ htms-ptb/Institucional/DemonstracoesFinanceiras.htm In this Report, we have followed the guidelines of the Global Reporting Initiative (GRI) and the Principles of the Your opinion on this Report is important, enabling UN Global Compact (Global Compact), both of which are us to continually improve our reporting and also reflected in our activities and initiatives in everyday life. management processes. You may contact us by e-mail at: [email protected] The information contained in this report relates to Votorantim Cimentos (VC) and, where appropriate, to our This Report is also available on our website at: parent company, Votorantim Industrial (VID). Here you will http://vcimentos.com.br/htms-enu/Responsabilidade/ find information about our operations, business, results and Ambiental.htm risk management. You also can download the portuguese version at: http://vcimentos.com.br/htms-ptb/Responsabilidade/ relatorioSustentabilidade.htm

Guide to References

GRI GRI UN Global Material Indicator Compact Issue Principle GRI In Brazil, in 2012, the Cuiabá (MT) cement unit came into 1.1,1.2, operation and the mills in Laranjeiras (SE) and Rio Branco 2.9, 3.11 Management do Sul (PR) were expanded. Also four new Concrete Units and two new Aggregates Units were opened. In South America, Letter we strengthened our presence through the acquisition of control of Cementos Artigas, Uruguay, and increased participation in Avellaneda, Argentina. With this process of organic growth and acquisitions, Votorantim Cimentos ended the year with a 45% increase in production capacity worldwide, reaching 52.2 million tons. In Brazil, our production capacity has reached 30.1 million tons.

Our investments totaled more than R$ 1.5 billion in 2012, including expansion, maintenance and health, safety and environment projects. For the next three years, investments of R$ 3.7 billion in expansion projects are scheduled.

In Brazil, we continue to believe in market growth through investment in infrastructure and housing, two important segments for the industry. The company is ready to meet the demand for materials resulting from actions to encourage construction, through “Minha Casa, Minha Vida”, greater facilities for housing credit, and major infrastructure projects aimed at the international sporting events scheduled for the coming years, the World Cup 2014 and Olympics 2016.

We have worked to build, day by day, a work environment in which people have opportunities for personal and professional development, and feel engaged in the growth ambitions and committed to the company’s future. Our human resource management is based on guidelines for attracting, developing and retaining talent, meritocracy, health and safety. Aiming to spread international best practices internally, we disseminate among employees a Global Anti-corruption Corporate Policy.

The year of 2012 was challenging for Votorantim Cimentos. We maintain a very strong focus on the issues of occupational Despite the global economic environment, we achieved solid health and safety; unfortunately in 2012 we could not achieve results, with strong growth and consolidation of our operations the goal of zero fatalities. To reverse this situation, we are in Brazil and abroad. In this sense, we highlight the completion promoting deep internal reflection in relation to operational of the integration process of the assets that belonged to controls and a review of procedures and training. These efforts the Portuguese cement producer Cimpor in seven countries, are being adopted with the total commitment and mobilization including new business in Europe, Africa and Asia. These of senior leadership. operations were of strategic importance for the company’s international expansion - which made Votorantim Cimentos In 2012, we initiated a review of the processes of our customer one of the eighth largest producers in the sector worldwide. service. Initially deployed as a pilot with clients in Brazil, this new

6 model of service aims to improve the relationship with customers This 2012 Votorantim Cimentos Integrated Report received through a better and more specialized system of selling products the A + rating according to the methodology of the Global and services. Reporting Initiative (GRI). This is a recognition of our search for the best practices in sustainability, which is aligned with our In the environmental area, being aware of the impacts of our business strategy. We have a model of consistent management operations, we operate with a continued focus on mitigating and a governance model that emphasizes transparency. these impacts through the development of innovative solutions - developed by the company itself or identified as a good market In the coming years, we will follow the path of expansion and growth. practices. The lessons learned from these solutions, besides We are well prepared for the new challenges that lie ahead and we mitigating the impacts, produce improvements in our operations. hope to reach even loftier heights in relation to productive capacity, competitiveness, technology and business position. The first cycle of Cement Sustainability Initiative (CSI) goals (2005-2012) to which we are committed has concluded Finally, I want to express appreciation of the dedication with good results. We have achieved, for example, the goal and commitment of our employees, customers and business of reducing CO2 emissions. In 2013, we will continue to enhance partners, all of them fundamental for us to achieve the desired our goals relating to key environmental issues involving results and to maintain our strategy. We want to be one our company, such as responsible use of fuel, energy and of the best global companies in the basic materials sector raw materials, water resources management, CO2 emissions of the construction industry, backed by our aspiration of and other pollutants, and biodiversity. These initiatives becoming a leader in sustainability in our industry. reinforce our commitment to make Votorantim Cimentos a reference for the industry.

Concrete results achieved, include: the reduction of CO2 emissions and particulate matter by 23.9% since 1990 and 30% since 2000, the renewal of the partnership with the Brazilian Society of Speleology (SBE) and Atlantic Biosphere Reserve, with which we act jointly on projects to preserve biodiversity, and other actions described in this report.

Within the social scope, we support in partnership with Instituto Votorantim development projects in the communities where we operate, which is essential for the future of our operations. An important mechanism in this regard is the training of Community Councils, which are participatory forums of society and government as well as a space for engagement of community leaders. These Councils allow the identification of local needs and help public departments in defining plans to improve education, income generation and Paulo Henrique de Oliveira Santos work - in addition to being a communication channel for the President of Votorantim Cimentos permanent relationship between our operations and communities. At the end of 2012, we recorded Community Councils operating in nine cities.

Management Letter Report for Votorantim Cimentos 7 EXPANSION AND Highlights INTERNATIONALIZATION WERE AREAS OF FOCUS of 2012 IN 2012

Itaú de Minas (MG) Plant • We invested about R $ 1.2 billion in expansion projects, • In relation to our commitments under the Cement in the form of cement plants, grinding mills and concrete Sustainability Initiative (CSI), we completed the first period units. We initiated the operations of yet another cement of targets (2005-2012). Now we will establish targets plant, this time in Cuiabá (MT), with capacity to produce for the second period of targets (2013-2020). The CSI 1.2 million tons per year. We also completed the expansion is an international initiative sponsored by a group of the of our cement plants in Laranjeiras (SE), Rio Branco do Sul largest global producers of building materials that believe (PR), Santa Helena and Salto de Pirapora (SP) and opened in sustainable development. Details of our progress are four new concrete units. shown in the following table. We have participated in this initiative since 1999. • We concluded the asset swap relating to our 21.21% stake in Cimpor, a Portuguese cement • Our social investments in the communities in which company. As a result of this transaction, we now we operate totaled R$ 9,173,000 from own funds have assets in Spain, China, India, Turkey, Morocco and R$ 836,000 from tax incentives. and Tunisia, in addition to a limestone mine in

Peru, adding 16.3 million tons to our worldwide • We ended 2012 with a 23.94% reduction in CO2 production capacity. emissions, exceeding the target committed to under the Cement Sustainability Initiative (CSI), which was

• Our global net income totaled R $ 9.5 billion, to reduce CO2 emissions by 10%, in relation to the 9% more than in the previous year. In Brazil, base year of 1990. our net income totaled R $ 7.7 billion, 6% more than in the previous year. • We also reduced emissions of particulates, which fell more than 30% in 2012, compared to the base year of 2000.

Highlights of 2012 Report for Votorantim Cimentos 9 VC’s Performance versus Targets

Volunteer commitments under the Cement Sustainability Initiative (CSI), of the World Business Council for Sustainable Development (WBCSD), for the period 2005 to 2012

Climate Protection Targets for 2012 2010 2011 2012 Comments

Reduction of specific net emissions of CO2 (Base year 1990) 10% 18.5% 20.7% 23.9% The target was met several years ago. Reduction of emissions We exceeded the target due to investment in equipment and management Reduction of specific emissions of particulate matter (Base year 2000) 5% 24.7% 8.38% 30.8% improvement programs in recent years. Although we were in compliance with the applicable legislation we did not achieve this target. However we have investments planned that are designed Reduction of specific NOx emissions (Base year 2000) 5% 15.1% 6.1% -3.6% to reduce these emissions. We did not achieve our target but we have planned investments in measures Reduction of specific SOx emissions (Base year 2000) 5% 17.3% 1.1% -11.3% to reduce these emissions. We were more rigorous with the CSI audit, using version 2 of the Guidelines for Emissions Monitoring in the Cement Industry. Under the previous version VC % of clinker produced with monitoring of major and minor emissions 100% - - 56.88% would have recorded a result above 80%.

% of clinker produced with continuous monitoring of major emissions 100% 68.2% 70.6% 74.0% We have developed a plan to install emissions monitoring equipment Local Impacts In 2012, surveys were carried out at the Salto and Araçariguama plants. % of mines that have recovery plans 80% - - 49% We have developed a plan to improve this indicator in 2013. Safety Despite the programs for education and training on the "Rules for Life" No. of fatalities for direct employees; - 0 0 2 initiative, we had 2 fatalities in 2012 - direct employees. Despite the programs for education and training on the "Rules for Life" initiative, we had 8 fatalities in 2012 - indirect employees - on-site (2) No. of fatalities for indirect employees - 2 2 8 and off-site (6). Frequency rate of accidents with lost time (per 1 million man hours) Frequency rate of accidents - 1.65 1.27 1.35 for direct employees

10 VC’s Performance versus Targets

Volunteer commitments under the Cement Sustainability Initiative (CSI), of the World Business Council for Sustainable Development (WBCSD), for the period 2005 to 2012

Climate Protection Targets for 2012 2010 2011 2012 Comments

Highlights of 2012 Report for Votorantim Cimentos 11 Market IN 2012, GLOBAL GROWTH WAS LESS Context THAN EXPECTED

Rio Branco do Sul (PR) Plant Global Market The eurozone countries as a whole were in recession in 2012, with a fall in GDP of around 0.4% on average. In December 2011, the market expectations for 2012 were The region’s biggest economy, Germany did not go into grounded in cautious optimism. Despite the pessimistic title recession but registered a mere 0.8% growth. At the other of its report “Deceleration of Growth, Rising Risks”, published extreme, China and India, although growing less than in 2011, the International Monetary Fund forecast relatively expected, ended the year with robust growth rates strong rates of growth for global GDP for 2012 and 2013, of 7.8% and 5.4%, respectively. of 4.0% and 4.5% respectively. Brazilian Market In line with this forecast, growth was in fact strong in the first quarter of 2012. Industrial production grew In Brazil, frustration with the economy’s poor performance by 7.5% worldwide and the future price index for metal was greater than for most other countries. The year had commodities, as measured by the Commodity Research begun with a large dose of optimism and high prospects Bureau, increased by 10%. The establishment of an for renewed growth due to a number of government agreement to resolve tax issues in the U.S. in the short measures to stimulate growth, such as: tendering for term, along with the formulation of measures to maintain concessions in the infrastructure sector; reducing the prices the Greek economy appeared to signal stability for the and taxes for electric power; introducing accelerated months to come. depreciation for all capital goods; reducing interest rates on FINAME / Bank of Economic and Social Development However, we saw a return to macroeconomic instability (BNDES) funding; and reducing taxes on payrolls. However, and slowed global growth due to the following factors: GDP ended the year at around R$ 4.4 trillion, only 0.9% the impasse in Europe, which raised long-term interest greater than the total recorded in 2011. rates and destabilized important economies like Spain and Italy; the electoral contest in the U.S. making Even though Brazil’s economic performance in 2012 it impossible to negotiate a definitive solution to caused frustration in world markets with its growth of only soften the effects of the “fiscal cliff”; and the decision 0.9%, the National Confederation of Industry (CNI) of the Chinese government, fearful of generating new announced positive results. imbalances, to reduce the level of stimulus that had been introduced in 2009. In 2012, industrial turnover rose in 12 of the 19 industry sectors surveyed by the CNI, in comparison with 2011. The A study released by the journal The Economist indicated largest increase was recorded in the pulp and paper that the world economy grew by 3% in 2012, even industry, where the indicator rose 28.2% and, in though it had been a difficult year. The U.S. economy, manufacturing, despite the adverse market conditions, the world’s largest, grew a little over 2%, confirming sales rose by 2.4%. a trend of gradual recovery that began in 2010, after the global financial crisis of 2009.

Market Context Report for Votorantim Cimentos 13

The real estate sector in Brazil suffered from the economic slowdown. On the other hand, the growth in the cement market Growth of the remained above average, driven by the favorable dynamics of the cement market labor market. The country’s unemployment rate ended the year was above average 2012 at 5.5%, according to the Monthly Employment Survey, published by the Brazilian Institute of Geography and Statistics in 2012 (IBGE). Also, according to the IBGE, this was the lowest annual figure since records began in March 2002.

Government concessions and public-private partnerships for the construction of roads, railways, ports and airports maintained the boom in the infrastructure sector and this will continue to be a growth factor for investments in the coming years. In 2012, the BNDES approved R$ 133 billion in projects relating to infrastructure and the total investment in the sector, according to estimates by the Brazilian Association of Infrastructure and Basic Industry, reached a level of 2.5% of GDP.

Sobradinho (DF) Plant

14 Rio Branco do Sul (PR) Plant

Construction Industry We are affected by the cyclical nature of the construction industry, which is characterized by periods of growth and decline caused by In 2012, the growth of the cement market remained above changes in supply and demand. The Brazilian construction market average, driven by the favorable dynamics of the labor market. has been booming and government policies aimed at encouraging The sharp increase in the minimum wage in early 2012 and infrastructure projects have had a significant positive effect on the the confirmation of a record low rate of unemployment led demand for our products and services. In 2012, the federal to an average increase of 6% in national income, contributing government launched the Program for Investment in Logistics, which significantly to the sector’s performance. includes a plan for the modernization and integration of transport infrastructure, including roads, railways, ports and airports. Moreover, According to preliminary data released by the National Association construction has already begun on infrastructure projects related to of the Cement Industry (SNIC), cement sales in the Brazilian market the 2014 Football World Cup and the 2016 Olympic Games. totaled 68.3 million tons in 2012, an increase of 6.9% over 2011. At a global level, the trend towards increasing urbanization will also Cement is a fundamental building material and is used at various bring opportunities for the construction materials sector. According stages throughout the construction cycle in residential, commercial to the World Business Council for Sustainable Development (WBCSD), and industrial buildings and infrastructure projects. In Brazil, the world population in 2010 was 6 billion inhabitants, with around cement is the most widely used building material and has been 3 billion (50%) living in urban areas. For 2050, WBSCD projects that produced on an industrial scale since 1926. the world population will reach 9 billion people, with about six billion (70%) living in cities.

Market Context Report for Votorantim Cimentos 15 WE ARE ONE OF THE 10 Business Overview LARGEST GLOBAL CEMENT COMPANIES AND THE MARKET LEADER IN BRAZIL

Rio Branco do Sul (PR) Plant

In 2012, the Votorantim Group celebrated 94 years GRI Overview of VID of business activities. In almost a century of business 3.8 operations we have built a large organization with Votorantim Industrial (VID) is a privately-held, a diverse range of businesses and opportunities and we 100% Brazilian-owned company. It is the strive continually to conduct our activities in an ethical, industrial arm of the Votorantim Group, one responsible and conscientious manner. of the largest business conglomerates in the country. We have a diversified portfolio of In our daily routine we seek to effectively integrate businesses controlled by a centralized sustainability issues into our strategy and business management structure. We started our operations, demonstrating the same energy and the activities in 1918, in Brazil. same direction that inspire us to achieve results, whether of a financial or a non-financial nature. Our business operating model is based around a diversified portfolio of businesses Thus, we have as the core goal of our strategy: offering a wide range of products, services and opportunities. LONG-TERM GROWTH WITH RESPONSIBILITY. VID’s industrial operations focus on basic industry sectors, which are capital-intensive and require large-scale production and cutting-edge technology. We are constantly in the process of expansion, always seeking to obtain appropriate returns and to add value to our relations with the market The Votorantim and with our stakeholders. Group celebrated VID is headquartered in São Paulo, Brazil 94 years of business and is present in other 21 countries: Argentina, activities in 2012 Australia, Austria, Belgium, Bolivia, Canada, Chile, China, Colombia, Hungary, India, Japan, Morocco, Peru, South Africa, Spain, Switzerland, Tunisia, Turkey, The United States, and Uruguay.

VID’s business divisions can be summarized as follows:

Business Overview Report for Votorantim Cimentos 17 VID’s BUSINESS Business Geographical distribution of the Products / Services Aspiration Market focus Division operations / Commercial activity Votorantim Cement, concrete, aggregates (gravel and sand) and Being among the best building materials companies • To grow organically by increasing our production capacity, both by the • Operations and performance in Brazil. Cimentos complementary products such as: mortar, hydrated lime, in the world, through vertical integration of business expansion of our existing facilities and by the opening of new plants. • Operations and performance overseas: (VC) lime paint, blocks, tiles, white cement and agricultural lime. and geographic diversification, using models that • To increase the degree of internationalization of our business through North America,South America, Europe, ensure sustainable profitability. acquisitions and investments in increased capacity. Asia and Africa. • To offer an increasingly diverse range of products and services, making us a company specializing in basic construction materials. • To improve processes.

Votorantim Aluminum, zinc, nickel, copper, silver, metallic indium, • Zinc: To be among the leading integrated low- • To strengthen the integrated production process. • Operations and performance in Brazil. Metais (VM) metallurgical coal, cobalt, cadmium, anhydrous sodium cost producers and have a global presence. • To ensure efficiency and offer quality products at competitive prices. • Overseas: operating plants in Peru, sulfate, copper sulfate, zinc oxide, sulfuric acid, powdered • Nickel: To improve the competitiveness Colombia, the U.S. and China and global lime and mineral concentrates. • To seek viable opportunities for the exploration of new mineral reserves and creation of our operational assets and broaden commercial activities. of new products. our base of mineral reserves. • To strengthen our operations in Peru. • Aluminum: To be the market leader in primary aluminum, downstream products and recycling in Brazil. • Other metals: To evaluate opportunities and develop or enhance exploration.

Votorantim Long steel bars. To be a leading player in the Latin American market for long • To increase the share of the steel business in VID’s portfolio. • Operations and performance in Brazil. Siderurgia steel bars. • To develop new opportunities. • Operation and activities in Latin America: (VS) Colombia and Argentina. • To improve customer relationships and loyalty.

Votorantim Company-owned electric power generation. To contribute to increasing the competitiveness of the business • To integrate and coordinate all of VID’s company-owned • Operations and performance in Brazil. Energia (VE) divisions, by ensuring the supply of electric power and natural power generation operations. gas with competitive pricing and reduced risk. • To ensure the supply of electric power and natural gas to VID, thereby contributing to the increased competitiveness of the business divisions. • To coordinate VID’s Energy Efficiency Program.

Fibria Pulp. To maintain our position as the market leader and • To maintain our position as the world leader in the production of pulp • Operations in Brazil and worldwide be a preferred supplier to large customers. from eucalyptus. • To manage renewable and sustainable forests. • To ensure access to timber for current operations and future growth.

Citrosuco Orange juice (fresh and concentrate). To maintain our position as the industry leader in orange juice. • To maintain our position as the largest producer of orange juice • Operations and performance in Brazil. in the world. • Overseas: operating facilities in the U.S. • To strengthen our export-oriented profile. and global commercial activities • To strengthen our expertise along the entire production chain and seek out new opportunities.

18 VID’s BUSINESS Business Geographical distribution of the Products / Services Aspiration Market focus Division operations / Commercial activity Votorantim Cement, concrete, aggregates (gravel and sand) and Being among the best building materials companies • To grow organically by increasing our production capacity, both by the • Operations and performance in Brazil. Cimentos complementary products such as: mortar, hydrated lime, in the world, through vertical integration of business expansion of our existing facilities and by the opening of new plants. • Operations and performance overseas: (VC) lime paint, blocks, tiles, white cement and agricultural lime. and geographic diversification, using models that • To increase the degree of internationalization of our business through North America,South America, Europe, ensure sustainable profitability. acquisitions and investments in increased capacity. Asia and Africa. • To offer an increasingly diverse range of products and services, making us a company specializing in basic construction materials. • To improve processes.

Business Overview Report for Votorantim Cimentos 19 Products tranportation

Inputs used in cement manufacturing

Mining

Cement plant

Products Distribution Center

Products transportation

Customers and end users

Values of Votorantim Cimentos

Customer Service Center Votorantim cement Training for employees Community

Mixers that carry concrete Engemix to customers

Factory of complementary products such as screeds Strategy Votorantim Cimentos and grouts

Household products, Worldwide Presence such as crushed stones in various particle sizes

Hexagon with strategic pillars, which are the basis of the strategy of Votorantim GRI Where We Operate cement plants, three grinding mills, 65 concrete 2.1, 2.3, 2.4, plants, 18 aggregate plants, one mortar plant, 2.5, 2.6, 2.7, Votorantim Cimentos (VC) is a privately held, three lime plants and one clinker plant. 3.8 100% Brazilian-owned company. How We Do Business We have units in virtually all states of Brazil, and we operate in Argentina, Bolivia, Canada, GRI Votorantim Cimentos (VC) is one of the top ten Chile, China, India, Morocco, Peru, Spain, Tunisia, 2.8 cement producers in the world and the leading Turkey, Uruguay and the U.S. The company’s company in the cement sector in Brazil. headquarters are located in São Paulo (SP).

In business since 1936, VC has a prominent position In Brazil, we have 16 cement plants, 11 grinding among the businesses of Votorantim Industrial (VID). mills, 110 concrete plants, 28 aggregate plants, eight mortar plants, and one lime plant, all Our business portfolio consists of four major strategically located near major consumer markets, product lines: which ensures an efficient distribution system.

• Cement In North America, our subsidiary Votorantim • Concrete Cimentos North America (VCNA) operates plants • Aggregates in both Canada and the United States. Overall • Complementary Products we have five cement plants, two grinding mills,

140 concrete plants and 34 aggregate plants. We employ a total of 12,571 people in our operations. In South America we operate through shares in companies in Argentina, Bolivia, Chile, Peru and Uruguay. In these countries we have five

22 Votorantim Cimento’s organizational chart is as follows:

President Paulo Henrique de O. Santos

Finance Lorival Luz Júnior

Risks, Compliance and Corporate Internal Audit Development -- Sidney Catania

Technical Edvaldo Araújo Rabelo

Europe, Africa South America Brazil North America and Equity Walter Dissinger and Asia Marty Fallon Investments Human and Erik Madsen Organizational Luiz Alberto Santos Development (HOD) Claudia Elisa Soares

Legal Ricardo Marcelo Cavallo

Business Overview Report for Votorantim Cimentos 23 GRI Strategic Positioning leadership. By increasing our production of cement, 2.8 concrete, aggregates and mortar, we are preparing By 2020, our goal is to be one of the largest to meet the forecast increased demand for the building materials companies in the world, vertically coming years, thereby reaffirming our commitment integrated and geographically diversified, and to the development of the countries where we observing standards that ensure a sustainable level are present. of profitability.

Our business strategy is focused on: GRI Business Segments 2.2,2.3, 2.7,3.6, • Increased production capacity. 3.8 Cement: Flagship Product • Vertical integration through growth Cement continues to be our primary business. in aggregates, concrete, mortar and GRI 2.9 We ended 2012 with a production volume of 30.1 other complementary products. million tons of cement in Brazil. Considering all units • Internationalization. worldwide, our capacity totaled 52.2 million tons. • Customers.

In Brazil today, 69% of our cement is sold in We strive constantly to increase our efficiency bags and 31% in bulk, a situation that has been and our range of products and services, and changing gradually. to keep a tight control on costs.

• Internationalization Increasingly, we are positioning ourselves as a GRI 2.9 VC’s process of internationalization accelerated company focused on basic construction materials, in 2012. In addition to our operations in Canada with products and services to meet the various and the United States, through VCNA (VC North demands of the sector and with a presence in a America), we now have assets in Spain, China, large part of Brazil as well as in overseas markets. India, Turkey, Morocco, and Tunisia and a limestone mine in Peru, all thanks to the asset swap relating Correspondingly, we invest not only in increasing to our 21.21% stake in Cimpor. the production of cement, but also in new plants making concrete, aggregate and complementary This transaction added 16.3 million tons to our products. We grow organically from expansion global production capacity, which increased from projects and, overseas, also through acquisitions. 34 million to 52.2 million tons per year. Votorantim became a shareholder in Cimpor in 2010. We strive to grow in the short, medium and long terms, and with responsibility. We operate With this swap transaction, we have incorporated in an industry that has a high environmental 13 cement plants, one clinker plant, eight grinding impact, but we are committed - through policies, mills, 78 concrete plants, 22 aggregate plants, five investments and partnerships - to reducing mortar plants and one hydrated limestone plant. the negative effects of our activities.

We are focused on a positive outlook for

infrastructure projects and housing in Brazil

and continue to invest in our sector, with the

opening of and/or expansion of plants to increase

production capacity and thus sustain our growth in the industry and maintain our position of market

24 We are also growing in South America, and the highlights in 2012, were as follows:

• We acquired 10.61% of the share capital in Cementos Avellaneda SA, in Argentina, and now own 49% of the total capital of the company. • We acquired 12.61% of the capital in Cementos Artigas SA, Uruguay, and now own 51% of the total capital of the company. • Also in South America, we operate in Chile and Bolivia as well. We have a small grinding mill in Bolivia, where we are starting a project to implement a full factory.

GRI • Expansion in Brazil 2.9 As a leader in the Brazilian cement market, we now have 27 units (plants and mills) in Brazil. Our expansion process started in 2007, and had the objective of increasing our presence in Brazil, as well as enabling us to work with spare capacity so that we can supply our customers, even during times of peak consumption.

We are improving our distribution network in order to meet the growing demand in the Brazilian market. We operate 52 distribution centers and 11 terminals throughout the country.

In 2011 and 2012, we invested in new plants and the expansion of existing plants in Brazil, such as Salto de Pirapora (SP), Laranjeiras (SE) and Rio Branco do Sul (PR). We have already started operating our plant in Cuiabá (MT). Construction projects for new plants are underway in Primavera (PA) and Edealina (GO), as is the expansion of the Santa Helena (SP) plant.

Rio Branco do Sul (PR) Plant

Business Overview Report for Votorantim Cimentos 25 Concrete: Strategic Importance Several programs have been created in our efforts to increase the use of recycled materials. One prominent initiative is the With 110 concrete centers distributed across Brazil, our concrete Zero Loss Program (Sustainable Engemix), which has enabled the business, operating under the brand Engemix, plays a strategic role recycled of up to 80% of the waste generated in the production in VC’s business portfolio, especially in positioning the company of concrete back into the production process. The program was as a service provider. made possible due to the development of an additive which increased the useful life of concrete from two and a half hours Concrete adds an important service to our core product of cement. to 48 hours, thus reducing losses. In this segment, we operate very close to the consumer market. The growth in consumption of concrete is estimated at 8% per year. In 2013, we will inaugurate new concrete centers in Brazil.

With an eye on this growing market, our concrete business, The ready mix market in the State of Florida, United States, which was concentrated in the State of São Paulo, began a steady where our subsidiary Prestige operates, experienced a substantial process of geographic diversification in 2012. decline during 2007-2011 but began making a strong recovery in the last quarter of 2012. This growth is expected to continue, The northeast of Brazil, which has a growth rate higher than with the total market projected to double over the next four years. the rest of the country, is a priority in this strategy. We have inaugurated concrete centers in São Luís (MA), Natal (RN), In order to better serve our customers in the state as well Recife (PE) and Lauro de Freitas (BA). as to provide support to the VC North America (VCNA) cement business, Prestige has expanded its footprint in central Florida We also supply concrete for major projects such as new football over the last 2-3 years and now operates 14 plants Furthermore, stadiums: Corinthians (SP), Pernambuco Arena (PE); Castelão (CE); Prestige has moved from being an organization focused almost and Grêmio (RS). We are also a supplier for the subway expansion exclusively on the residential segment of the market to a “full in São Paulo and construction works for Petrobras. Besides service” provider supplying many infrastructure and commercial diversifying geographically to increase market share, Engemix’s projects. This diversification has allowed Prestige to increase market strategy is based on excellence in services and tight cost control share, mitigate the impact of the market slowdown and position to gain competitiveness. itself to take full advantage of the projected recovery.

Engemix Cement Truck

26 The vertical integration of Prairie Ready-Mix, Prairie Aggregates In Canada VC North America (VCNA) operates its ready-mix concrete and St. Mary’s Cement allows VC North America (VCNA) to maintain business through Canada Building Materials (CBM), with 32 concrete a strong market position in the Great Lakes region, in the Midwest centers across the province of Ontario, one concrete center in the of the United States. Prairie operates 57 permanent and 12 mobile province of Quebec and 4 portable plants that can be mobilized for concrete production plants in the State of Illinois, Indiana and specific high volume concrete applications. CBM plays a strategic role Wisconsin. It also manages 18 plants in the State of Michigan in VC North America’s business portfolio, specifically in positioning through its 50:50 joint venture, Superior Materials. the company as a service provider.

As with most U.S. businesses in the region, Prairie experienced Over the past few years CBM has been focused on maintaining a severe economic downturn starting in 2008, reducing its production market share within a highly vertically integrated and independent by over 50% while reorganizing to face the challenging business concrete environment. climate. Throughout this downturn, Prairie maintained its leadership position by providing products and expertise for major projects in the The economy has been sustained through major infrastructure region, including the Trump Tower in Chicago, the Aqua at Lakeshore projects such as subways, highways, wind farms, hospitals, East residential high rise in Chicago, Cook Hall at Indiana University, and schools, with CBM playing an active role in the supply chain. the Milwaukee Deep Tunnel, the Federal Express World Center Further, the residential high-rise condominium sector has been in Bedford Park, Illinois and others. robust over the last ten years in Toronto (Canada’s largest city) and has provided much of the economic growth and stability The growth outlook for Prairie remains positive as market share in the province. has been recovered and the economy is improving, with increasing cement consumption in the Midwest. CBM is present at strategic locations along Highway 401, the main thoroughfare across the province of Ontario, where the majority VC North America (VCNA) has implemented numerous sustainable of the province’s cities and population exists, and where growth business practices designed to achieve and maintain an industry is expected to continue. Notable projects to supply concrete include, leadership position in Environmental and Sustainable Stewardship: besides those already mentioned, the sports facilities for the next Pan American Games in 2015, and major high-rise office buildings - • Invested in projects for improving environmental performance; for example the Bay Adelaide Center. CBM continues to seek • Developed an Environmental Management System (EMS) strategic opportunities to expand geographically and increase for implementation in all Prairie ready-mix facilities; its market share. • Established a pilot program for concrete recycling operations using on-site return: Much of CBM’s success has come from its value added program • Provided for 100% recycling of all returned concrete; under the brand name MAXIMIZERS. These differentiated products • Prevented landfill of approximately 5,000 m3 increase the performance of concrete to achieve the stipulated of returned concrete; specifications or meet special demands, such as high strength • Partnered with O’Hare Airport to provide recycled concrete concrete and high flow capacity. As well as marketing high in place of traditional concrete as part of the O’Hare pilot performance products, CBM remains focused on the tight program for sustainable airport expansion; control of variable and fixed costs in a competitive market. • Established numerous “Green Prairie” promotions and demonstrations for pervious concrete and roller-compacted concrete; • Established the Innovative Concrete Solutions Summit to demonstrate sustainable solutions in partnership with BASF Chemicals; • Established a pilot program for Prairie Green Fleet to introduce compressed natural gas (CNG) powered ready-mix trucks to the fleet in 2014.

Business Overview Report for Votorantim Cimentos 27 Aggregate Business is Reorganized to Regrow Araçariquama (SP) Plant

GRI In Brazil, after strong growth, at a rate 2.2 of about 30% per year between 2007 and 2011, the aggregates (crushed rock and sand) business underwent a year of reorganization in 2012. 15 acquisitions were made in a three-year period, which changed the geographical profile of the business: today, there are 28 units in operation in 15 Brazilian states and the Federal District.

With about a 2% market share VC is a national leader in the aggregates market, which is estimated to be around 750 million tons p.a. There is good potential for growth, so we decided to consolidate what had been done so far by standardizing processes, adjusting the structure and documentation, and implementing VC’s guidelines for environmental and health and safety procedures.

All of this was achieved without adversely affecting the business, which totaled 15 million tons sold in 2012. One of the projects was the integration of all of the production units into our Systems, Platicapnos and Products (SAP) data processing system, which facilitated the process control and operational management in these units. As part of the reorganization, we created four regional businesses. The aggregates business has plans to grow further, whether by acquisitions or by building its own units, reinforcing our strategy to make VC a company focused on basic construction materials and services.

Aggregate Business was reorganized and

consolidated in 2012

28 In the US market, our Prairie Aggregates Prairie currently operates 13 sites and will operations were significantly impacted by the add a new limestone quarry. This will enhance significant economic downturn between 2008 its strategic growth plan with expansion into and 2012, when the industry operated at 60% a new region. of capacity utilization in Indiana and Illinois. The economic environment is now improving In Canada, VCNA’s aggregates operations are but remains challenging. conducted by Canada Building Materials (CBM). In 2012 the company continued to grow the With respect to our management of environmental business profitability to record levels. This was and occupational safety issues, the company’s achieved through growth at greenfield sites operations had zero environmental violations in as well as maximization of profitability at existing 2012 and completed five years without accidents. sites through the management of the product mix.

Community and employee engagement was Over the past 6-10 years considerable investment enhanced through school tours, open houses was made in several small acquisitions as well and fundraisers for local charities. as investment in licensing of greenfield pits and quarries. Prairie has increased its participation in the recycled materials market through targeted sales initiatives In 2012 a considerable growth in volume was and communication of the benefits of recycled achieved at the newly licensed Orillia quarry and products to its customers and communities. a new quarry license was granted for the new The company continues to be a leader in clean Osprey quarry. Both of these quarries are able to construction and demolition debris management. supply the Greater Toronto Area with high quality These inert soils are used to fill in decommissioned concrete and asphalt aggregates. quarries and pits, thus maximizing and enhancing the final reclamation and use of this land.

Business Overview Report for Votorantim Cimentos 29 Barueri (SP) Plant

GRI The Success of Our Complementary The restructuring and performance of the 2.2 Products Business Complementary Products business proved to be a success story, and it won the award Founded in 2010, the area of Complementary for “Outstanding Performance of the Year” Products of Votorantim Cimentos brings together within VID. In two years, even without direct six different businesses, with management focused investments, doubled production capacity on well-defined strategies: and sales. It has eight mortar plants, two lime plants and two limestone plants. • Mortar for construction, in large volumes (Matrix brand). In 2012, the sales of the Complementary Products • Adhesive mortars (Votomassa brand). business were around R$ 550 million, with plans • Concrete blocks plant. to reach sales of R$ 1 billion by 2016 and its cash • Sales of white cement (imported). flow for 2020 is forecast to be R$ 400 million. • Production and marketing of lime. • Production of limestone for agriculture. The Complementary Products business team, with an average age of 35 years, was formed The six businesses operate independently, from internal resources. The working atmosphere with a coordinated support structure consisting is very positive: in 2011, its first full year of activities, of Human Resources, Finance, Research and its score on the Satisfaction Index in the Employee Development, Projects and Strategy Management. Climate Survey was 74%, increasing to 80% in 2012.

30 Improvements in processes and costs

The purpose of the Optimal Cost Structure Program, which has been implemented in the cement plants in Brazil, was to improve the performance and operational cost of these plants.

To identify opportunities for improvement we undertook technical visits at all the units. The activities included the training of employees in the management of projects and improvement processes, along with the appointment of a person responsible for the execution of projects in each unit.

GRI Our Products In North America, Europe, Africa and Asia, 2.2,2.8 our main brands are: St. Marys, Suwannee, In Brazil we sell more than 40 products, including CBM, Hutton Transport, Prairie, Prestige, cement, concrete, aggregates (crushed stone and Cementos Cosmos, Pulmor, AsmentTemara, sand) and complementary products such as mortar, Jbel Oust, Ybitas and Kamal. hydrated lime, lime paint, blocks, tiles, white cement and agricultural lime. In everyday life, our products are found in many applications in buildings and general infrastructure Our products are marketed under the following works: columns, floors, walls, facades, tiles, water brands: Votoran, Itaú, Poty, Tocantins, Aratu, tanks, floors, and in the case of agriculture, agricultural Votomassa, Matrix, Engemix, Cimento Ribeirao, lime - and many others items commonly found Pavilit, Normalit and Blocolit. ineveryday life.

In 2013 we will start to analyze the life-cycle of our products.

GRI Our Priority Subjects 3.5,4.14, 4.15,4.16, 4.17 VC seeks to grow in the basic construction materials market, while generating sustainable results in Brazil and overseas. To this end, we have adopted 12 material issues as priorities, which are:

Votorantim Cimentos Material Issues 1. Responsible Use of Fuel and Energy UN Global Compact Principles 7, 8 and 9 CSI Themes 1 and 2 2. Responsible Use of Raw Materials UN Global Compact Principles 7, 8 and 9 CSI Themes 1, 2 and 7 3. Water Resources Management UN Global Compact Principles 7 and 8 CSI Theme 9 4. Solid Waste UN Global Compact Principles 7 and 8

5. Emissions of CO2 and other Pollutants UN Global Compact Principles 7, 8 and 9 CSI Themes 1 and 4 6. Health and Safety CSI Theme 3 7. Local Development UN Global Compact Principles 1, 2, 4, 5 and 8 CSI Theme 5 8. Biodiversity UN Global Compact Principles 7 and 8 CSI Theme 5 9. Sustainable and Inclusive Construction UN Global Compact Principles 7 and 8 CSI Theme 8 10. Supplier Management UN Compact Global Principles 4, 5, 7 and 8 CSI Theme 10 11. Sustainability in Human and Organizational Development (HOD) UN Global Compact Principles 6 12. Green Rules Priorities UN Global Compact Principles 7 and 8

Business Overview Report for Votorantim Cimentos 31 The preparatory work to define these themes was undertaken in 2012 through internal discussions. It was based on the process established by VC for defining its sustainability strategy, which was established with the support of external specialists.

The discussion of our sustainability strategy covered a wide range of issues, as shown in the following figure:

OVERVIEW OF VC PROJECT – CURRENT SITUATION PROJECT ONDE ESTAMOS?

Externalities of VC’s economic sector Sustainability: Sustainability of VC Market Study (positioning, products (customers and /solutions and competitors) management system)

Selection of material sustainability issues for Current demands Aspects of sustainabilty the sector and analysis and trends concerning which relate to the of societal pressures the adoption of company’s management related to the issues sustainability criteria system considering: (financial system, by customers and identity, long-term sector players and the positioning of vision, positioning, organized civil society) competitors in relation products, to such demands communication, education, metrics, stakeholder relations, processes and policies.

The results of the analysis of these factors led to the selection of the priority material issues to be included in VC’s strategic planning process as regards sustainability.

32 To define our material issues, we took into The overall conclusion was that the material issues consideration the themes of the Cement Sustainability already being prioritized should be maintained. Other Initiative (CSI), for which we had set goals in 2005, issues surfaced, such as: certain aspects of legislation and which already included many of the issues and legal issues, operating license management, identified. The CSI key issues are as follows: climate mechanisms for identifying and resolving grievances protection, alternative fuels and co-processing, and conflicts, etc. The new issues will be analyzed in health and safety, air emissions, biodiversity, local the strategic planning process for 2013. development, communication, sustainable concrete, water, and supply chains. Progress on these issues It should be noted that VC’s material issues are aligned is achieved though work-groups and task forces (TFs). to the material issues of our parent company, Furthermore, in 2012, the validation process for our Votorantim Industrial (VID). For more details on the already-identified material issues and the possible VID’s material issues, see the Votorantim Industrial identification of new issues advanced to a higher Report - www.votorantim.com/relatorio. level with the adoption of stakeholder consultations, which we believe will contribute to the overall To achieve the objectives outlined in the key areas, improvement of the organization. we will have management practices that encourage our teams to act as owners of the business, focusing With the support of a specialized consultancy on: achieving operational excellence throughout the (BSD Consulting) we defined the scope of our production chain; constituting a competitive setting first consultation with external stakeholders at for business, with a management system that can be the corporate level. This consultation, carried out replicated in the new units built or incorporated as part by means of interviews, took place at the end of of the expansion plan; and having a commitment 2011 and during the first half of 2012. The objective to environmental responsibility. was to collect information and opinions that would help us to assess the challenges and commitments That is how we will achieve our goal of satisfying affecting existing priority issues as well as to identify our customers and growing responsibly. possible adjustments and new material issues.

This first consultation involved representatives of several of Votorantim’s external stakeholder groups: institutional investors, experts, the financial sector, media, governments, public entities, NGOs and trade associations. In all, 28 stakeholder representatives were interviewed and internally, and 23 directors and general managers were interviewed or consulted.

These consultations will now take place every two years, with the above-mentioned stakeholder groups, so as to obtain valid information and references to enable us to continually improve our operations and activities.

VC’s Strategic Hexagon

Business Overview Report for Votorantim Cimentos 33 Sobradinho (DF) Plant Ratings

The ratings for the Votorantim Group are established at the corporate level, i.e. based on the level of financial and operational management of Votorantim Industrial (VID). VID has obtained an “investment grade” rating from three of the most important global rating agencies, as shown in the below. This enables it, for example, to have access to more attractive interest rates in long-term financing, such as those provided by the National Bank of Economic and Social Development (BNDES).

VID is classified as “investment grade” by three of the most important global rating agencies, as follows:

Rating Agency Rating Standard & Poor’s BBB Moody’s Baa3 Fitch Ratings BBB

In the case of Votorantim Cimentos (VC), Fitch Ratings has attributed a rating of “BBB-” to a specific issue of US$ 500 million of bonds (a re-issue under an existing bond program), maturing on April 5, 2041.

Votorantim Industrial has achieved an investment grade rating

34 Certifications

We have obtained the following certifications:

Certifications Standard Description No. of units Certified ISO 9001 Certification of Quality Management Systems. 23 ISO 14001 Environmental management. 10 ISO 50001 Attests to excellence in energy management. 1 SA 8000 Social responsibility. 1 Certification in occupational health OHSAS 18001 6 and safety management. Certification of the fact that the product does not emit any toxic substances that could affect Greenguard indoor air quality or people’s health, according Votomassa product line. to guidelines set by the U.S. Federal Toxicology Program. Certification of eco-efficient concrete products by the ECO 25 ReadyMixed Concrete Association of Ontario, Canada. Certification of energy-efficient products by the Energy Star 1 Environmental Protection Agency of the United States.

Efficiency recognized

The Votorantim Cimentos plant in Rio Branco do Sul (PR), in the metropolitan region of Curitiba (PR), was the first cement company in the Americas to achieve an Integrated Certification award, which included: ISO 9001 - Quality; OHSAS 18001 - Occupational Health and Safety; ISO 14001 - Environment; and SA 8000 - Social Responsibility.

In VC North America (VCNA), the Bowmanville plant in Canada was the first plant in North America to obtain the ISO 50001 certification, which attests to the efficiency of its energy management system.

Business Overview Report for Votorantim Cimentos 35 GRI Voluntary Commitments With respect to the period of CSI goals, beginning 4.12,4.13 in 2013, we are designing a dashboard of goals to We adhere to the following voluntary commitments: be completed by 2020 which will be published at the end of 2013. Cement Sustainability Initiative (CSI) Other Commitments The initiative for sustainable cement is a program, coordinated by the World Business Council for Business Pact - “Na Mão Certa (In the Right Sustainable Development (WBCSD) and adopted Direction)” Program: VC Votorantim Cimentos by the largest producers of construction materials is a signatory to the above-mentioned “Business Pact”, in the world, which promotes the exchange which is a joint initiative of Childhood Brazil and the of experiences between its participants and the Ethos Institute of Business and Social Responsibility, dissemination of best practices. The participating with technical support from the International Labour organizations make voluntary commitments and Organization (ILO). The Business Pact aims to promote targets relating to social and environmental issues. the fight against the sexual exploitation of children More information at: http://www.wbcsdcement.org/ and adolescents on Brazilian highways by including this issue in the social responsibility strategies By participating in this initiative, VC seeks of the participating companies. More information to consolidate its position as the best cement at: http://www.namaocerta.org.br company in Brazil, which requires the adoption of best environmental and social practices. It is important to note that, since 2011, Votorantim The cement sector was the first to propose Industrial has been a signatory of the UN Global structured action in this direction, engaging Compact and this commitment extends to all of the global cement industry in a commitment its business divisions, including VC. The UN Global to sustainable development. Climate change Compact is an initiative of the United Nations (UN) has been a major focus of attention, since cement the aim of which is to mobilize the business production accounts for 5% of the global industrial community to adopt certain internationally accepted emissions of Greenhouse Gases (GHGs). fundamental values and practices in relation to human rights, labor relations, the environment Votorantim Cimentos formally joined the CSI and the fight against corruption.More information in 1999. As a result we undertook, among other at: http://www.unglobalcompact.org/ objectives, to implement the guidelines proposed by the CSI task forces and to adhere to the At an institutional level we are permanently in contact commitments established in the Agenda for Action with the governments of the municipalities in the (2002). We set goals, measured by the CSI Charter locations in which we operate, and participate in indicators, for the period 2005-2012, and with the discussions about public policy and support for the ending of this period we are now starting the second development of local communities. We also participate period of goals (2013-2020). in forums at various levels of government, including ministries and other public bodies, to discuss and For details of our progress in the implementation of present our needs and / or proposals for regulations. our goals, see the table in the Highlights for 2012 section of this Report.

36 GRI Itaú de Minas (MG) Plant SO7 Cement Cartel

EIn November 2011, the Secretariat of Economic Law (SDE) of the Ministry of Justice issued its opinion on the investigation, which began in 2006, into an alleged cartel in the cement sector. This opinion was delivered to the Administrative Council for Economic Defense (CADE), which is conducting the investigation, for its appreciation. In its opinion the SDE accused certain companies and executives of having committed acts in violation of Brazil’s competition laws, as follows: Holcim do Brasil S.A., Votorantim Cimentos S.A., Camargo Corrêa Cimentos S.A., Cimpor Cimentos do Brasil Ltda., Itabira Agro Industrial S.A., Companhia de Cimento Itambé, Associação Brasileira das Empresas de Serviços de Concretagem (ABESC), Associação Brasileira de Cimento Portland (ABCP), Sindicato Nacional da Indústria do Cimento (SNIC), and six executives working in the sector.

The Votorantim Group affirms that it has always acted in accordance with the law and does not endorse anti-competitive practices. During the administrative process, the company will present its defense, according to applicable procedures.

For more information on the voluntary commitments assumed by Votorantim Industrial (VID), as a whole, please see the Votorantim Industrial Integrated Report at: www.votorantim.com/relatorio.

Business Overview Report for Votorantim Cimentos 37 The recognition received shows we are on the right track

GRI Honors and Awards 2.10 • “Top of Mind” ranking from the Correio de Sergipe In 2012, we received the following honors and awards: newspaper - Most recalled brand (CimentoPoty).

• Pini Prize - 2012: Best supplier to the construction • “Top Brands” prize from Jornal Vanguarda industry in the categories “Portland Cement” of Caruaru - Most recalled brand (CimentoPoty). and “Concrete Batcher”. • Top Anamaco Award 2012: “Sales and Marketing” for • The U.S. Portland Cement Association and the the projects “VC em Campo” and “ Cartão VC Mais” magazine Americas Cement awards (St. Marys Cement Inc): the prize for Land Stewardship, • Anamaco Award 2012: First place in “Cement and which recognized its commitment to addressing Hydrated Lime” and 2nd place in “Adhesive Mortars”. environmental issues in the U.S. cement industry. • Survey on the Most Admired Companies in Brazil • “Concept and Imaging” ranking from Revenda organized by Carta Capital magazine in the category: magazine - First place in the Cement category. Manufacturer of Construction Materials. Commendations for: Adhesive Mortar, Hydrated Lime, Textured Coating and Grout. • 16th “Best Product of the Year” award by RevendaConstrução magazine: First place in the • “Top of Mind” ranking from Amanhã magazine - “Cement” category. Second place in “Textured Most remembered brand in Rio Grande do Sul Coatings” and 3rd place in the categories “Mortar” and Paraná (Cement Votoran). and “Hydrated Lime”.

38 • The Charlevoix plant (VCNA) in the U.S., received • The Portland Cement Association presented the PCA the award for environmental management from Large Terminal Safety Award to the St. Marys terminal the Portland Cement Association (PCA Land in the Port of Milwaukee and the PCA Medium Stewardship Award). Terminal Safety Award to the terminal in Cleveland.

• VCNA’s aggregate plants, Brighton, Clarington, • VCNA’s aggregates operations received awards Cramahe, Fanshawe and Thamesford, received from the Indiana Mineral Aggregates Association the Ontario Sand, Stone & Gravel Association’s for Safety and Excellence in Mining. Progressive Rehabilitation Award. • The Ontario Concrete Awards were given, in three • The Detroit plant received the PCA Chairman’s categories, to projects in Ontario, where CBM/VCNA Safety Award. was the partner for concrete operations.

• VCNA’s aggregate plants in Paxton, Pontiac, For more information on the honors and awards received by Votorantim Industrial (VID) as a whole, please see the Votorantim Marengo, Manteno, Ashkum, Dixon, Shelbyville Industrial Integrated Report at: www.votorantim.com/relatorio. and Bloomfield received the Rock Solid Safety Award which recognizes excellence in occupational health and safety in the aggregates business

Business Overview Report for Votorantim Cimentos 39 Our Identity OUR FOUNDING PRINCIPLES GUIDE OUR BUSINESS ACTIONS AND RELATIONS WITH STAKEHOLDERS GRI 4.8

Rio Branco do Sul (PR) Plant Votorantim Cimentos is a business division • Ethics and values that guide responsible of Votorantim Industrial (VID), one of the business conduct. largest industrial conglomerates in Latin • Highly competitive business divisions. America. We in VC can count on the resources • The constant drive to incorporate creative and of the organization as a whole as a foundation innovative products and services into its portfolio. for developing our business strategy, and • People who are motivated to achieve supporting our goal of growth with sustainable high performance. results both in Brazil and overseas. In this way we can generate value for all of our Values stakeholders: customers, employees, partners, local communities and society in general. Our values are represented by the acronym SEREU:

Our corporate identity is expressed by a set of founding principles and guidelines, as follows:

• Vision • Values • Solidity - To seek sustainable growth with • Aspirations value creation. • Management Beliefs • Ethics - To act responsibly and transparently. • Sustainability Principles • Respect - To respect people and be willing to learn. These pillars are our essence and they guide our • Entrepreneurship - To have the courage position, our operations and business operation to grow, innovate and invest. and our relationships with our stakeholders. • Union - The whole is stronger than the sum of the parts.. Vision Aspirations To ensure the growth and sustainability of the organization as a large family-owned Our aspirations are summarized in group that is respected and admired by the two propositions: communities where it operates, and is focused on creating economic, environmental • To grow in the long term, and in a and social value, based on: sustainable manner. • To achieve world-class standards in our operations and management, comparable to those of the best global companies.

Our Identity Report for Votorantim Cimentos 41 Management Beliefs • Open Dialogue We believe that an atmosphere of trust will Our management beliefs are: foster open dialogue and ensure that all have room to speak and to be heard, and also that a diversity of opinions leads to better solutions.

• Partnerships We believe that our success is a result of collaborative efforts, strengthened by genuine relationships and partnership in which everyone wins. • Talent development We invest time and effort in developing our talented • Sense of ownership employees because we believe in and trust them. We believe in people who take on responsibility, work with passion and lead by example, celebrating • Meritocracy their achievements and using mistakes as an We believe that people are individuals and deserve opportunity for learning. to be treated fairly and in accordance with their personal performance. Sustainability Principles

We seek the long-term survival and continuous • Excellence expansion of our business, based on appropriate and We believe we can always do more and better consistent results. We believe that sustainability is vital to overcome challenges with discipline, humility to ensure the permanent growth of the organization, and simplicity. as expressed through our corporate identity.

• Pragmatism Increasingly companies are scrutinized both by the We believe it is essential to devote time and energy market and by society in relation to sustainability. Our to what is most relevant, with objectivity and without efforts and actions in sustainability are guided by our losing sight of the big picture or future trends. Sustainability Principles, which are in turn aligned with the principles of the UN Global Compact.

Our Sustainability Principles

1, 2, 8 1. To be recognized by society as a socially and environmentally responsible organization.

2. To have sustainability as a strategy, guiding governance, management, education, decisions and investments, 1 up to 10 thereby creating value.

3. To consistently improve our economic, social and environmental performance, striving to achieve world-class 3 up to 9 standards of efficiency and operational reliability. 4. To be recognized as a company that attracts, develops and retains talent to create value and build a fair 3 up to 6 and inclusive society.

1 up to 6 5. To be committed to the welfare, health and safety of our employees, customers and partners.

1, 2, 4, 6. To contribute to the development of the local communities where we operate. 5, 8

7. To encourage the cooperation and participation of all employees and stakeholders in building partnerships 3, 4, 5, 6,10 and working together in order to generate value for all.

42 GRI Code of Conduct Corporate Ombudsman 4.4,4.6, HR4,HR6, Our Corporate Ombudsman is accessible to all our We have a Votorantim Code of Conduct, released HR7,SO4 stakeholders (both in Brazil and overseas), such as in 2005, which establishes the basic parameters employees, suppliers, customers, local communities, of our operations. In 2012, the code was updated the media and others, on any issue, but especially 4,5,6 to address even more clearly, the issues relating on those relating to our Code of Conduct, such as to the use of child labor and forced or compulsory harassment (moral, sexual) discrimination, suspicion labor, which we most explicitly repudiate. of fraud, abuse of power, embezzlement, unlawful acts and other forms of non-compliance. The Code now also includes more current issues, such as liability for information security and the All of the requests and complaints are treated use of electronic information systems. confidentially and impartially (identification of the complainant is optional). The Ombudsman The code is available (in several languages) can be accessed in the following ways: to all of our employees in Brazil and overseas, and also to contractors, partners, suppliers and other stakeholders, on our website at: http://www.votorantim.com/pt-br/ouvidoria/ codigoConduta/Paginas/codigoConduta.aspx

• Phone: 0800-8911729 • Website: http://www.votorantim.com/pt-br/ouvidoria • Mail: Please send correspondence to PO Box 19134 - São Paulo - SP

Complaints are recorded in a specific stand-alone system. Investigations are carried out by Corporate Anti-corruption Standards: Audit. The results are sent to the Corporate Ombudsman who is responsible for responding With the objective of disseminating to the sender of the complaint. All incidents the best international practices internally, are discussed and handled in bimonthly meetings we have established a Corporate Global between representatives of the Corporate Conduct Anti-corruption Policy, which applies to all Committee and the Business Division Conduct our operations. The policy is aligned with Committees. A summary of the minutes of each the Foreign Corrupt Practices Act (FCPA-U.S.) meeting is sent to the VID Board and to the CEO. and the Bribery Act (UK). This policy addresses issues such as bribery and facilitation payments, accounting rules, internal controls and the management of relations with third parties. The policy is available on our website at: www.votorantim.com

Our Identity Report for Votorantim Cimentos 43 The VID Corporate Conduct Committee GRI Number of Discrimination is composed of representatives of the Business HR4 Cases Identified Division Conduct Committees, Internal Audit, 104 the Legal and HOD Departments. It is responsible for handling special cases arising in the Business Division Conduct Committees, and for establishing criteria for: cases not provided for in the Code; 63 situations of conflict of interest; and uniformity in the application of the criteria used. It is also responsible for championing the good functioning of the Ombudsman function in the organization.

In 2012, we implemented an Ombudsman Policy, Harassment and applicable to the whole organization, in order to abuse of power 2011 2012 standardize guidelines and policy interpretations and to formalize the procedures and processes. GRI The complaints received by the Ombudsman are SO4 analyzed and classified as founded or unfounded. Our approach to remediation, for recurrent From there they go through an internal audit infringements, is based on rules for consequence process, and then the appropriate actions are taken. management, which are defined in the Code, 10 namely: guidance, warnings, transfers or The following table shows the actions taken re-allocations, dismissals and the termination in cases of corruption: of contracts.

We closed the year 2012 with 104 complaints deemed valid for VID as a whole. GRI Results of Corporate Audit on Cases SO4 of Corruption

For 2013, our goal is to enhance the training of 39 specialist Ombudsmen and specific training programs to create a stronger Ombudsmen culture in all the business divisions and functional areas.

In 2012 we instituted 11 an Ombudsman Policy, 6 valid for the whole organization. 2011 2012 Total number of employees punished or dismissed for corruption

Number of cases of contracts not renewed with partners due to violations related to corruption

44 GRI Corporate Governance and to facilitate the effective realization of new 4.1,4.2, growth opportunities. New by-laws for VID are 4.3,4.4, Our strategy for corporate governance is based being developed, including specific regulations for 4.7,4.9 on the following factors: the new structure of Board advisory committees. Although Votorantim is a privately-held • Family-controlled organization organization, it follows the high standards and • Leadership team which is qualified to manage practices that are adopted by major publicly-owned the business divisions corporations which give great emphasis to • Integrated vision. transparency and equality in their relations with • Controlled environment managed under high their stakeholders. This includes the disclosure standards of governance. of quarterly financial results. • Long-term business sustainability. • Corporate policies and the guidelines of the Corporate Governance Structure Code of Conduct.

At VC, we believe that good governance practices We are committed to continually improving our contribute to achieving our aspiration to grow with governance model. We have begun to implement sustainable results, and so we are continually evolving in a new corporate governance structure which aims this area. In 2012, we began to review the structure of to prepare the organization to be controlled, in the the internal committees linked to senior management, long-run, by the next generation of shareholders, defining competencies and responsibilities.

COMMITTEE RESPONSIBILITY Conduct Committee Management of Ombudsman issues and cases of misconduct. Fixed Remuneration Committee Definition of promotions and merit. Variable Remuneration Committee Management of Results Participation Program Votorantim Development System (SDV) Committee Management of Employee Performance Evaluation System. HR Committee Evaluation of the strategy for managing people and definition of the succession pool. Risk Committee Procedures for identifying, assessing and monitoring risks IT Committee Prioritization of investments and monitoring of projects. Safety Committee Management of occupational safety indicators and actions. Environment Committee Assessment and monitoring of environmental risks and opportunities. Mining Development Committee Management of the strategy for and capacity of mining activities. Capital Investment (CAPEX) Investment Committee Decision-making on and prioritization of investments. Executive Committee for Sustainability Management of sustainability initiatives and projects.

Our Identity Report for Votorantim Cimentos 45 Itaú de Minas (MG) Plant

Internal Policies • Executive Committee for Sustainability, composed of members of the senior leadership Governance in VC is reinforced by internal policies team - presidents and directors. This committee that guide the attitude of the employees day-to-day: meets to discuss and monitor priority sustainability issues, with activities carried out by the respective • Excellence Policy: Sets the model of excellence work-groups. in the management of issues such as health and • Sustainability Committee, composed of the safety, people, environment, customer satisfaction, coordinators of the work-groups (listed below) process improvement, performance optimization and VC’s technical director. The committee and cost control. meets every three months to discuss the progress • Environmental Policy and Green Rules: Set of the work-groups and exchange information standards that describe the behaviors expected and experiences, thereby promoting the integrated of employees in relation to environmental issues management of the various themes. that we select. • Technical Director/General Manager for • Rules for Life: Guidelines for the prevention Sustainability – this area has the role of facilitating of accidents. the work of committees, coordinating the work- groups, managing the voluntary external commitments and communicating on sustainability. It also supports GRI Sustainability Governance the organization’s divisional and corporate center 4.10 areas in the development of the themes. Sustainability is a cross-cutting theme for all • Work-groups – Each group is led by a senior of our business divisions. Senior managers have professional and comprises people from the different specific goals relating to sustainability issues in technical and management areas of the various their annual individual assessments. business divisions.

In 2012, we made progress in our model of sustainability governance, and defined the management structure of this theme with in VC as follows:

46 The proposed sustainability governance structure involves many different areas of the organization

Positioning, Priorities, Guidelines and Targets OPERATING GROUPS

SUSTAINABILITY EXECUTIVE COMMITTEE

SUSTAINABILITY COMMITTEE Sustainability Management and Functional Area Managers Communication

Functional Areas Technical Directory Work Groups

Supports Reports 1. Responsible use of fuel and Facilitates energy 2. Responsible use of raw materials 3. Water resource management SUSTAINABILITY GENERAL Coordinates 4. Solid waste

MANAGEMENT 5. Emissions of CO2 and other pollutants 6. Health and safety Aligns Manages 7. Local developoment 8. Biodiversity 9. Sustainable and inclusive • Preparation of Annual reports construction Group and Group Companies • Consolidation of information on 10. Supplier management sustainability projects 11. Sustainability in Human and • Adherence to voluntary commitmentss Organizational Development • Management of institutional (HOD) partnerships 12. Green Rules priorities

We also have a specific governance process for the environment. Given the strategic importance of the topic for us there is a specific environmental work-group, formed by the VC leadership team. The group meets to discuss the evolution of indicators by business division and region.

By strengthening the governance process, we have accelerated the implementation of the proposed initiatives with good results. There is more information in the Business Model and Performance section of this report.

Our Identity Report for Votorantim Cimentos 47 WE ACHIEVED SOLID RESULTS IN 2012: Business Model INCREASED PRODUCTION, EXPANSION OF THE INTERNATIONAL NETWORK AND and Performance IMPROVED CUSTOMER SERVICE

Itaú de Minas (MG) Plant Strategic Planning Votorantim Management System (SGV)

Our long-term strategic plan (the Five-year Plan) is updated The SGV was developed to facilitate the management annually and involves discussions between the corporate center and implementation of the strategic plan. The system assists and the business divisions. The strategic plan and projected us to continually improve our procedures and practices, results are based on assumptions developed from research on by capturing synergies, by transferring skills between macroeconomic trends, market and industry sector scenarios the business divisions and by implementing best market and competitive analysis. Our business division plans practices. The SGV system is administered by the Corporate incorporate the impacts of expansion projects and investments, Management Committees (coordinated by senior the performance management of the plants, risk analysis and management) with the support of specialist Thematic the material issues linked to sustainability. Teams (which are made up of experts from the business divisions and coordinated on a rotational basis). The validation of the strategic plan is formalized after discussions with VID’s Board.

In this process, the focus and performance of each business GRI Responsible Growth 2.8,EC1 division are defined, and resources are allocated to investments Despite the economic conditions faced on the basis of their economic return and impact on our over the last few years, VC has achieved competitive position. The evaluation of projects and the solid results, confirming the resilience prioritization of strategies are based on criteria which consider of our business model. The actions the efficient use of resources, the adequacy of the undertaken over that time period were organizational structure, the material issues of sustainability directed at meeting the demand generated and the technological developments expected. by both the opportunities created by the government and the higher average income For more information on VID’s governance structure and of the Brazilian consumer. strategic planning process, please see the Votorantim Industrial Integrated Report at: www.votorantim.com/relatorio Total Income * 2011 2012 Sales of products and services 11,205,555 12,070,735 Other operation income (expenses) 65,467 551,553 Provision for credits of doubtful settlement (1,922) (11,077) Total revenues 11,269,100 12,611,211

* Breakdown of Value-added (DVA)

Business Model and Performance Report for Votorantim Cimentos 49 In 2012 VC’s income was distributed as follows: In addition, 2012 saw the expansion of the Rio Branco do Sul (PR) and Laranjeiras (SE) Statement of value added / sva 2012 units, and the inauguration of the Cuiabá (MT) unit, which occurred in November.

12% • Sales Our product sales volumes in Brazil were: 24.3 million tons of cement, 15.0 million tons of aggregates, 4.8 million cubic meters of concrete 21% and 1.7 million tons of mortar. In the U.S. market, 42% we sold 4.0 million tons of cement, 11.3 million tons of aggregates and 4.0 million cubic meters of concrete. Consolidated net income for cement, concrete and mortar increased by 4.3%, 2.2% 25% and 7.1%, respectively, compared to the year 2011. This result was due mainly to increased demand in the heavy construction sector and the start-up of new operational units. Salaries and Employee Benefits

Remuneration of Third-party Capital

Remuneration of Own Capital

Payments to Government Sales Volume - Cement (‘000 tons)

28,309 27,303 26,369 4.009 3.621 3.581 We would like to highlight the following achievements in 2012:

• Increased production We ended 2012 with a production capacity of 30.1 million tons of cement per year in Brazil and 52.2 million tons of cement per year worldwide, 80% more than in December 2010.

2010 2011 2012 This increase was due mainly to the entry of new units into operation and improvements VC Brazil and VC North America in our operational efficiency. The asset swap with Cimpor also added a significant volume to our annual production.

50 • Net Income • Costs / expenses Our global net income totaled R$ 9.5 billion, Cement production is a highly capital-intensive 9% more than in the prior year. In Brazil, our net activity and it is based on the extraction and income totaled R$ 7.7 billion, 6% higher than the processing of natural resources. Thus, our cost previous year’s figure. This result was due mainly structure comprises mainly processing (energy) to the start-up of new plants and mills, which and the maintenance and operation of plants. increased our sales volume of cement, concrete and mortar by 3.3%, 5.4% and 7%, respectively, The cost of products sold was 9% higher than and also by the increase in the average prices for the amount recorded in 2011. cement and mortar of 4.1% and 2.8% respectively. Consolidated expenses increased by 14% Our North American operations increased compared to 2011. their net income to R$ 1.8 billion, up 23% compared to 2011. This result was mainly due to the appreciation of the dollar against the real by 17%. Excluding currency effects, VCNA’s net income increased by 3.5% compared to 2011. The sales volumes of cement and aggregates recorded increases of 11% and 9% respectively, compared to 2011. This was offset by the lower average prices of these products, down 3% and The consolidated net 1%respectively, and a lower concrete volume, income was 9% higher down 2%. than the previous year

Consolidated Net Income (R$ Million)

9,482 8,698 8,047 1.777 1.448 1.509

2010 2011 2012

VC Brazil and VC North America

Business Model and Performance Report for Votorantim Cimentos 51 • Earnings before Interest, Taxes, Depreciation In other transactions we raised our shareholdings in and Amortization (EBITDA) Cementos Avellaneda S.A. (Argentina) and Cementos VC’s adjusted and consolidated EBITDA was Artigas S.A. (Uruguay) to 49% and 51%, respectively. R$ 3.1 billion, 11% higher than in the previous year. These transactions reinforced our strategy of continually investing in the growth of our business in the Americas. Consolidated EBITDA (R$ MM) VC’s capital expenditures totaled R$ 1.5 billion in 2012. 3,071 2,805 2,777 296 Of this amount, R$ 1.2 billion, or 78%, related to our 263 expansion projects, which included plants in: Edealina (GO) - which began construction in December 2012; Cuiabá (MT) - which went into operation in November 2012; Rio Branco do Sul (PR); Primavera (PA); Santa Helena (SP); and Cimesa, emLaranjeiras (SE)

All of these actions are part of an expansion plan that envisages making investments in the period from 2007 to 2014, involving the construction and expansion of VC manufacturing units throughout the country 2010 2011 2012

VC Brazil and VC North America Consolidated Investments (R$ MM)

• Net profit 1,723 1,578 Net profit in 2012 was R$ 1.6 billion, 92% higher than in 2011. This was due mainly to the increase in sales during the year (9%) and the extraordinary gains of R$ 267 million from the sale of our stake 964 of 21.21% in Cimpor and of R$ 390 million from the elimination of deferred income tax generated by the asset swap with Cimpor.

• Investments With the expansion of our international operations 2010 2011 2012 in Europe, Asia and Africa, due to the exchange of assets with Cimpor, we now have a presence in Spain, India, China, Turkey, Morocco and Tunisia, as well as a limestone mine in Peru. As a result VC Brazil and VC North America we added 16.3 million tons to our worldwide production capacity and incorporated 13 cement plants, one clinker plant, eight grinding mills, 78 concrete units, 22 aggregate plants, five mortar plants and one hydrated lime plant.

52 • Liquidity and debt Debt Profile - 2012 Debt management and the optimization of our capital structure are priorities for VC. In 2012, our gross debt 2% totaled R$ 12.8 billion, composed of 5% in short-term 17% debt and 95% in long-term debt.

In 2012, our total consolidated indebtedness was 32% R$ 1.5 billion, of which 5% was in short-term debt and 95% in long-term debt. Our debt denominated in reais and in foreign currency amounted to 11.5% and 51% of our total debt, respectively. In terms of 49% foreign currency, the equivalent of R$ 4.1 billion was denominated in U.S. dollars and R$ 2.1 billion was denominated in euros. EUR USD

In the first and second semesters of 2012 we BRL Other Currencies issued debentures in the amounts of R$ 1 billion and R$ 1.2 billion respectively. We also raised 12% US$ 500 million from a re-issue under our 30-year 38% bond facility. These were the main reasons for the increase in our debt. We used the proceeds from 13% this issue to extend the average maturity of our debt profile and strengthen our working capital position.

In December 2012, due to the completion of the swap of our stake in Cimpor, we took control of 100% of VCEAA, the subsidiary which 37% consolidates our assets in Spain, India, Turkey, Morocco, Tunisia and China. As a result we added Debentures BNDES, Export 16.3 million tons to our production capacity, Credit Agency and began to fully consolidate these assets Bonds and liabilities on our balance sheet. Commercial Bank Debt Our cash balance at the end of 2012 rose to R$ 3.0 billion, R$ 1.3 billion higher than in 2011, primarily due to the amount of funds raised during the year. These more than offset the payment of dividends to our parent company, VID, in the amount of R$ 2.4 billion. At year end our net debt totaled R$ 9.8 billion, an increase of R$ 3.4 billion, and our leverage, as measured by the ratio of net debt to EBITDA, reached 3.2x.

Business Model and Performance Report for Votorantim Cimentos 53 Customer Service Ongoing Program of Improvements Our strategy of making VC a provider of basic construction Relationships with Customers materials and services requires that we pay special attention to all processes involving customer service. Quality customer service is a top priority for us. We have a portfolio of 30,000 retail customers, spread out over all In 2012, we initiated a review of these processes, in search the regions of Brazil. Our clients range from large construction of improvements. The new project, still in the pilot phase, companies to small entrepreneurs and owners of building aims at upgrading the following points: material shops. Our business proposal is to give each of them a customized level of service. • The registration of orders and payments in order to authorize delivery. We take specific actions to maintain close relationships • The operation of a Customer Service Center accessed with our customers, and to understand their expectations by phone and other communication channels. and needs. Examples of these actions are as follows: • The provision of services to truck drivers in order to speed up loading and unloading, and avoid trucks being parked for • “VC in the Field” a long time in our plants and distribution centers. We give We want to ensure that all VC employees are focused on guidance to truck drivers about safety and customer service, serving the customer and not just those who work in sales and and have a loyalty program, with a score based on the number marketing. One of our actions to support this idea is the VC in of times they work with us in a given period. In late 2012, the the Field program, which organizes visits by employees of VC’s loyalty program for truck drivers was implemented in 28 units, various units and functional areas to customers, together with involving a total of 1,200 drivers. In 2013, these services will the sales team. be extended to other plants and distribution centers.

• Delivery of the right order at the right time: we have The program is held every semester, and in three editions noted an improvement in our OTIF (short for “On time in to date (one in 2011 and two in 2012), over 1,200 employees full”), an indicator used to measure our customer service drawn from all of our business segments (Cement, related to distribution. Complementary Products, Concrete and Aggregates), • Quality of products. made visits to over 1,500 clients.

One of the highlights for improving customer service was • “Open Doors” program the implementation of the software Distribution Network This program, initially designed in 2011 to receive visits by Optimizer, which aims to achieve the optimal flow of products members of the local community, now has a version aimed and materials in order to reduce distribution costs and to at our customers. Customers are invited to visit our factories ensure a better service for the market. in order to understand how we operate and see how cement is produced. In 2012, we organized 82 visits, involving The Distribution Network Optimizer System centralizes data approximately 2,500 customers. on production, inventory, transportation and tax issues. It allows us, within minutes, to simulate scenarios and identify the best routes for deliveries, an analysis that previously took days. Deliveries can be scheduled between a week and 15 months from the order date.

54 GRI Customer Satisfaction Survey PR5 Periodically we evaluate customer satisfaction. We conducted two customer satisfaction surveys in 2011 and one in 2012, between June and A satisfactory level November. In the latter survey, 2,330 customers, of customer service is distributed throughout the country, were one of our priorities interviewed by telephone.

The level of overall customer satisfaction with VC shows a positive trend:

Number of Overall Research customers satisfaction conducted in: interviewed: rate: 2011: 03/22 to 04/13 1,701 77% 2011: 10/10 to 11/24 1,510 84% 2012: 06/01 to 11/30 2,330 87%

Satisfaction with the delivery of products: GRI Environmental Activities Timeliness of EN30,EN26 delivery in respect and Investments of the date Delivery date Research specified at the specified at the We have outstanding environmental performance conducted in: time of the order time of the order among the companies participating in the Cement 2011: 03/22 to 13/04 82% 78% Sustainability Initiative (CSI), with one of the lowest 2011: 10/10 CO2 emission rates of this group of companies. to 11/24 86% 83% 2012: 06/01 to 11/30 89% 88% The actions relating to the environment follow the guidelines of our Environmental Policy The OTIF, an indicator that measures the performance and include the use of cleaner technologies of customer service related to distribution, i.e. the and low carbon fuels, emission reduction, and delivery of the right order at the right time, and in environmental conservation, all coordinated in the right quantity, also improved from 84.9% in 2011 a process of integrated management, which drives to 91.7% in 2012. their development. Recognizing the essential role of each employee in this process, we have We also monitor the quality of the services of reinforced the communication on the Green Rules, our Customer Service Center: in 2012, about 80% which serve as a guide for people’s behavior of calls were answered. The abandonment rate in day-to-day activities. of calls in 2012 was 16%, 22% less than in 2011.

Business Model and Performance Report for Votorantim Cimentos 55 In 2012, we spent R$ 31.6 million on CAPEX projects and R $ 27.7 million on operational expenses (OPEX). The distribution of the capital investments is detailed in the following chart:

GRI capex EN30

Environmental management Waste treatment 6,682.035 123,908 Conservation, Reforestation Waste-water treatment 1,464,911 4,287,468 and Biodiversity 230,896 Decommissioning/ Environmental Prevention Remediation of contaminated areas Treatment of air emissions

18,036,477 864,373

GRI 0pex EN30 524,545 Environmental education HOD - Environmental Area 2,770,920 5,502,292 Environmental management Decommissioning/ 1,262,195 Remediation of Environmental Preventio 805,861 contaminated areas Conservation, Reforestation 5,026,257 (soil and water) and Biodiversity Other environmental 1,187,583 Treatment of air emissions expenses 1,475,410 Waste treatment

5,939,534 3,292,975 Waste-water treatment

The Votorantim Management System includes the CAPEX Management System which addresses capital investment guidelines.

Eco-efficiency and the Responsible Use of Resources

Votorantim Energia (VE) manages our contracts GRI Responsible Use of Fuels and operates/manages our company-owned plants EN3,EN4 EN5 and Electric Power and/or holdings in plants to generate electric power (except for two small hydroelectric plants we own Energy consumption is an important source in Itaú de Minas and Rio Branco). The management of CO2 emissions. At VC, we operate in an organized of thermal energy (fuel) is our responsibility, including manner to increase our energy consumption the corporate purchasing of low carbon fuels, the efficiency and to invest in the diversification corporate management of co-processing services of our energy matrix. and the corporate management of coke purchasing.

56 In Brazil, we have a network Specific Eletric Energy Consumption per tonnes of Cement of industrial plants which operate 0% with up-to-date technology 0% and our projects for expanding 121 capacity employ the most advanced 124 124 120 119 117 115 118 technology available globally, 112 116 117 115 107 106 106 103 2,2% 107 which has enabled a significant 99 3,4% 3,8% reduction in energy consumption. 5,0% 5,5% 6,7% 7,3% In 2012, we saved 4,121,631 GJ 9,6% 5,5% of total energy. 7,3% 13,6% 14,6% 14,7%

13,6%17,2% 20,2%

1990 2010 2011 2012 1990 2010 2011 2012

Specific Consumption Reduction

7,8 Preserve vegetation.

Preserve waterways. Green Rules Dispose of waste properly.

Report any problems in the operation of pollution control systems.

We have strengthened the governance of environmental Do not mistreat or capture wild animals. issues: we have established regular meeting on this theme, which brings together the directors of the Do not carry out activities in protected areas.

business segments (Cement, Concrete, Aggregates and Preserve caves and archaeological sites. Complementary Products), as well as the Technical Director, the environmental area and our regional managers. Do not set fire to vegetation.

Do not work the land or store supplies in unauthorized areas.

Make conscious use of natural resources.

Business Model and Performance Report for Votorantim Cimentos 57 We hold an annual meeting for the staff of the environmental functional areas of VC’s plants in Brazil. The meetings include presentations by outside experts on current environmental issues with the aim of providing training and discussion on achieving continuing improvements in the environmental performance of our plants.

GRI Energy saved due to improvements EN5 in conservation and efficiency (GJ) The initiatives with the greatest impact on reducing 4,121,613 energy consumption were as follows:

• IInstallation of a roller-type grinding mill at the new plant in Vidal Ramos (SC). As a result the plant reduced its total consumption of electricity by 2,014,086 about 23% compared to the plants with ball-type grinding mills. Roller-type grinding mills have been purchased for our plants in Rio Branco do Sul (PR), Cuiabá (MT), Xambioá (TO), Edealina (GO) and Primavera (PA).

• Installation of vertical mills for grinding cement 2011 2012 and slag in our plants in São Luís (MA) and Santa Cruz (RJ). This technology has reduced energy consumption by 30% compared to other plants, Total energy saved due to improvements for the same type of cement. in conservation and efficiency

• Adjustments to the operation of new furnaces in Salto de Pirapora (SP) and Vidal Ramos (SC). These reduced thermal energy consumption by 6% compared to the average for all VC plants.

58 Another action that contributes to greater efficiency In 2012 we faced shortages in the availability of biomass and a reduction of CO2 emissions is the replacement on the market. Furthermore, cement consumption grew and, of fossil fuel energy with that produced from as co-processing reduces productivity, our preference was biomass, waste and other materials. We have four for maintaining customer service, and we decreased the pace co-processing projects that use low carbon fuels, of our thermal energy substitution strategy. Today we have planned for our plants in: Vidal Ramos (SC), Rio reached a rate of 10.2% of thermal energy substitution and Branco do Sul (PR), Cimesa (SE) and Cuiabá (MT). are working with a goal of doubling this level over the next five years in Brazil and North America. These projects are expected to come into operation in mid-2013, except for the Cuiabá project, which is planned for the last quarter. Besides this, we have five other projects under technical and economic analysis for deployment in 2014.

Specific Thermal Consuption Thermal Substitution Rate in Clinker Production

13.2% 12.8% 4,625

10.2% 9.0% 8.8% 3,490 3,496 3,381

5.5% 4.7% 4.1% 4.0% 24.5% 24.4% 26.9% 1.4% 1.4% 0.0%

1990 2010 2011 2012 1990 2010 2011 2012

Specific Consumption Biomass

Reduction Low carbon fossil fuels

Total

Business Model and Performance Report for Votorantim Cimentos 59 GRI Responsible Use of Raw Materials In the Concrete and Aggregates segments, we are expanding EN1,EN2 the use of re-cycled materials, similarly to the Zero Loss EN26 We strive to use raw materials in a responsible program, also known as the Sustainable Engemix program. manner in all of our production processes. Raw materials are managed by each business segment EN2 - Percentage of recycled according to its operational characteristics and needs. materials used Recycled materials used (tons) 2012 8,9 We are working to reduce the consumption Total raw materials used (EN1) 71,941,244.11 of clinker, the principal component of the Total recycled materials used as inputs 5,545,024.63 manufacture of cement. As a result we expect to Percentage of recycled materials used reduce our dependence on non-renewable fuels, as inputs 8%

reduce emissions of CO2 and maximize the use of non-cementitious materials. The main substitutes

for clinker are pozzolan (a calcinated clay, a type

of ash derived from industrial burning processes), GRI As listed in the chart below, the substitute slag and other materials. EN2 materials in cement powder included contaminated soil materials, iron mill scale and gravel. The substitute GRI Use of Materials (million tons) raw materials in the cement grinding mill included EN1 artificial gypsum, slag and ash.

41.42 Recycled materials used (tons)

1.31% 0.0048%

30.53 0.12% 25.81%

0.46%

72.30%

Cement Another VC business Cement: ground Other VC business: Recycled materials used (Cement) limestone, ground Concrete- sand, gravel, gypsum, clay, artificial cement and rice husk; Substitutes of raw materials in cement powder (Cement) plaster, limestone Aggregates - ground additive, slag, ash, limestone, ground Substitutes for raw materials in cement grinding mill pozzolan, contaminated gypsum and clay; soil, gravel, iron mill Complementary Products Additives (Cement) scale, and others. - ground limestone, ground gypsum, clay, Returned concrete reused sand, chemical additives and cements. Aggregates

60 GRI Management of Water Resources EN8 The problem that became a solution Our Environmental Policy and Green Rules, implemented in 2011, set guidelines related to the In the past about 2% of the concrete produced by Engemix pursuit of efficiency in the use and conservation was disposed of as rubble - around 100,000 cubic meters of water resources, and the collection and disposal per year, equivalent to the volume of concrete used to build of effluents. To strengthen the governance one this 40 medium-sized buildings. question, we created a work-group dedicated to water resources and in 2013 we will work on new procedures Besides the loss of material, there were a number to further improve the management of water resources of other problems such as: in all VC units.

• The cost of removing and disposing of the waste Last year we undertook a study to evaluate the in landfills. operations that are at risk of water shortages using the • The high cost of water for cleaning the inside of concrete methodology of the Global Water Tool (GWT). The goal mixers (850 gallons of water on average per mixer). is to develop action plans and targets to be achieved by • Increased emissions of CO2 caused by the cleaning each of the areas and units. process, since the mixer continued rotating throughout the whole process. An important step will be the sharing of successful initiatives, for example, our experience at Capivari de The solution came through the Zero Loss Program. Baixo (SC). This unit collects rainwater that is then used Our team developed a special additive to retard the to water access roads, to clean the storage area of the chemical reactions in the setting of cement, thereby ash drier, and to feed into the system of micro- extending the useful life of concrete from two to 48 sprinklers in the conveyors that feed the ash into hours, without any loss of product quality. storage silos. This practice avoids consumption of other water sources and reduces the amount of ash blown In 2012, the use of this additive reduced the amount away by wind. of waste rubble by 35%, generating annual savings of R$ 3 million. A new initiative has reinforced the We have specific operational procedures for benefits of this program. We have developed a crusher managing the disposal of waste generated that turns the hardened concrete in the mixers into in the production process and other activities, aggregates which are then converted into raw material with guidelines to identify, treat, dispose of and for cement production. monitor effluents. For example, we have developed a worksheet (the Environmental Operational The Zero Loss Program has received several awards, Performance Indicator) that registers the historic including the Top Anamaco Award (National data for the monitoring of effluents in each unit. Association of Construction Material Dealers) and the Argos Menna Barreto Award (Brazilian Institute of In the Engemix operations the effluents are captured Concrete - Ibracon). by a system of channels and flow to decanting tanks for treatment. These tanks are composed of a system of cells that retain the solid material before the liquid effluent is pumped into water tanks. This water is then reused in the production process and also in other applications, such as watering the parking area.

Business Model and Performance Report for Votorantim Cimentos 61 GRI Solid Waste GRI EN22 EN18,EN26 Emissões de CO2 One prominent initiative is the Zero Loss Program, e outros poluentes which has enabled Engemix to recycle 80% of the waste generated in the concrete manufacturing 8,9 With regard to our management of emissions, process back into the production process. This it is worth noting that in 2012 we had a reduction

efficient solution was made possible due to the of net emissions of CO2 (Kg CO2/ton of cementitious development of the concrete additive described product) of 23.9% over the 1990 base year. above, thus reducing losses. With this result, we exceeded the target that we committed to with the CSI, which was to reduce Most of our products are sold in bags and so our emissions by 10% for this indicator. the solid waste work-group is discussing economically and environmentally viable solutions for the reverse Several factors contributed to us achieving this

logistics of the packaging of our products. reduction of CO2 in 2012, such as the reduced proportion of clinker in cement manufacture, Another area on which we are working is higher efficiency in thermal energy consumption, elimination of the presence of Polychlorinated the reduction in electricity consumption (see Biphenyls (PCBs - Askarel) in our inventory. In 2009, “Responsible Use of Energy and Fuel” in this Report) we initiated specific projects for this purpose. and the use of biomass and low carbon fuels.

It is worth mentioning that we have been preparing an annual emissions inventory for GHGs produced in cement manufacture since 2005. In 2012, we began to study the processes used in our Concrete, Aggregates and Complementary Products units, Specific CO Emission in order to broaden the scope of the inventory. 2

794 794 Clinker/Cement Factor 656 647 638 0% 630 613604 81.2%

75.6% 73.3% 72%

18.5% 20.7%

23.9%

1990 2010 2011 2012

Gross Net Net Reduction 1990 2010 2011 2012

62 Unidade de Paulista (PE)

Business Model and Performance Report for Votorantim Cimentos 63 Santa Helena (SP) Plant

We have taken measures to reduce emissions of • adoption of the “Dust Control” technology to particulate matter, including investments in the: control particulate emissions in the clinker conveyor belts in Esteio (RS). • retrofitting of bag filters in the clinker kiln chimneys in the plants in Pinheiro Machado (RS), • Through the implementation of these measures Itaú de Minas (MG) and Rio Branco do Sul (PR). we have significantly reduced the specific particulate emissions by 30.8% relative to 2011. In 2013, we will • new micro-sprinkler systems in the conveyors that continue with these efforts and have already decided feed ash into storage silos at Capivari de Baixo (SC). to focus on the management of particulate emissions at our plants in Salto de Pirapora (SP), Santa Helena (SP), Laranjeiras (SE) and Sobradinho (DF).

64 SPECIFIC DUST EMISSIONS Cimesa (SE) Plant

0.20 0.19

0% 8.4%

0.15

0.14 24.7%

30.8%

2000 2010 2011 2012

Specific Emission Reduction

Although we were in compliance with the local legislation where we operate, we recorded increases of 3,6% and 11,3% in the emissions of NOx and SOx respectively, compared to 2000. As such we did not achieve our target for 2012 of a 5% reduction in these pollutants. We have already planned investments in this area for the next few years. We also have a program to improve the monitoring and reporting of these emissions.

SPECIFIC NOX EMISSIONS

1.66

1.60 -3.6%

0% 1.50

1.36

6.1% 15.1%

2000 2010 2011 2012

Specific Emission Reduction

Business Model and Performance Report for Votorantim Cimentos 65 Specific SO2 Emissions

1.09

-11.3% 0.98 0.97

0% 1.1% 0.81

17.3%

2000 2010 2011 2012

Specific Emission Reduction

Rio Branco do Sul (PR) Plant

66 CO2 transformed into food for algae and biofuels

Our Canadian subsidiary, St. Marys Cement / VCNA, is developing an innovative technology using algae to mitigate its emissions of CO2. This research project, still in its initial phase, started in 2009 in partnership with Pond Biofuels, a biofuels company, and it consists of cultivating algae in bio-reactors that receive the gases generated in the cement- manufacturing process. The presence of CO2 accelerates the process of photosynthesis in the algae, which absorb CO2 and release oxygen. Besides the immediate environmental benefit from the absorption of CO2, the algae can then be used in the manufacture of biofuels and other high value products, like nutraceutical and pharmaceutical feed stocks.

Business Model and Performance Report for Votorantim Cimentos 67 . GRI EN11,EN12 EN13,EN14 restoration plans. MM2 Biodiversity

Brazil is a country rich in biodiversity and there are important conservation areas close to some of our By 2020, we intend to have developed plans plants. Since 2011 we have been mapping the for the closure and the restoration of degraded biodiversity near our plants in order to more fully areas for all of our plants and mines. These plans understand the related issues and to manage our will follow accepted international methodologies business appropriately. and the management of each plan will be the responsibility of the respective unit with the In 2012, we conducted a survey of the overlaps support and monitoring of the corporate center. between our plants and areas of high biodiversity, using IBAT software. We identified the positioning As part of this strategy, we have entered into an of all of our units in relation to the various biomes innovative partnership (see box below) with two and those units which were in or near areas of respected organizations working in environmental high biodiversity value. conservation, namely, the SBE and the Biosphere Reserve of the Atlantic. We will work together We mapped 48 units in Brazil and 34 in North on biodiversity projects at all of VC’s properties America (VCNA), of which 57.32% had overlaps throughout the Brazilian territory. with areas of high biodiversity value. Of this total number of units, 48.78% have developed

Among the biodiversity monitoring conducted, in the areas of the Vidal Ramos and Ribeirão Grande units some species of high biodiversity value were found, such as Puma, Tapir, Hawk and Hedgehog.

Tapirus terrestris

Puma concolor Spizaetus tyrannus Erinaceus europaeus

68 Working together to protect biodiversity

We have signed a cooperation agreement for two years with the SBE, which focuses on actions to conserve caves, and the Biosphere Reserve of the Atlantic, which supports the conservation of remaining areas of the Atlantic Rainforest.

The agreement aims to develop, initially, the following projects: the creation of a “Guide to Good Environmental Practices in Mining”, with rules for mineral exploration; research on the national speleological patrimony; education in speleology; and the conservation and management of caves, karst areas, and areas of the Atlantic Rainforest.

Among the projects undertaken in 2012 was the photo contest “Caves of Brazil”. A book was also published on “The Human Being and the Karst Landscape”. This event occurred during the Rio + 20 Conference, with the participation of representatives of the caving community.

We also began pilot programs to identify environmental assets at our plants in Ribeirao Grande (SP), in 2012, and at CIMESA, in Laranjeiras (SE), beginning in 2013, in order to develop a Sustainable Land Management Plan. This will enable us to incorporate the conservation of biodiversity and ecosystem services into our strategic planning process. Another project initiated in 2012 and still ongoing is the Cave School at our plant in Xambioá (TO) which provides training for local speleology groups.

Babaçu (Orbignya sp)

Business Model and Performance Report for Votorantim Cimentos 69 GRI Health and Safety of expansion of the company, driven by the LA7 construction of new plants in 2012. In each of these construction sites, up to 1,500 people are involved, Safety including both employees and outsourced staff, which demands a concerted effort to divulge Votorantim Cimentos ranks among those firms that and monitor the application of safety rules. have a better record for safety in the cement sector.

The main instruments for achieving this are The CSI has developed specific guidelines for driving (i) the “Rules for Life” program which is a set safety with the aim of reducing the rate of traffic of processes, methods and equipment designed accidents, which is the leading cause of fatalities to prevent accidents and to create an increasingly among the companies involved in the initiative. safe working environment, (ii) the Management As a member of CSI, VC has undertaken to apply Walking in the Area (GANA) program which ensures the best practice guide, which can be read in detail that management is constantly monitoring safety at: http://www.wbcsdcement.org/index.php/ and (iii) the Right of Refusal. These programs key-issues/health-and-safety/driver--contractor-safety) stipulate mandatory safety standards that must be adopted at all times and by all involved. The current market conditions in Brazil, characterized by a lack of manpower and high turnover, bring

additional challenges to this issue. In addition, there is the challenge represented by the fast pace

Cards available to VC employees with Health and Safety Norms

70 Good Practice Example at the Vidal Ramos plant

“In our unit we noticed that truck drivers were behaving inadequately in order to be first in line for loading. So we implemented a loading schedule with a fixed appointment time, and we used pagers to remind drivers of their appointment times. The goal was to improve the quality of their lives, by allowing them more time to rest and to be with their families. One of the factors that helped us in this work was the cooperation from the local population and government agencies, which helped us to monitor the conduct of these professionals, ”said Ivan Sotoprieta, Head of Distribution at Votorantim Cimentos’s plant in Vidal Ramos (SC).

Business Model and Performance Report for Votorantim Cimentos 71 We ended 2012 with a frequency rate GRI Total Fatalities of accidents lower than the previous previous LA7 8 year’s. Still, we had fatalities in the year, two direct and two indirect involving on-site employees, six indirect involving off-site and five involving third parties*, for we are deeply sorry. In such On-site 5 cases, we investigate the responsibilities and the risk situations and use the results to develop new Off-site measures, to both avoid them happening again and to strengthen our actions to increase 2 2 awareness, in a continuous process of learning. 2 2

LTI Frequency Rate- Direct employees 0 0 0

2010 2011 2012 1.65

Direct employees Indirect employees 1.27 *Third Party 1.06

*Third-party: This classification includes any person who is not categorized as a direct or indirect employee of Votorantim Cimentos. Third parties usually include customers and visitors to the company’s units (whether specifically invited or not). They also include drivers and passengers, involved in off-site accidents with company vehicles, but only in the case of negligence by the company.The number of fatalities includes indirect employees, and events inside and outside the company’s premises.

2010 2011 2012 Safety is a top priority for us and is integrated in our Sustainability Principles. The Safety Committee is responsible for the governance of safety issues, including the management of safety indicators and initiatives, and is linked to the senior management Safety is a top team of VC. priority for management Our Safety Management System covers a large number of initiatives in safety education, engagement and communication, as follows:

• Preliminary Risk Analysis (PRA) - this is used to identify dangerous situations during the execution of activities.

72 • Incident Register - this is used to record situations • Management of Third-Parties - we have a project or conditions that could lead to more accidents. to strengthen the monitoring of the occupational risks in the activities carried out by third-party • Accident Prevention Day (DIPAT) - this sets aside service providers. a time during which the employees of each unit are mobilized to talk about security.

• Management Walking in the Area (GANA) - Right to refuse this puts the management in closer contact with the operational team. Every Friday, the managers of the An employee who does not feel qualified, industrial plants go into the field to talk to the teams, trained or in a condition to be able to to identify potential risks and discuss opportunities perform a certain task, can refuse to do for improvements in safety. so. The right to refuse not only exists on paper, but is also encouraged in practice, • Movement Alert - this function operates on a daily basis, through communication a communication channel dedicated to safety in actions with employees and training for Direct employees Indirect employees industrial units, providing information on safety managers. In 2012, 2,795 employees standards and and issuing advice advice to avoid exercised their right to refuse. *Third Party exposure to risk.

• The Internal Commission for Accident Prevention (CIPAs) - this is composed of employees of all units who are involved in the routine matters of health and safety.

• Security Minute – during this period every day before the beginning of each shift, employees assemble to talk about safety.

• With VC - safety is a frequent topic of conversation (in web conferencing) between the president and the employees.

• Training in safety - for managers, we have the School of Health and Safety at the Votorantim Academy of Excellence. The School is focused on strengthening the concepts and practices in the management of health and safety, principally among general and middle managers. There were 184 participants during the year.

• Security of Company Property - we provide training for the security team (outsourced staff), with whom we discuss issues relating to human rights.

• Meritocracy - we adopt strategies that associate the variable remuneration of managers and teams with Rio Branco do Sul (PR) Plant good safety performance.

Business Model and Performance Report for Votorantim Cimentos 73 GRI Health and Quality of Life • Support for Pregnant Women program - we LA8 encourage pre-natal consultations and offer The health and quality of life of our employees monitoring by the plant’s medical unit. Future are priority issues in our HR strategy. We have mothers receive a booklet with information about developed a “More Life” program, which takes the pregnancy period along with baby-care. actions to stimulate initiatives, on a day-to-day basis, that focus on creating a healthy environment Family that will contribute to people’s well-being. These We organize programs of visits to the company initiatives cover topics such as healthy eating, (under the Open Doors program), aiming to bring ergonomics, prevention of cardiovascular risks, the employees’ families into closer contact with women’s health, sports, etc. their work. We also hold social and integration events and give lectures on financial education The program is divided into four aspects: and household budgets.

Health Movement • Health campaigns targeted at employees We take actions to encourage sports activity and to and their families. prevent situations that lead to repetitive strain injuries. • Nutrition advice provided by a specialized We offer occupational gymnastics and quick massages, professional. in addition to organized group activities such as running • The competition “Who Loses Wins”, dedicated groups, championships, walks and excursions. There to weight loss, with the supervision of a dietician. are also grants for paying the fees for private gyms. • Flu immunization program. • Acupuncture. Culture • The “More Life” event, which seeks to raise Our activities include: the distribution of the awareness of health matters among employees local cultural schedules of the cities where we and contractors, as well as family members, with have operations; establishment of libraries in our explorations of: the control of chronic diseases units; private movie screenings; and the provision such as diabetes and high blood pressure; of discounts on movie and theater tickets. physical condition; and mammography.

74 Local Development In 2012, VC invested R$ 17.2 million in social projects (cultural, sporting and work-related), distributed geographically as follows: In 2012 we invested R$ 17 million in social projects. In VC North America (VCNA) we have the Open House program where the families of employees and members of the local community visit the plants. GRI SOCIAL INVESTMENT BY REGION EC1 GRI SOCIAL INVESTMENT BY CATEGORY EC1

3% 3%

54% 36% 19% 19%

10% 17%

28% Community Sport Engagement and Work Development Via (Way)* Education Management Culture

* Support for projects to improve the quality of life of children and adolescents and to strengthen the administrative agencies in the area (Councils and Funds).

Itaú de Minas (MG) Plant

Business Model and Performance Report for Votorantim Cimentos 75 Focus Areas for our Social Investment GRI Engagement with Stakeholders SO1 • Education - Improving the quality of education In 2012, VC developed 26 stakeholder engagement through projects that complement and strengthen plans, to manage the impacts of our operations on the role of schools, contributing to the expansion the relations with the strategic stakeholders of the of opportunities for youth development. plants in Cantagalo (RJ), Corumbá (MS), Laranjeiras (SE), Salto de Pirapora (SP), Sobradinho (DF), Sobral • Culture - Promoting cultural democratization (CE) and Xambioá (TO). Engemix developed a plan for by supporting projects that increase access of stakeholder engagement at its plant in Jaguaré (SP). children and youth to cultural production of all artistic disciplines: visual arts, performing arts, In terms of results, a good example is the plan made film and video, literature, music and heritage. by our plant in Sobral (CE). The main objective was to disseminate information to both employees and • Sport - Educating youth through sports activities the local community about our production processes of all types, strengthening leadership skills and and their emissions, providing clarification and, in this teamwork, and valuing school and family life. way, contributing to improving the company’s image.

• Work –Enhancing the inclusion of, qualified Through our existing Open Doors program, the plant young people in the workplace, by supporting management had the opportunity to clarify and talk their training and the establishment of connections about the subject with young people and community between their interests and market opportunities. representatives. The visit, which previously lasted an hour, was extended to six hours, and covered the • Via (Way) - Providing support for projects entire plant operation. After the visit, we found that which improve the quality of life of children there was an increase of 25% in the participants’ and adolescents in vulnerable situations and knowledge about our operations (assessed through which strengthen the administrative agencies before and after questionnaires). in this area (councils and funds).

• Stakeholder Engagement/Community Councils - Developing communities through a participatory process that has the goals of increasing social capital, and encouraging economic dynamism and the sustainable use of local natural resources.

76 Community Advisory Panels

We have fostered the formation of Community Advisory Panels Sustainable Primavera in the municipalities in which we operate, aiming to create forums Primavera is a municipality with just over 10,000 inhabitants, to interact and engage with local communities to find solutions located in the northeastern part of the State of Pará. It is to local issues. The Councils are made up of community leaders, an extremely poor region, with one of Brazil’s lowest values representatives of business, and local government. on the Human Development Index (HDI). In 2011, we began studies to build a new plant in the municipality, scheduled We ended the year with nine Community Advisory Panels to go into operation in 2014, with an annual production established in the municipalities of: Xambioá (TO), Laranjeiras capacity of 1.2 million tons of cement. (SE), Cuiabá (MT), Sobradinho (DF), Itaú de Minas (MG), Cantagalo (RJ), Rio Branco do Sul (PR), Vidal Ramos (SC) Later that year, when plant construction got underway, and Imbituba (SC). we entered into an agreement with the local government, committing ourselves to invest R$ 8 million over five years, The Councils meet in order to identify opportunities, to debate, in projects that would be selected as priorities by the and to find solutions to critical issues in the municipality and the community itself, based on socioeconomic studies that region. Working together, the Council drafts an agenda to promote would be conducted beforehand to identify the major community development, determining the actions in priority areas needs of the municipality. such as education, culture and entrepreneurship, among others.

Known as Sustainable Primavera, this initiative is In Imbituba (SC), for example, the Community Advisory Panel, part of the umbrella program “Support for Municipal set up in 2011, prepared a strategic plan for tourism development, Management”, developed by the Votorantim Institute, and defined specific actions and responsibilities for various social which aims to provide broad assistance to municipalities groups. “The Community Advisory Panel provides guidelines in the preparation of projects for improvements in for some sectors of society to optimize their work and thereby infrastructure, in modernization, and in the efficiency encourage increasing progress in our region,” said Abraham S. of public administration. Medeiros Filho, president of Imbituba’s Education Cooperative and a member of the municipality’s Community Council. Among the activities carried out in Primavera in 2012 were the preparation of a Master Plan and the In addition to generating benefits for the communities, implementation of the Program for the Modernization the Community Advisory Panels are important to VC for of Public Administration. This latter program provided contributing to, among other things, prioritizing our private support to the municipality in the identification and social investment and guiding the allocation of resources resolution of critical issues in fiscal and administrative to projects aligned to the needs of the communities. matters, along with essential services such as health, education and social assistance.

In this process, we determined which investments would be made in the coming years, in projects such as the renovation and expansion of schools and health facilities, the modernization of the city center and the promotion of family farming, among others.

Business Model and Performance Report for Votorantim Cimentos 77 Training of the Local Workforce • Votorantim Partnership for Education This program mobilizes employees, communities We developed two training programs for young and government bodies, in order order to make people in our communities: the “Future in Our education a priority on the local agenda. In 2012 Hands”program, which trains employees for the the following municipalities benefited from this construction industry, and the “Evolving” program. program: Paulista (PE), Sobradinho (DF), Itapeva The latter provides technical training in industrial (SP), Laranjeiras (SE), Primavera (PA), Rio Branco maintenance (mechanical, electrical and mining) do Sul (PR), Sobral (CE) and Xambioá (TO). to young people from low-income backgrounds. These courses were developed in partnership with educational institutions such as SENAI and GRI Supplier Management HR2,HR5, CEFET, which, besides giving training, also provide HR6,HR7 We seek to establish long-term partnerships support to young people in entering the labor with our suppliers and to promote closer relations market, either in the Votorantim Group or in other with those companies that also have this perspective. companies. In 2012, we completed 12 courses, 1,2,4,5 This means that before entering into such relationships training 421 young people in ten municipalities. we take a close look at the issues, relating to the business of these companies that could bring risks Other Social Investment Actions Taken to our reputation and our business.

We have an investment strategy focused on the social To administer this process, in 2012, we launched development of the communities where we operate. our “Institutional Policy for Contracting Local Suppliers”, In this work, we seek to strengthen the role of social and then implemented these practices in all of our actors in search of alternatives for improving quality units, thereby bringing discipline to the way they of life, strengthening social transformation. were put into effect.

In late 2012, we supported nearly 80 projects in 25 counties in all regions of Brazil, with more than 100,000 people benefiting directly.

We highlight the following initiatives:

• “Via (Way)” This is a corporate program, coordinated by Our social the Votorantim Institute, which guides us in the investments are allocation of tax incentive resources to the Municipal focused on the Funds for the Rights of Children and Adolescents. In 2012, our donations totaled R$ 735,037.00. development of the communities where we have operations

78 During the year we hired 139 suppliers (34%) in Approximately 71% of our critical suppliers were municipalities where we had plants, either installed evaluated and approved under this policy in 2012. or under construction. Of these, 47% of the contracts The goal is to reach 100% by the end of 2013. included criteria for, or an evaluation of, human rights. Moreover, we have set a goal of having 100% of critical suppliers with a score exceeding 70%. We reviewed the management procedures and We have already achieved 66% of this goal. implemented the process for the approval of critical suppliers, including those working full-time in our This methodology has been disseminated throughout plants, both those most relevant from a financial the company. To date we have implemented the policy point of view and those with the greatest potential in 89% of our manufacturing units, in the engagement to impact on our activities. We defined five groups and training of the supplier management teams, and of indicators health, safety and environment; quality the measuring and monitoring of indicators. of service provided; quality of service contracted; personnel management; and operational Furthermore, we have standardized our infrastructure. We assigned a weight (%) to each contracts which include clauses of compliance group of indicators, so that the final score reflected with environmental and labor laws and respect these issues. The target is to work only with for human rights, including the prohibition of the suppliers with a score higher than 70%. use of child labor and workers in slave-like conditions. Additionally, last year, we implemented the automatic In the case of “Health, Safety and Environment”, which blocking of the registration of suppliers that are is an important factor (20%) in the composition of the “blacklisted” by the Ministry of Labor and IBAMA, score, for example, it is mandatory to obey Votorantim the Brazilian Institute for the Environment and Cimentos’s rules for health, safety and environmental Renewable Natural Resources. issues, which go beyond legal requirements.

Cubatão (SP) Plant

Business Model and Performance Report for Votorantim Cimentos 79 GRI Employee Development LA1

We have made progress in our plan to expand In order to prepare the company for the future, our business in Brazil and abroad. This progress we focus on attracting and retaining people through brings challenges for the management and at specific programs that promote skill development, the same time, opportunities for more than meritocracy and career development within 12,000 employees who work with us, as well the organization. We also invest also in initiatives as for local pools of potential employees. to ensure a pleasant working environment where people feel motivated and satisfied. GRI LA1

Number of Own Employees by Category

Own Employees 2010 2011 2012 Salaried Employees 7,756 8,349 9,339 Hourly-paid Staff - Trainees 61 13 21 Total Own Employees 7,817 8,362 9,360 Total Own Employees VCNA 2,937 1,251 2,717 Interns and Apprentices 2010 2011 2012 Interns and Summer Interns 217 281 339 Apprentice 69 104 155 Total Interns and Apprentices 286 385 494 General 2010 2011 2012 Total Workforce 8,103 8,747 9,854 Total 11,040 9,998 12,571

GRI Number of Own Employees by Category LA1 9,360 8,362

9,339 8,349

We seek to continuously build a culture of excellence in people management 13 21

Salaried Trainees Total Own Employees Employees

2011 2012

Only VC Brazil

80 GRI Human Resources Policies GRI Attracting and Retaining Talent LA12 LA2,LA3 and Management Despite the current full employment in the sector in Brazil, companies are experiencing turnover rates The Votorantim Development System (SDV) above historical averages. In Votorantim Cimentos, is a corporate system that promotes, supports and the rate is high, at 22,6%. Management practices accelerates the development of VC employees, in an become even more challenging in this situation integrated manner, including remuneration policies, and we have achieved good results, especially promotions, and training and career opportunities in the attraction and retention of employees within the organization. in management positions.

Through the SDV, we seek to build a culture The basic premise of our strategy is meritocracy. of excellence in people management, based on our The total remuneration package consists of a fixed values, management beliefs and business strategies, salary and a variable portion that relates to the ensuring the best use of our human capital and performance achieved and applies to employees resources for growth and succession plans. and managers. The fixed salary is in line with the market average and is monitored through salary The goals and objectives for the year are passed surveys. When added to the variable portion, total down by senior management to the operational earnings are above the market average, ensuring areas, aligning and engaging our teams to face the the competitiveness of our remuneration policy. challenge of growing with sustainable results. In 2012, in addition to economic and financial indicators, the Our benefits package is another attractive feature. SDV included indicators relating to health and safety, In addition to the basic benefits (medical and dental the environment, customer satisfaction and working care, food, transportation, pension plan and life climate. Performing well in these categories is also insurance), employees receive subsidies for medicines linked to our system of meritocracy. and children’s school supplies and also have access to the Personal Support Program, which offers a wide One of the main tools of the SDV is the evaluation range assistance services. cycle, where the performance of and outlook for employees are analyzed in a transparent process The total cost of employee benefits was approximately that encourages self-reflection and dialogue between R$ 220 million in 2012. leaders and the led.

Meritocracy is our measure for career opportunities. Based on the results, an Individual Development The results of the evaluation cycle, which is part Plan (IDP) is prepared for each professional. The IDP of the SDV, are discussed by the Human Resources summarizes the skills that the employee needs Management Committees, thereby allowing us to develop as well as the activities and training to know our employees better and to plan their necessary to advance in his/her career. career paths.

The filling of vacancies, in all areas and units, is done primarily through internal recruitment, under the “Movement” program. Only after having exhausted all the possibilities for internal solutions do we resort to external recruitment.

Business Model and Performance Report for Votorantim Cimentos 81 A highlight of the year was the launch of the project Employee Value Proposition (EVP), aiming to prepare a “value proposition” to be offered to candidates for key positions.

GRI LA2

Total Number and Turnover of Employees by Age Range, Average at Gender and Region Region Age Range Male Female company

Other Under 30 30-50 Over 50 Employees 2012 Brasil Countries years years years % % Years Total Employees at 12/31/2012 (*) 9,854 9,854 - 3,448 5,550 856 86% 14% 5.6 Employees Dismissed in 2011 2,231 2,231 - 1,096 1,033 102 81% 19% 2.8 Turnover 22.6% 22.6% - 32% 19% 12% - - -

(*) Own + Interns + Apprentices + Seasonal Workers Only VC Brazil

Skills Development Map

VID as a whole has a process to identify strategic and critical skills in the units, strategic and critical skills, primarily for technical functions, so we can invest more aggressively in the development of our employees. In 2012, we prepared a Skills Development Map for 516 people in the areas of maintenance, CAPEX, the environment, Human and Organizational Development (HOD), health and safety, and sustainability. Based on these maps, we developed pathways for employees to acquire knowledge and set career plans.

Cimesa (SE) Plant

82 GRI Corporate Education and Training One of the most prominent programs in the LA10 Academy is the “School of Challenges”, where we In Votorantim Cimentos, technical training select people with the potential to act on important is driven by Skill Matrices that make it possible company projects and offer them development plans. to identify needs for training and recycling as Part of the program, for example, is the module well as the skill requirements of new projects. on the “Trends in construction methods for the next The planning of these needs is centralized 20 years.” In this module, the employees are led in the Annual Training Plan. to reflect on the future, considering the economic, social, environmental and technological aspects, In 2012, we began to restructure our corporate among others, that may impact on our business. education system with the objective of furthering the continuous and pragmatic development Also in 2012, we expanded the Management of our employees. Skills Program, which applies to all of VC’s 144 managers, to include leadership training All training is coordinated with the Votorantim modules for all of our business activities. This Academy of Excellence, our corporate university, approach prepares managers to foster a good so that these investments are focused on those working atmosphere and motivate their teams, issues which are essential to VC’s strategy to grow thereby creating good examples to be followed. with sustainable results. In the case of the Cement Division the training also includes modules to increase technical knowledge Sempre em linha com a Academia de Excelência, in mining, processes, maintenance, quality and universidade corporativa do grupo Votorantim environmental issues. para que os investimentos foquem em temas essenciais para a estratégia da VC de crescer com resultados sustentáveis. GRI LA10

Calculation of the average number of hours of training per year, per employee, and per employee category 2010 2011 2012 Director / President - - 11.9 Manager - - 30.7 Coordinator/Consultant - - 7.8 Technician/Analyst/Supervisor - - 10.6 Trainees - - 203.2 Operator - - 195.8 Intern - - 1.2 Apprentice - - 0.0 Average - - 57.7

Only VC Brazil

Business Model and Performance Report for Votorantim Cimentos 83 Diversity Rio Branco do Sul (PR) Plant

As one of the foundations of our meritocracy we seek to ensure equal conditions for all employees to develop their careers within the company.

With regard to women, we grant maternity leave for six months and have a support program for pregnant women, focused on raising awareness about health care and nutrition.

We also promote the inclusion of people with disabilities. With the support of ISocial, a specialized consulting firm, we train our HR employees, occupational physicians, safety engineers and managers in this area, strengthening the processes behind the recruitment, development and retention of these employees. In late 2012, we had 137 people with disabilities working in the company.

Internal Communication

We value dialogue and feedback and have established processes and channels of direct communication to bring together managers and employees. In 2012, we maintained our focus on disseminating our management beliefs, launched in 2011, with the aim of raising awareness of them and encouraging changes in behavior, in order to align with our strategies in areas such as health and safety, the environment and customer satisfaction.

In addition to meetings between managers and teams, we maintain a set of internal communication channels to ensure the continuous flow of information to employees.

Every quarter, the president of Votorantim Cimentos, via a web conference, talks with employees from various units of the company throughout Brazil. At these meetings, called “With VC”, the company’s results are communicated, the prospects and the challenges are discussed and information is presented on programs and corporate projects. The president responds to questions from employees, sent by SMS or e-mail. When there is no further time to answer all the questions, they are published in the next issue of the company newspaper.

84 Highlights in Personnel Management GRI Relations with Trade Unions LA4,HR5 In 2012, we can highlight the following: Trade unions have a positive role to play in labor relations and we maintain an open dialogue with • We paid R$ 5.296 billion (42% of income) in 2012 the unions representing our employees. 3 to our employees, in the form of salary (fixed and variable) and benefits. Respect for the free association of employees with unions is explicitly mentioned in our Code • We evaluated 12,571 employees, including mangers of Conduct. The collective bargaining process and operational area employees, under the SDV. includes representatives of the trade unions that represent our workers. The results of negotiations • Between 65% and 70% of leadership positions were are disseminated to employees through our internal filled internally. communication channels.

• 9,856 employees underwent technical and leadership training, totaling 1,446,956 hours of training during the year.

Cantagalo (RJ) Plant

Business Model and Performance Report for Votorantim Cimentos 85 Risk Management IN 2012 WE MADE GOOD GRI PROGRESS IN BUILDING OUR 4.11 RISK MANAGEMENT SYSTEM

Rio Branco do Sul (PR) Plant New Steps in Risk risk evaluation cycle and are made clear to management. The main processes considered Management are those related to the business-related activities and areas: sales, purchasing, Votorantim Cimentos began investing in the distribution, assets and liabilities, investments, development of its risk management area in inventory and costs, tax, legal, accounting, 2007. The area’s main objective is to implement consolidation and reporting, treasury, etc. policies and methods to enable the business divisions to manage the risks which could impact The areas responsible for these processes the company’s strategy, with transparency prepare monthly self-assessment reports to and proper governance. evidence the effectiveness of their controls.

The main risks impacting the long-term goals, Since 2011, the company has carried operations and regulatory compliance have out quarterly audits of its internal controls, been identified and are the subject of regular according to a methodology developed by the discussions between managers and directors. Committee of Sponsoring Organizations of the Actions on risks are set by, reported to and Treadway Commission (COSO). Our controls monitored by the Risk Committee to ensure structure is audited according to the AT 501 their effective implementation standard published by the American Institute of Certified Public Accountants (AICPA). Operational Risks and In 2012 we revisited the processes related Internal Controls to our operations’ environmental issues. We identified the improvements and investments Votorantim Cimentos has invested substantially required to obtain the level of excellence in in the design of business processes and systems managing both compliance and conformity to ensure that business relationships with with the voluntary commitments assumed customers, suppliers and other stakeholders are under the Cement Sustainability Initiative (CSI). governed by clear definitions of responsibilities. In addition to the publication of the financial statements, the internal control environment has been enhanced with the definition of a set of controls that are continually reassessed to ensure that new processes, operations and business scenarios are covered in our

Risk Management Report for Votorantim Cimentos 87 Rio Branco do Sul (PR) Plant

Strategic Risks Risks and Opportunities

In 2012 we made a major reassessment of the VC’s management of risks and opportunities critical risks that could impact the company’s gives priority to the pursuit of business value business strategy and sustainability. The analysis of and performance in a dynamic environment the impact of these risks on the company’s strategy in which sustainability issues will have increasing and business continuity is measured and monitored relevance for business continuity. using key risk indicators (KRIs). Futhermore, the monitoring of the implementation of risk mitigation The planning of our initiatives and investment projects actions is discussed in depth by the Risk Committee. takes into account both internal assessments and also the projects and trends under discussion by government and society, in order to anticipate the preparation of the company for new legal requirements. This aspect becomes even more important as we proceed with our process of rapid expansion.

88 With the support of our risk management area we seek to prepare the company for an increasingly volatile business environment

VC strictly complies with the terms of reference expanded as our business grows. For this reason for preparation of environmental impact studies, both these types of waste are considered strategic which require the evaluation of indigenous and inputs in our range of risks and opportunities. traditional communities. Our next challenge in the risk management area Risk management can provide us with opportunities is to replicate our methodology for the recently for new business and sustainable solutions. One acquired overseas units. We intend to raise the level example is the issue of waste. Although, on the one of risk management at these overseas plants to the hand, waste can represent an environmental hazard, same standard of excellence that we seek in Brazil, on the other, it can be used in cement production and, by working in partnership, also incorporate as an energy source in co-processing. We are now in Brazil the best practices identified in these prepared to expand the use of this technique new markets. in our plants. Also, the use of recycled raw materials for the production of clinker, such as steel-making slag, is an option which in the future will be

Risk Management Report for Votorantim Cimentos 89 WE WILL CONTINUE WITH Vision of the OUR STRATEGY TO EXPAND PRODUCTION AND OUR Future and Trends INTERNATIONAL NETWORK

Itaú de Minas (MG)Plant Economic Scenario

We believe that 2013 will present a complex global At a global level, the demand for raw materials is economic environment, but we remain optimistic. forecast to continue growing. According to the World Business Council for Sustainable Development (WBCSD), The measures to stimulate industry announced the world population in 2010 was 6 billion inhabitants, by the Brazilian government in 2012, were a major with around 3 billion (50%) living in urban areas. For 2050, breakthrough in terms of support for the industrial WBCSD projects that the world population will reach development of the country. The measures taken, such 9 billion people, with about six billion (70%) living in as lowering interest rates, repositioning the exchange cities. In addition, we expect that the U.S. economy rate, issuing new legislation on ports, taking measures will continue on its route to recovery, the economies to prevent tax wars between the Brazilian states, of the eurozone will show signs of improvement and and reducing tax in general, demonstrated the that China and India, along with other emerging government’s concern with stimulating industry growth countries, will continue to grow strongly. and increasing its competitiveness. We believe that the main sectors of society in Brazil are converging strongly in order to return to a healthy and sustainable level of growth for the country.

Considering the various industry sectors, we are most optimistic about infrastructure: there are huge opportunities in Brazil, for example the World Cup in 2014 and the Olympic Games in 2016. The expectations for We are prepared 2013 include a qualitative change in the growth of the for the coming construction sector. Firstly, the availability of housing credit should continue to be healthy and, secondly, government years, which will initiatives to accelerate the package of concessions for be challenging ones infrastructure investment should stimulate the continuance of the current cycle of growth in the sector.

Vision of the Future Report for Votorantim Cimentos 91 Considering this overall context, we intend to continue with In parallel, we will work on internal initiatives that add our plan to invest selectively in expansion projects, following value to the organization, such as: reducing operating costs; the trend of recent years. We remain steadfast in our goal to reducing risk; seeking out new opportunities; and increasing increase the efficiency of our operations, grow our business the effectiveness of our management systems. sustainably and reduce financial leveraging, as measured by net debt/EBITDA, towards our target level. At the same time, Overall, we want to consolidate our new geographical areas we will work on internal initiatives that contribute to improved of operations in Europe, Asia and Africa and continue to grow. profitability, with a focus on reducing operating costs and In South America, we have projects for new plants in the region, increasing the effectiveness of our management systems. and continue to seek strategic opportunities. Furthermore, we are constantly searching for synergies and improvements in our processes, as well as seeking to offer a product mix that maintains the highest customer satisfaction.

92 Business Segments

For Votorantim Cimentos, the continuation of our strategy to up the cement plants under construction in Edealina (GO) expand capacity and increase production volumes, combined and Primavera (PA). with the increased internationalization of our business, put us in a position to meet increases in current demand and further At a global level, we intend to consolidate our operations demand from a resumption of growth. Over the next three years, in Europe, Asia and Africa and continue to grow. In South we plan to invest R$ 3.7 billion in expansion projects. America, we have projects for new plants in the region, and continue to seek strategic opportunities. In 2013, we will start up operations at a concrete center in Seropédica (RJ) and complementary products units in Goiânia (GO), Jaboatão (PE) and Seropédica (RJ). For 2014, we plan to start

Sobradinho (DF) Plant

Vision of the Future Report for Votorantim Cimentos 93 IN 2012, WE ADOPTED THE INTEGRATED About the Report REPORT FORMAT, WHICH INTERRELATES FINANCIAL, OPERATIONAL, SOCIAL, GRI 3.1,3.2, AND ENVIRONMENTAL INFORMATION 3.3,3.6,3.7, 3.9,3.10, 3.11,3.13

Sobradinho (DF) Plant Since 2005 Votorantim Cimentos has published With this in mind, this Report covers all of Votorantim information on its sustainability performance according Cimentos’s strategies, activities, products, services, to the requirements of the Cement Sustainability Initiative projects, operations and business divisions, with the main (CSI). For 2012 we took a strategic decision to publish focus on our performance in 2012. The Report covers our this first report in the format of an integrated report operations in Brazil and North America (VCNA). To obtain with the aim of providing a wide range of information more information on our GRI indicators, please consult on our strategies and practices. the section of the Report on GRI Indices/Indicators.

We have structured this Report, for 2012, according Specific limitations on the scope or boundary of these to guidelines published by the Global Reporting Initiative indicators are mentioned throughout the report in the (GRI). We have also taken into consideration some form of notes. For indicators relating to the issues of GHG of the recommendations contained in the provisional emissions, biodiversity and health and safety, we follow framework for integrated reporting published in 2012 the guidelines established by Cement Sustainability by the International Integrated Reporting Council (IIRC). Initiative CSI. The IIRC has championed the importance of companies publishing an integrated report and is working on the Our Report has been audited by PwC for both the financial development of a formal framework that aims to serve and the non-financial data and has also been evaluated by as a standard for the wider business community. the Global Reporting Initiative (GRI). A further independent The essence of an integrated report is presentation of evaluation was made by Cláudio José Andrade of Relatto financial and non-financial information in an integrated, Comunicação e Sustentabilidade Ltda. cohesive manner, with a clear narrative describing the sustainability issues embedded in the organization’s This Report is being published, in its full version, strategy, market positioning and business activities. in Portuguese and English. You can also download the PDF versions, available at http://vcimentos.com.br/ Our goal is to be increasingly transparent and responsible htms-ptb/Responsabilidade/relatorioSustentabilidade.htm in our reporting, disclosing our strategies and activities (portuguese) and http://vcimentos.com.br/htms-enu/ to our principal stakeholder groups and to society in general Responsabilidade/Ambiental.htm (english). in a structured manner. Therefore, we will report our annual information on the economic, social and environmental aspects of our business in an integrated way.

About the Report Report for Votorantim Cimentos 95 Audit Statement

96 Correlations with the UN Global Compact Principles

Principle Pages Human Rights 1. Respect and protect human rights 31, 78 2. Prevent human rights violations 31, 78

Labor Rights 3. Support freedom of association at work 85 4. Abolish forced labor 31, 43, 78 5. Abolish child labor 31, 43, 78 6. Eliminate discrimination in the workplace 31,43

Environmental Protection 7. Support a precautionary approach to environmental challenges 31, 57 8. Promote environmental responsibility 31, 57, 60, 62 9. Encourage technologies that do not harm the environment 31, 60, 62

Anti-Corruption 10. Combat corruption in all its forms including extortion and bribery 44

Correlations with the UN Global Compact Principles Report for Votorantim Cimentos 97 Assurance Report

Independent auditor's limited assurance report on the Integrated Report for 2012

To the Board of Directors Votorantim Cimentos S.A. São Paulo - SP

Introduction

We have been engaged by Votorantim Cimentos S.A. and its subsidiaries (the "Company") to present our limited assurance report on the compilation of social and environmental information included in the Integrated Report for 2012 of Votorantim Cimentos S.A. and its subsidiaries, related to the year ended December 31, 2012, as well as on the compliance with the requirements established by GRI-G3 for reports with Application Level A.

Management's responsibility for the Integrated Report for 2012

The management of the Company is responsible for the preparation and fair presentation of the social and environmental information included in the Integrated Report for 2012 in accordance with the criteria described in the Global Reporting Initiative (GRI-G3) for Application Level A, and for such internal control as it determines is necessary to enable the preparation of information that is free from material misstatement, whether due to fraud or error.

Auditor's responsibility

Our responsibility is to express a conclusion on the social and environmental information included in the Integrated Report for 2012, based on our limited assurance engagement carried out in accordance with the Technical Communication CTO 01 - "Issuance of an Assurance Report related to Sustainability and Social Responsibility", issued by the Federal Accounting Council (CFC), based on the Brazilian standard NBC TO 3000 - "Assurance Engagements Other than Audit and Review", also issued by CFC, which is equivalent to the international standard ISAE 3000 - "Assurance engagements other than audits or reviews of historical financial information", issued by the International Auditing and Assurance Standards Board (IAASB). Those standards require that we comply with ethical requirements, including independence requirements, and perform our engagement to obtain limited assurance that the social and environmental information included in the Integrated Report for 2012, taken as a whole, is free from material misstatement.

A limited assurance engagement conducted in accordance with the Brazilian standard NBC TO 3000 and ISAE 3000 mainly consists of making inquiries of management and other professionals of the Company involved in the preparation of the information, as well as applying analytical procedures to obtain evidence that allows us to issue a limited assurance conclusion on the information taken as a whole. A limited assurance engagement also requires the performance of additional procedures, when the independent auditor becomes aware of matters that lead him to believe that the social and environmental 2 de 4

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Assurance Report Report for Votorantim Cimentos 99 Votorantim Cimentos S.A.

information taken as a whole might present significant misstatements.

The procedures selected are based on our understanding of the aspects related to the compilation and presentation of the social and environmental information included in the Integrated Report for 2012, other circumstances of the engagement and our consideration of the areas in which significant misstatements may exist. The following procedures were adopted:

(a) planning the work, taking into consideration the materiality and the volume of quantitative and qualitative information and the operating and internal control systems that were used to prepare the information included in the Integrated Report for 2012;

(b) understanding the calculation methodology and the procedures adopted for the compilation of indicators through interviews with the managers in charge of the preparation of the information;

(c) applying analytical procedures to quantitative information and making inquiries regarding the qualitative information and its correlation with the indicators disclosed in the Integrated Report for 2012;

(d) comparing the financial indicators with the financial statements and/or accounting records;

(e) interviewing the members of management responsible for the information during technical visits to the following business units: Araçariguama, Cajamar, Jaguaré, Rio Branco, Santa Helena, Corporate - São Paulo and Corporate – Curitiba;

(f) verifying, with regard to the units above, the following GRI.G3 indicators selected as the most significant for each business unit visited:

. Business unit of Araçariguama:

.. Environmental performance: EN1, EN3, EN4, EN22.

. Business unit of Cajamar:

.. Environmental performance: EN1, EN3, EN4, EN8, EN21, EN22.

. Business unit of Jaguaré:

.. Environmental performance: EN1, EN2, EN3, EN4, EN8, EN22.

. Business units of Rio Branco and Santa Helena:

.. Environmental performance: EN1, EN2, EN3, EN4, EN8, EN20, EN21, EN22.

. Corporate business unit - São Paulo:

.. Environmental performance: EN28, EN30. .. Performance referring to labor practices and decent work: LA4, LA7, LA8, LA10. .. Social performance referring to society: SO3.

. Corporate business unit - Curitiba:

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Votorantim Cimentos S.A.

.. Economic performance: EC1. Votorantim Cimentos S.A. .. Environmental performance: EN16, EN17, EN20. .. Economic performance: EC1. (g) verifying.. Environmental the compliance performance: with the requirements EN16, EN17, established EN20. by GRI-G3 for reports with Application Level A. .. Economic performance: EC1. (g) verifying the compliance with the requirements established by GRI-G3 for reports with Application .. Environmental performance: EN16, EN17, EN20. WeLevel believe A. that the evidence we have obtained is sufficient and appropriate to provide a basis for our limited assurance conclusion. (g) verifying the compliance with the requirements established by GRI-G3 We for believe reports that with the Applicationevidence we have obtained is sufficient and appropriate to provide a basis for our Level A. Scopelimited andassurance limitations conclusion.

We believe that the evidence we have obtained is sufficient and appropriateTheScope procedures andto provide limitations applied a basis in for a limited our assurance engagement are substantially less detailed than those limited assurance conclusion. applied in a reasonable assurance engagement, the objective of which is the issuance of an opinion on the socialThe procedures and environmental applied in information a limited assurance included engagement in the Integrated are substantially Report for 2012. less detailed Consequently, than those we were Scope and limitations unableapplied to in obtain a reasonable reasonable assurance assurance engagement, that we would the objective become of aware which of is all the significant issuance mattersof an opinion that might on the be identifiedsocial and inenvironmental a reasonable assuranceinformation engagement, included in the the objective Integrated of Reportwhich is for the 2012. issuance Consequently, of an opinion. we were If we The procedures applied in a limited assurance engagement are substantiallyhadunable performed to less obtain detailed an reasonable engagement than those assurance with the that objective we would of issuing become an aware opinion, of all we significant might have matters identified that other might be applied in a reasonable assurance engagement, the objective of whichmattersidentified is the issuanceand in possiblea reasonable of an misstatements opinion assurance on the inengagement, the social and the environmentalobjective of which information is the issuance included of an in opithenion. If we social and environmental information included in the Integrated ReportIntegratedhad performedfor 2012. Report Consequently, an forengagement 2012. Therefore, we with were the we objective do not expressof issuing an an opinion opinion, on wethis might information. have identified other unable to obtain reasonable assurance that we would become aware mattersof all significant and possible matters misstatements that might bein the social and environmental information included in the identified in a reasonable assurance engagement, the objective of whichNIntegratedon is-financial the issuance Report data for ofare an2012. subject opi nion.Therefore, to moreIf we inherentwe do not limitations express an than opinion financial on this data, information. due to the nature and had performed an engagement with the objective of issuing an opinion,diversity we might of the have methods identified used other to determine, calculate and estimate these data. Qualitative interpretations matters and possible misstatements in the social and environmentalofN informationon the-financial relevance, included data materiality are insubject the and to accuracy more inherent of the datalimitations are subject than tofinancial individual data, assumptions due to the nature and judgments. and Integrated Report for 2012. Therefore, we do not express an opinionFurthermore,diversity on this information. of the we methods did not usedconsider to determine, in our engagement calculate andthe dataestimate reported these for data. prior Qualitative years, nor interpretations future projectionsof the relevance, and goals. materiality and accuracy of the data are subject to individual assumptions and judgments. Non-financial data are subject to more inherent limitations than financial Furthermore, data, due we to did the not nature consider and in our engagement the data reported for prior years, nor future diversity of the methods used to determine, calculate and estimate theseConclusionprojections data. Qualitative and goals. interpretations of the relevance, materiality and accuracy of the data are subject to individual assumptions and judgments. Furthermore, we did not consider in our engagement the data reportedBasedConclusion for on prior the years procedures, nor future performed, described herein, no matter has come to our attention that causes us projections and goals. to believe that the social and environmental information included in the Integrated Report for 2012 of VotorantimBased on the Cimentos procedures S.A. performed, and its subsidiaries described has herein, not beenno matter comp hasiled ,come in all to material our attention respects, that in causes us Conclusion accordanceto believe that with the the social specific and guidelinesenvironmental of the information Global Reporting included Initiative in the Integrated (GRI-G3) forReport reports for with2012 of ApplicationVotorantim LevelCimentos A. S.A. and its subsidiaries has not been compiled, in all material respects, in Based on the procedures performed, described herein, no matter has accordance come to our with attention the specific that causes guidelines us of the Global Reporting Initiative (GRI-G3) for reports with to believe that the social and environmental information included inSãoApplication the Paulo,Integrated October Level Report A 8. th, for2013 2012 of Votorantim Cimentos S.A. and its subsidiaries has not been compiled , in all material respects, in accordance with the specific guidelines of the Global Reporting Initiative São Paulo, (GRI- OctoberG3) for reports 8th, 2013 with Application Level A. th São Paulo, October 8 , 2013 PricewaterhouseCoopers Manuel Luiz da Silva Araújo Auditores Independentes Contador CRC 1RJ039600/O-7 "S" SP CRCPricewaterhouseCoopers 2SP000160/O-5 Manuel Luiz da Silva Araújo Auditores Independentes Contador CRC 1RJ039600/O-7 "S" SP CRC 2SP000160/O-5 PricewaterhouseCoopers Manuel Luiz da Silva Araújo Auditores Independentes Contador CRC 1RJ039600/O-7 "S" SP CRC 2SP000160/O-5

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Assurance Report Report for Votorantim Cimentos 101 GRI Indices / Indicators

GRI 3.12

Rio Branco do Sul (PR) Plant GRI Indicators

GRI Description 1. Strategy and Analysis 1.1. Declaration by the President 6 Page 1.2. Key impacts, risks and opportunities 6 2. Organizational Profile 2.1. Name of organization 22 2.2. Primary brands, products and/or services 24, 28, 30, 31 2.3. Operational structure 16, 22, 24 2.4. Location of organization’s headquarters 22 2.5. Geographic presence 22 Page 2.6. Legal nature 22 2.7. Markets served 22, 24 2.8. Size of the organization 22, 24, 31, 49 2.9. Significant changes in the year 6, 24, 25 2.10. Awards 38 3. Report Parameters 3.1. Reporting period 94 3.2. Previous report 94 3.3. Period between reports 94 3.4. Contact information 5 3.5. Definition of content 31 3.6. Report Boundary 24, 94 3.7. Limitations on the scope and boundary of Report Page 94 3.8. Basis for preparation of the Report 17,22,24 3.9. Data measurement techniques and the bases of calculations 94 3.10. Consequences of restatements of information 5, 94 3.11. Significant changes 5, 94 3.12. GRI summary 104 3.13. External verification 94

GRI Indices / Indicators Relatório Votorantim Cimentos 103

1 GRI Indicators

GRI Description 4. Governance, Commitments and Engagement 4.1. Corporate Governance Structure 45 4.2. Identification of principal executives 45 4.3. For organizations that have a unitary board structure, state the number of independent or non-executive members of the highest Page governance body. 45 4.4. Mechanisms for shareholders and employees to provide recommendations or direction to the highest governance body. 43, 45 4.5 Linkage between compensation for members of the highest governance body, senior managers, and executives (including departure This information is strategic. arrangements) and the organization’s performance (including social and environmental performance). 4.6. Processes at the highest governance body to avoid conflicts of interest 43 4.7. Process for determining the qualifications and expertise of the members of the highest governance body. 45 4.8. Values, codes and internal principles relevant to economic, Page environmental, and social performance and the status of their implementation 40 4.9. Performance of the Board in evaluating sustainability performance 45 4.10 Processes for evaluating the performance of the highest governance body, especially with respect to economic, environmental and social performance 46 4.11. The Precautionary Principle 86 4.12. Charters, principles and initiatives 36 4.13. Membership of associations 36 4.14. List of stakeholders engaged by the organization 31 4.15. Identification of stakeholders Page 31 4.16. Stakeholder engagement 31 4.17. Key topics and concerns that have been raised through stakeholder engagement and measures adopted by the organization 31

104 Relatório Votorantim Industrial 2 PERFORMANCE INDICATORS Economic Performance EC1 - Direct economic value generated and distributed, including Pages 49 and 75 revenues, operating costs, employee compensation, donations and other community investments, retained earnings and payments to capital providers and governments. COMPLETED Composition of Value-added (R $ / thousand) 2010 2011 2012

1.1) Gross sales of products and services 11,205,555 12,070,735 1.2) Other net operational income (expense) 65,467 551,553 1.3) Provision for bad debts -1,922 -11,077 Total income 11,269,100 12,611,211

Total inputs acquired from third parties 2.1) Cost of goods and services sold -3,767,015 -5,567,590 2.2) Materials, energy, outsourced services and other -1,973,705 -206,116 Total inputs acquired from third parties -5,740,720 -5,773,706 3) Gross value-added 5,528,380 6,837,505 3.1) Depreciation, amortization and depletion -441,055 -558,279 3.2) Amortization of discount - - 4) Net value-added produced 5,087,325 6,279,226 5) Value-added received by transfers 0 0 5.1) Income from equity investments 311,753 -144,614 5.2) Financial income 203,728 316,496 Total value-added received by transfers 515,481 171,882

6) Total value-added available for distribution 5,602,806 6,451,108 7) Distribution of value-added 7.1) Personnel costs and payroll taxes 685,570 788,039 7.1.1) Direct remuneration 540,323 629,361

7.1.2) Benefits 145,247 158,678 7.2) Taxes, social charges 2,967,973 2,709,736 7.2.1) Federal 1,531,195 1,442,343 7.2.2) State 1,659,819 1,737,549 7.2.3) Municipal 30,575 31,293 7.2.4) Deferred taxes -253,616 -501,449 7.3) Remuneration of third-party capital 1,041,791 1,336,534 7.3.1) Financial expenses 976,142 1,251,760

7.3.2) Rental payments 65,649 84,774 7.4) Remuneration of own capital 907,472 1,616,799 7.4.1) Dividends 288,823 865,505 7.4.2) Participation of non-controlling shareholders 19,347 - 7.4.3) Retained earnings 599,302 751,294 8) Value-added distributed 5,602,806 6,451,108

3 GRI Indices / Indicators Report for Votorantim Cimentos 105 PERFORMANCE INDICATORS Economic Performance EC2 - Financial implications and other risks and opportunities Table of Contents for the organization’s activities due to climate change COMPLETED Financial implications (R $ / thousand) 2010 2011 2012 Insurance costs 8,084.23 Other 0.00 Total 8,084.23 This is the first reporting year for insurance costs. Insurance costs can be reported in two ways: • Insurance against environmental damage resulting from an accident: insurance for property damage and bodily injury caused to third parties. Comments: • Insurance of assets with a provision for flood damage. VC, in Brazil and abroad, contracts insurance for its operations with first-line insurers. Among the various policy coverage we have is Flooding, to cover damage to our operations resulting from this risk; and Civil Responsibility (RC) for emergency pollution, which covers damage to third parties resulting from accidental pollution. Table of Contents EC3 - Coverage of the liabilities of the company’s defined-benefit pension plan COMPLETED Participation of plant employees in pension plans 2010 2011 2012 Votorantim Cimentos VOTOPREV + VCNE * (2) 78.0% 81.0% 90.0% VCNE 82.0% 87.8% 82.2% Estimated total value of pension plan obligations (R$) 2010 2011 2012 Votorantim Cimentos S / A - Assets R$168,043,400.60 Votorantim Cimentos S / A - Liabilities R$165,034,060.80 Votorantim Cement N / NE S / A - Assets R$7,593,735.92 Votorantim Cement N / NE S / A - Liabilities R$7,429,988.73 The Group offers pension plans to its employees through the Foundation Ermírio Senator José Ermírio de Moraes (FUNSEJEM), a closed-end, non-profit, private pension company, responsible for the administration of the plans. Established in 1994, the plans administered by FUNSEJEM are structured in the form of “defined contribution” funds and provide participants with the formation of a long-term savings fund for retirement, in which both the participating employee and Votorantim make contributions Over the years the FUNSEJEM has evolved through improvements proposed and approved in the Regulations of the VotorantimPrev Benefit Plan. In 2012 improvements were made to the Plan and it was disclosed to participants via the website and the Futuro journal. FUNSEJEM discloses the benefits of pension plans to employees through correspondence, lectures, training by the HOD’s, and also through the integration meeting. In these meetings, the newly-hired employees can clarify all their doubts and receive a information Comments: kit for FUNSEJEM, containing the Statutes, Regulation of the Votorantim Prev Plan, the Explanatory Booklet and application forms. As a result the percentage membership of the Plan, after considering turnover, is 90%. Furthermore, in 2012, four videos on the plan Votorantim Prev Plan were launched on the Group’s website, in the section on financial education and welfare of employees. They address issues such as the benefits of the plan, contributions, the investment profiles and the tax impacts and are available on the website. FUNSEJEM also launched an e-learning (distance learning) course Votorantim Prev on the Group training portal. This is designed for HOD professionals and Foundation partners, for the dissemination of the plan among employees. The HOD also opened an exclusive portal with operating procedures, forms, and contacts, among others, to facilitate access to information from the Plan. A relationship area was created to serve the needs of participants and sponsors. Table of Contents EC4 - Significant financial assistance received from government PARTIAL

Report, when significant, an estimate of the financial value added presented on an accrual basis: tax incentives/credits; 2010 - 2011 - During 2012 the following tax incentives were granted: PRODUZIR (ICMS) for the Edealina plant; a reduction of income tax relating to the Porto Velho plant; and the renewal of the Special Regime of Tax Incentives: PROMARANHAO (ICMS) for the São Luis plant. 2012 The granting of tax incentives in the period represented a tax reduction of R$ 26,946,000. This was due to new projects in the years: 2010: obtained 8 tax incentives with respect to AFRMM, ICMS and IRPJ taxes. Comments 2011: obtained 9 tax incentives with respect to AFRMM, ICMS and IRPJ taxes

106 Relatório Votorantim Industrial 4 PERFORMANCE INDICATORS Market Presence

EC6 - Policy, practices and proportion of spending on locally-based suppliers Table of Contents at significant locations of operation NOT ANSWERED What factors Does the organization has a policy or common What percentage of the budget for influence the practices to give preference to local suppliers procurement for significant operating selection of suppliers for both the organization as a whole and for units is spent with local suppliers? besides geographical specific locations? location? 2010 - - 2011 - - No information No information is collected is collected on 2012 No on this subject this subject To administer this process, in 2012, we launched our Institutional Policy for Contracting Local Suppliers , and then implemented these Comments practices in all of our units, thereby bringing discipline to the way they were put into effect. During the year 34% of suppliers were local suppliers in municipalities where we had plants, either installed or under construction.

EC7 - Procedures for local hiring and proportion of senior management Table of Contents hired from the local community at significant locations of operation COMPLETED

Total number of Percentage of There is a global policy senior managers, senior managers, or common practices of Total workers with of significant of significant Plant employing local residents permanent contracts (LA1) operating units, operating units, in major operating units that come from the that come from the local community local community 2010 2011 There is no overall policy established for hiring local residents. In this context "local" 100% of the plants means individuals who were 40 37 92.5% in Brazil born in, or have a legal right to reside indefinitely in, the 2012 geographic market of the plant. Report the definition of senior management Senior management comprises the positions of general manager, director and president (GS 38 and above) In 2012 Votorantim Cement began measuring this indicator regarding the procedures for local hiring and proportion of senior management hired from the local community at significant locations of operation. Despite not having a formal policy to encourage local hiring, the 37 members of senior management in Brazil are from this local area. Comments VCNA units were not considered. Local employees includes those born, and those with a legal right to reside indefinitely (e.g. naturalized citizens, foreigners with permanent visas), in the same geographic market of the operating unit. There is no traceability for the years 2010 and 2011, as the information survey began in 2012.

5 GRI Indices / Indicators Report for Votorantim Cimentos 107 PERFORMANCE INDICATORS Indirect Economic Impacts EC8 - Development and impact of infrastructure investments and services Table of Contents provided primarily for public benefit through commercial relations, in-kind or pro bono activities COMPLETED For the whole of Votorantim Cement in Brazil the following investments were made: Construction of Highway SCT 486 –Highway Germano Schaffer - Entrance SC 431 – Vidal Ramos – 6,6 km in length, Stretch of Highway SC 341 – Entrance SCT 486 /Entrance 428 – 11 Km in length , SC 428 – Entrance SC 341 – Imbuia – 7 km , Highway Extra Plano – Imbuia – access to Highway SC 352 – Project to recover and increase capacity – 10 km , containing access points and diversion around urban center of Imbuia.Total improvements in State Highways – 34,6 km TIME-TABLE (period) – jul/2011 a jul/2013 Cost – Keep the reference value – R$ 61,250,000

Construction of Highway MT 402 and access points – Stretch of Highway – Entrance MT 010 – Entrance MT 401 – Coxipó-Açu/Sub. Stretch of Highway Entrance MT010 Km 18 – Stretch No. 1 – 18 km e Stretch No. 2 – 3,62 km, making 21,72 km of new State roads TIME-TABLE (period) – dec/2011 to jul/2013 Cost – keep the reference value – R$ 29,740,278

Improvements to urban roads in the municipality of Ituporanga (SC) – traffic corridor composed of the roads: Pref. Virgilio Scheller, Av.João Paulo II, Governador Jorge Lacerda, Leonel Thiesen- stretch of 5,5 km, added to recovery and increase in capacity of Highway SC 110 , stretch between Ituporanga e Imbuia, in the urban area of Ituporanga with a length of 7,56 km making atotal of 13.1 km of improvements in existing roads and highways. TIME-TABLE (period) – apr/2012 to jul/2013 Cost – keep the reference value – R$ 9,100,000

For all the projects cited the results obtained were the reduction of truck traffic in urban roads, thereby contributing to increasing the safety and quality of life of these communities

For the VCNA plants: This type of investment does not normally apply in North America, since it is a responsibility of local government. Votorantim invests in infrastructure projects with the objective of generating public benefits. Votorantim Cimentos has autonomy in defining these investments which are typically focused on: Construction of highways, and the improvement of urban roads. The results from the projects described above were: reduction of truck traffic on urban roads and improved quality of life in the surrounding communities. Comment: The amount invested in 2012 was: R $ 100,090,278 This is the first reporting year for this indicator. There is no information available for comparison. VCBR: Completion of the work is within the agreed timetable and has been communicated to local communities VCNA: The costs are stored in the SAP system ENVIRONMENTAL PERFORMANCE Materials

Page 60 EN1 - Materials used by weight or volume COMPLETED Consumption of Main Materials (million tons) 2010 2011 2012 Cement 41,415,552.93 Other Business VC 30,525,691.18 Total volume of materials (million tons) - - 71,941,244.11 For this indicator we considered different materials for each business. Concrete: sand, gravel, cement and rice husk; Aggregates: ground limestone, ground gypsum and clay; Complementary Products: ground limestone, ground gypsum, clay, sand, chemical additives and cements; Cement: ground limestone, ground gypsum, clay, artificial plaster, limestone adt, slag, ash, pozzolan, Comment: contaminated soil, gravel and iron mill scale (Cement Sustainability Initiative and Mineral Products Association). Under “Other” we considered the following materials: ash, ground gypsum, contaminated soil, gravel, iron mill scale, other (cement). The element “other (cement)” refers to materials which are not specified in the Environmental Performance Index (EPI) spreadsheet.

108 Relatório Votorantim Industrial 6 ENVIRONMENTAL PERFORMANCE Materials

Page 60 EN2 - Percentage of recycled materials used COMPLETED Recycled materials used (million tons) 2010 2011 2012 Recycled materials used (cement) 265 Raw material substitutes in powder (cement) (Contaminated soil, iron mill scale, gravel, other) “ 1,431,086 The substitute raw materials in the cement grinding mill included: artificial gypsum, slag and ash. - - 4,008,810 Additives (Cement) 25,525 Returned concrete reused 6,742 Aggregates 72,597

Total recycled materials used as inputs 5,545,025 Total raw materials used (EN1) 71,941,244 Percentage of recycled materials used as inputs 8% VC’s products have a high content of recycled materials. In addition, we use alternative sources such as low carbon fuels and biomass. For the cement sector, VC has given greater emphasis to the licensing of co-processing for new projects. The data collected for the Inventory are consolidated and have their Key Performance Indicators (KPIs) generated in the CSI Inventory spreadsheet, except for the proportion of alternative raw materials, which has its consolidated KPI calculated in an separate spreadsheet. The amount of waste generated in Engemix was 14,932 tons for PPZ1 and 120,267 tons for PPZ2. These wastes were sent for recycling and/or reused in the Zero Loss Program (PPZ). These two values for reused materials represent 1.34% of the total volume of concrete Comment produced in the year (10,066,993 tons). • PPZ1 - the leftover concrete in the mixer is diluted with additional water and additives, so that the concrete can be reused in other shipments. • PPZ2 - the leftover concrete which has hardened is crushed and returned to the production process as sustainable concrete. The measurement of the consumption of sustainable concrete is automated in the VC System. This is also applied in some types of concrete. The concrete generated in these two processes meet National and International Quality Standards

7 GRI Indices / Indicators Report for Votorantim Cimentos 109 ENVIRONMENTAL PERFORMANCE Energy

EN3 - Direct energy consumption broken down by primary energy source Page 56 (Thousand GJ) COMPLETED

Important: The data that makes up this index are obtained from the carbon inventory spreadsheet Fuel Used 2010 2011 2012

Regular Fuel 60,895,318 Low carbon fuels 3,819,619 Regular Fuels were: coke, diesel oil, coal, natural gas, gasoline, GLP.B161: G176. For low carbon fuels were: tire, solid waste (mixed industrial waste), oil 2A (waste oil), liquid waste, ethanol, biomass (biomass content from low carbon fuels), and other renewables. Comment In 2012, the price of natural gas fell to a lower level. In order to reduce fuel costs, Suwannee America Cement increased consumption of natural gas in place of coal. Coal consumption in 2011-2012 declined significantly despite the company’s increased production. This was due to an increased consumption of natural gas and low carbon fuels in 2012. Page 56 EN4 - Indirect energy consumption by primary source (thousand GJ) COMPLETED

Important: The data that makes up this index are obtained from the carbon inventory spreadsheet Period 2010 2011 2012

Electric power - Own Generation 997,687 Electric power - General Purchases 11,365,122 Electric power - Purchased with incentives 0 Total Consumption of Indirect Energy 0 0 12,362,809

Energy Matrix (EN3 + EN4) 2010 2011 2012 Total Consumption of Energy (Direct + Indirect) 0 0 97,189,559 Percentage of Non-Renewable Energy (NRE) in the Matrix 79.4% Percentage of Renewable Energy (RE) in the Matrix 20.6%

110 Relatório Votorantim Industrial 8 ENVIRONMENTAL PERFORMANCE Energy Pages 56 and 58 EN5 - Energy saved due to improvements in conservation and efficiency (GJ) COMPLETED

Important: The data that makes up this index are obtained from the carbon inventory spreadsheet Period 2010 2011 2012

Total energy saved due to improvements in conservation and efficiency (thousands of GJ) (485,353) (2,014,086) (4,121,613) Replacing the fuel for clinker with pozzolan (64,800) Increased efficiency Name of Initiative/Program Percentage improvement in efficiency of energy utilized -0.63% -0.39% -2.23% Replacing the fuel for clinker with pozzolan Improvement in energy efficiency (%) - EN5 2010 2011 2012 Percentage improvement in efficiency of energy utilized 0.00% -0.30% -0.25% Votorantim Cimentos has been systematically reducing its electricity consumption since 1994, through the adoption of new technologies: • Use of precalciner in new plants, reducing fuel consumption and enabling increased replacement of fossil fuels by organic and industrial waste; • Use of high efficiency motors; • Use of frequency inverters in engines with power higher than 250 kW; • Installation of Roller Mills instead of Ball Mills, in raw milling; • Installation, since 2006, of Roller Mills instead of Ball Mills, for cement milling;

Comments: Another very important point is the replacement of clinker by slag or fly ash, of thermoelectric power plant, in cement production. This practice has been widely used since long ago, around the world and also in Brazil. It turns out that slag and fly ash are not available in the plants further away from major centers, and then calcining clay is required to obtain a product called pozzolana, that can also be used in cement production.

Votorantim then developed, based on the acquired operation of the two existing old kilns at Poty Paulista unit, a process for the production of pozzolana on a large scale, reaching 1000 tons / day. The pozzolana production has no GHG emissions derived from limestone, GHG emission derived from fuel only, a rate much lower than that presented in clinker production. Thermal energy consumption in puzzolan production is 27% lower than the production of clinker. Today VC has 4 pozzolana kilns in operation. Water

Page 61 EN8 - Total water withdrawal by source COMPLETED Withdrawal by source (m³) 2010 2011 2012 Surface water 10.117.039 7,818,984 Underground water 3.970.086 Rainwater - Water supply companies 914.667 38,244,810 Effluents from another organization Vegetable condensate water Other (underground water for industrial use/other purposes) 52,145,301 Total water withdrawal by source 0 15.001.792 98,209,095

The comparison of the information on total water withdrawal by source with previous years presents significant differences, since the management of the compilation of the information has been improved, as from 2012. Quantitative data for source type is not Comment: collected at all plants. The total value of Underground Water (industrial) and Underground Water (for other purposes) were included in the category “Other (underground water for industrial use / other purposes).”

9 GRI Indices / Indicators Report for Votorantim Cimentos 111 ENVIRONMENTAL PERFORMANCE Biodiversity EN11 - Location and size of land owned, leased or managed which is in, Page 68 or adjacent to, protected areas and also areas of high biodiversity value which were outside protected areas. PARTIAL Inside the Plant located inside conservation conservation area Biome found in the area area (UC) (Km ²) or adjacent to it Atlantic Rainforest Cerrado Cerrado and Atlantic Rainforest (Transition Zone) Total inside conservation/protected area In 2012 we defined the method for gathering information on the location and size of our land (owned, leased or managed) which is in, or adjacent to, protected areas and also areas of high biodiversity value which were outside protected areas. The software, called IBAT, includes a database on areas of importance for world biodiversity thus allowing the assessment and mapping of VC’s operations and the identification of overlaps with areas of high importance for biodiversity. The overall management of this information, using the software, is carried out by the corporate Environmental area, and the detailing of the identification of overlaps is done by the local unit.

In Brazil, 80.43% of the 48 units analyzed had overlaps, and in VCNA, 28.57% of the 34 units analyzed had overlaps. Of these, 57.32% had overlaps in areas of high biodiversity value. In relation to restoration plans, 10.41% of the 48 units in Brazil that were assessed have developed plans to restore the affected areas. In VCNA, 100% of the 34 units have restoration plans. The weighted average of units Comment: in Brazil and VCNA with restoration plans is 48%. When we assessed the plants for a Biodiversity Management Plan (BMP) we found that 5.41% of the 48 units in Brazil had such plans. VCNA has not yet made this assessment. Including the 34 VCNA units the average number of units that have a BMP is 1.24%.

Various activities were carred out under the umbrella agreement of technical cooperation between VC, SBE (Brazilian Society of Speleology) and RBMA (Biosphere Reserve of the Atlantic), for example, a survey of environmental assets in one of the areas owned by VC. More information is available at: http://www.cavernas.org.br/cooperacaotecnica. This indicator is reported in a manner similar to that of the CSI, as KPI 1 Biodiversity, which is defined as the number of operating units that are located within or adjacent to i) Protected Areas and ii) Other areas important for biodiversity. The IBAT tool provides information about the position in relation to the protected area (containing portions of the protected area) and the type of operating unit, which, in this case, are mines.

112 Relatório Votorantim Industrial 10 COMPLETO ENVIRONMENTAL PERFORMANCE Biodiversity EN12 - Description of significant impacts of activities, products Page 68 and services in protected areas and areas of high biodiversity value outside protected areas COMPLETED Major Significant impacts Report the nature of the Report the significant direct Does the associated with activities, impacts on the following aspects: and indirect impacts, either positive project have products and services construction or use of factories or negative in relation to: species outside of the organization and mines, pollution, introduction affected; size of impacted areas; partners? of invasive species, reduction of length of time of impacts; reversibility species, habitat conversion, changes or irreversibility of the impacts in ecological processes outside the natural range of variation 2010 2011 Considering the units The nature of the impacts cited VC’s unit in Ribeirão Grande (SP) that have a Biodiversity are due to implementation and has developed a Biodiversity Management Plan, the impacts operation of the units, which often Management Plan. The main negative identified were: changes are close to areas of high importance impacts identified were: the loss of thick to local aquifer systems; for biodiversity, as in the case of unit forest areas and the consequences; deforestation and removal Ribeirão Grande. This location of this changes in plant life in the community; of natural vegetation; unit overlaps with an area called population displacement due to the increased noise; possible "Maciço Florestal de Paranapiacaba" pumping of mine run-off water; changes loss of natural caves; loss which is classified as an Important in riparian vegetation from drained of habitats in the area of direct Birdlife Area (IBA ) and is a priority areas; disturbance of terrestrial fauna; influence; risk of invasion area for conservation due to the changes in the community of wildlife; by exotic species; risk to system of springs and streams changes in the habitat of fish neighboring ecosystems; flowing into the Paranapanema populations. These potential impacts 2012 decrease in richness of river, according to MMA, 2007. are being assessed by the unit according structural species; and Furthermore, in the surrounding to 3 monitoring plans. In this same unit, changes in the indicators area, within 5 Km, there is an VC acquired a pilot project “Survey or the behavior of terrestrial Environmental Protection Area, of Environmental Assets”, in an area species, among others. "Serra do Mar", and an UNESCO of more than 300 ha that had originally World Heritage Site, the Southeast been in an advanced state of degradation. Atlantic Rainforest Reserve. The restoration of forest area was initiated in 2001, and accompanied by continuous monitoring and research studies by university partners. There has been a notable gradual occupation of habitats by species of fauna groups that are being studied and monitored. Describe the process of collection and compilation of information covering the aspects and the impacts of the operations on the biodiversity in the area. 2010

11 GRI Indices / Indicators Report for Votorantim Cimentos 113 ENVIRONMENTAL PERFORMANCE Biodiversity EN12 - Description of significant impacts of activities, products PÁGINASPage 5968 E 60 and services in protected areas and areas of high biodiversity value outside protected areas COMPLETED 2011 The survey of biodiversity issues is carried out through an environmental impact study, as well as through other types 2012 of surveys conducted by each operating unit. In 2012 Votorantim conducted a survey of recognized high biodiversity areas around its operations and found that over 80% of its operations in Brazil are in such areas. As a result VC has already started preparing BMPs for these areas and aims to have these plans for 100% of the units in these situations by 2020. We also started a pilot project in 2012 to survey our environmental assets under Comments: a technical cooperation agreement signed with SBE (Brazilian Society of Speleology) and RBMA (Biosphere Reserve of the Atlantic). This project consists of the detailed assessment of each of VC’s properties in Ribeirão Grande (SP) in order to enable the preparation of a Sustainable Land Management Plan (SLMP) for the area in the Atlantic Rainforest. This project aims to integrate the conservation of biodiversity and ecosystem services into the strategic planning of the organization (providing tools and strategies). Page 68 EN13 - Habitats protected or restored PARTIAL Biome Total area of the habitat (sq km) Description of the habitat Atlantic Rainforest 10.12 Protected area Cerrado - - Cerrado and Atlantic Rainforest (Transition zone) - - TOTAL 10

Comments: For this indicator only Vidal Ramos and Porto Velho units were considered. EN14 - Strategies, current actions and future plans for managing impacts Page 68 on biodiversity COMPLETED 1) Explain how the theme ‘Biodiversity’ was discussed or considered in the Environmental Impact Assessment and Environmental Impact Reports (EIA-Rima). The Environmental Impact Assessments (EIA) at the plants were carried out in such a way as to allow the environmental assessment of the areas of influence of the projects, considering the identification and evaluation of impacts and an integrated analysis. In the section of the EIA report called Diagnostic of the Biotic Environment, there is a description of the flora and fauna, as well as the ecosystems that integrate the two groups. 2) List the methodologies used to determine the risks to biodiversity.

Environmental impact studies 3) What were the targets and objectives established with relation to the theme ‘Biodiversity’?

2020: For 2020 our goal is that 100% of those units with an overlap in an area of high biodiversity importance will have Biodiversity Management Plans. In addition to maintaining the existing partnership we will look to sign other agreements with NGOs targeting the biodiversity theme. 4) What were the monitoring processes adopted?

Vidal Ramos: We conduct an annual survey to monitor mammals and birds. These groups were selected as a proxy for biodiversity since there is substantial research on the ecological requirements of these species. The results allow us to assess the impacts on wildlife caused by the plant operations. 5) Cite the public reports prepared in 2012 that relate to the theme ‘Biodiversity’.

“Vidal Ramos: The monitoring results are entered into the Monitoring Report on Environmental Management of Operations for the years 2008, 2009, 2010 and 2011.

114 Relatório Votorantim Industrial 12 ENVIRONMENTAL PERFORMANCE Biodiversity

EN14 - Strategies, current actions and future plans for impacts managing Page 68 on biodiversity COMPLETED 6) Describe the influence of government regulations on the management of risks to biodiversity. “Vidal Ramos: The list of fauna identified is compared to the list of Brazilian fauna threatened with extinction (Normative Instruction 03/2003).“ 7) Ecosystem Services: Cite the projects undertaken with a focus on identifying the impact/dependence and valuation.

There was no management of this item for the year 2012

In 2012 we surveyed the overlaps of our operations with areas of high biodiversity, using the IBAT software, which allowed to evaluate the proximity of our operations to areas known to be of high biodiversity importance. We have also developed several projects under a cooperation agreement, signed in 2011, with the Biosphere Reserve of the Atlantic (RBMA) and the Brazilian Society of Speleology (SBE). More information at: (http://www.cavernas.org.br/cooperacaotecnica), Among these projects was the Comment: publication of a book, The Human Being and the Karst Landscape during the international conference Rio+20, as well as the project to survey the environmental assets in the pilot area of the Ribeirão Grande plant. For the preparation and implementation of a Biodiversity Management Plan, the corporate area identifies the units that have an area of influence that overlap with areas of importance to biodiversity, and then each operational unit is responsible for preparing its own plan. EN15 - Number of species on the IUCN Red List and national Table of Contents conservation lists, with habitats in areas affected by operations, by level of extinction risk COMPLETED Number of endangered species by extinction risk level: 2010 2011 2012 Critically endangered - Endangered - Vulnerable - Near threatened - Least concern - Note: Classification according to the IUCN Red List. Não material

We have not collected data on the number of species on the IUCN Red List and national conservation lists, with habitats Comments in areas affected by operations, by level of extinction risk. This indicator will be reported in the coming years. Emissions, Effluents, and Waste

EN16 - Total direct and indirect emissions of greenhouse gases, Table of Contents by weight (GHG) COMPLETED

Direct GHG emissions (tCO2 eq) 2010 2011 2012 Stationary Combustion 6,384,784 Mobile Sources - Owned 562,484 Process 11,828,299 Waste Treatment 0 Soil - Limestone 0 Soil - Nitrogen Fertilizer 0 Other Total Direct Emissions - Scope 1 0 0 18,775,567

Indirect Emissions (tCO2eq) 2010 2011 2012 Electric Power 485,660 Total Indirect Emissions - Scope 2 0 0 485,660

13 GRI Indices / Indicators Report for Votorantim Cimentos 115 ENVIRONMENTAL PERFORMANCE Emissions, Effluents, and Waste Table of Contents EN17 - Other relevant indirect emissions of greenhouse gases, by weight COMPLETED

Other indirect GHG emissions (tCO2 eq) 2010 2011 2012 Transportation by third-parties (cargo, goods, etc.) 0 Total 0 0 0 Total Emissions 0 0 19,261,227 Carbon capture 0 Carbon stock 0 Carbon suppression 0

EN18 - Initiatives to reduce emissions of greenhouse gas emissions Page 62 and reductions achieved (GHG) PARTIAL Initiatives in 2010 Effective reductions

Projects that generated emission reductions in 2010 Site in tCO2 eq/year Status Awaiting 2nd issue VC - 59,485 of Certified Emission Hydroelectric plant with existing reservoir Pedra do Cavalo Reductions (CERs) Awaiting 2nd issue 2,074 of Certified Emission Fuel substitution VC - Cubatão Reductions (CERs) 6,562 Plants with the (corresponding Energy Efficiency Ongoing program to the years 2007 Program Energy Efficiency to 2010) Initiatives 2012 Effective reductions

Projects that generate reductions in 2011 Site in tCO2 eq/year Status Waiting 2nd issue VC - 59,485 of Certified Emission Pedra do Cavalo Hydroelectric plant with existing reservoir Reductions (CERs) 9,829 (corresponding to VC - Cubatão the crediting period Project completed of the project from Heat Reclaimed 2004 to 2011) Iniciativas 2012 Effective reductions

Projects ongoing in 2012 Site in tCO2 eq/year Status UHE in existing reservoir - - - Heat Reclaim - - -

116 Relatório Votorantim Industrial 14 ENVIRONMENTAL PERFORMANCE Emissions, Effluents, and Waste EN18 - Initiatives to reduce emissions of greenhouse gas emissions Page 62 and reductions achieved (GHG) PARTIAL

Among the factors which reduce the net emissions of CO2/ton kg per ton of cementitious product we can cite the gradual introduction of pozzolan kilns to replace clinker kilns (the use of pozzolan has a lower heat consumption compared to clinker). The pozzolan kiln consumes 750 kcal/day. With this kiln there is an estimated saving of 30% in thermal consumption compared to the clinker kiln. Saving 64,800 GJ of energy is equivalent to saving 8,500 tons of coke. The technology used before 1994 in VC kilns was the kiln with pre-heater, a technology that has a higher thermal consumption than the new technologies implemented as from that year onwards. The calciner technology has a lower heat consumption and has been constantly upgraded. The present process has a process yield of 67% (21,100 t fuel/day) which is more efficient compared to the former process yield of 33% (43,550 t Comments: fuel/day) . Since 2006 six plants have had the efficiency of their production process improved, namely, Cimesa, Xambioá, Santa Helena, Salto, Vidal Ramos and Cuiabá. Votorantim Cement currently has 4 pozzolan kilns in operation. One project, still experimental, which is being undertaken in a St. Marys plant, together with the Canadian government, is dealing with sequestration of carbon from the atmosphere. We have projects to reduce the clinker/cement factor, to increase the replacement of conventional fuels with low carbon fossil fuels and biomass, and to the heat consumption in clinker production and the electric power consumption in cement grinding.

Table of Contents EN19 - Emissions of substances that destroy the ozone layer by weight COMPLETED

The indicator was not reported because it was not considered material.

15 GRI Indices / Indicators Report for Votorantim Cimentos 117 ENVIRONMENTAL PERFORMANCE Emissions, Effluents, and Waste Table of Contents EN20 - NOx, SOx and other significant air emissions by type and weight COMPLETED Emissions of NOx, SOx and PM (t) 2010 2011 2012 NOx Emissions 29,754.18 34,598.02 SOx Emissions 19,230.92 22,809.86 PM (Particulate Material) Emissions 3,714.26 2,957.53 Total Emissions of NOx, SOx and PM 52,699.36 60,365.41 Emissions of heavy metals (t) 2010 2011 2012 Mercury (Hg) 0.27 0.29 Cadmium (Cd) 0.11 0.15 Thallium (Tl) 0.36 0.45 Total Emissions of Heavy Metals 0.00 0.74 0.89 Other air emissions (t) 2010 2011 2012 Volatile Organic Compounds (VOC) (or THC) 390.70 289.30 Total Emissions 0 53,091 289

The emission values reported in 2012 have risen in absolute terms, part of which is proportional to the organic growth of the company. However, considering this growth, the amount of emissions should have been much higher. This did not occur because there were major investments in new technologies, especially related to retrofit, with lower rates of emissions.

The significant investments mentioned below are retrofits, that is, a change in technology from electrostatic filters to bag filters. This change of technology only reduces the emission of particulate matter and has no direct influence on the emission of gases. There has been a notable reduction in emission (1,300 tons less PM emitted). In 2012, investments were made to retrofit existing filters into bag filters that provide better efficiency in the process, for the following plants: Pinheiro Machado W1, W2 Itaú de Minas, Rio Negro W1. In relation to NOx emissions, one of the largest kilns (in terms of productive capacity) commenced operations in 2012, the W5 at our plant in Salto de Pirapora. Despite having an emissions cleaning system, it is one of the most critical plants for NOx emissions. Several areas of VC are currently involved in finding a solution to reduce the impacts of this kiln. After the W5 kiln at Salto de Pirapora the next Comment: most critical kiln is the W1 at the Vidal Ramos plant, which has been operating since mid-2011, and thus had the greatest impact only on the difference in emissions from 2011 to 2012, since it operated for the full year in 2012. In absolute terms the emissions were 4x higher due to the higher time of operation (2x) and higher production (3x). For these two plants, and a third plant, that together have the greatest impact on these parameters, VC has planned investments for 2013 and 2014.

In the case of SOx, the same comment for NOx for the W1 kiln at Vidal Ramos applies. This kiln is also one of the most critical in this parameter. This plant alone contributed about 3,000 tons of SOx emissions in 2012, compared to about 800 tons in 2011 (also due to increased operating time and output). The difficulty in reducing SOx emissions, especially in this plant, is due to the presence of pyrite in the raw material (compound containing sulfur). Among all the kilns, the largest contributor of SOx is Kiln No. 3 at the Cimesa plant. CAPEX investments are planned for these kilns in 2014 and 2013, respectively. In addition, a kiln at the Bowmanville plant in North America emits significant amounts of SOx. Research work will begin on this case in 2013. Table of Contents EN21 - Total water discharge by quality and destination PARTIAL Discharge of water, by treatment (m³) 2010 2011 2012 Waste-water with treatment 1,253,965 Waste-water without the need for treatment - - Total water discharged 0 0 1,253,965 Discharge of water, by destination (m³) 2010 2011 2012 Ocean / Sea - Rivers 1,253,965 Lakes - Other - Total water discharged 0 0 1,253,965

Comment: Quantitative data for source type is not collected at all plants.

118 Relatório Votorantim Industrial 16 ENVIRONMENTAL PERFORMANCE Emissions, Effluents, and Waste Page 62 EN22 - Total weight of waste by type and disposal method COMPLETED Total Weight of Waste (tons) 2010 2011 2012 NON-HAZARDOUS waste disposal 0,00 0,00 106,575.16

Composting - - - Internal reuse/recycling - - - External reuse/recycling with value-added - - - External reuse/recycling without value-added - - -

Recovery - - - Incineration (or use as fuel) - - - Co-processed/Refined - - - Landfill - - - Industrial landfill - - - Waste injected underground - - - Others - directed to specific uses - - - Unclassified disposal - - 106,575.16 HAZARDOUS waste disposal 0,00 0,00 22,581.34

Composting - - - Internal reuse/recycling - - - External reuse/recycling with value-added - - - External reuse/recycling without value-added - - - Recovery - - - Incineration (or use as fuel) - - - Co-processed/Refined - - - Landfill - - - Industrial landfill - - - Waste injected underground - - - Others - directed to specific uses - - - Unclassified disposal - - 129,156.51 Data for “Total Amount” is consolidated, covering all the business segments. Comment: VC does not have full management control over the disposal of waste generated by its plants. Achieving full control is one of the goals for the coming years.

17 GRI Indices / Indicators Report for Votorantim Cimentos 119 ENVIRONMENTAL PERFORMANCE Emissions, Effluents, and Waste Table of Contents EN23 - Total number and volume of significant spills PARTIAL Significant spills 2010 2011 2012 Plant Oil 3 Quantity Oil 4.5 Cubic meters (m³) Chemicals 4 Quantity Chemicals 2.704 Cubic meters (m³) Fuels 0 Quantity Fuels 0 Cubic meters (m³) Other (please specify) 0 Quantity Other (please specify) 0 Cubic meters (m³)

Total number 2010 of spills - Plant Total volume - Cubic meters (m³) Total number 2011 of spills - Plant Total volume - Cubic meters (m³) Total number 2012 of spills 7 Plant Total volume 7.204 Cubic meters (m³)

Report the impacts of significant spills 2010 - 2011 - The principal environmental impacts were the contamination of water (rivers and lakes) and the soil of the area 2012 surrounding the wastewater storage basin.

Spills reported in the financial statements 2010 2011 2012 Location of spill (Plant) - - 0 Spill volume (m³) - - 0 Oil - soil - - 0 Oil - water surface - - 0 Fuel - soil - - 0 Fuel - water surface - - 0 Material Waste - soil - - 0 Chemicals - water surface - - 0 Chemicals - soil - - 0 Chemicals - water surface - - 0 Other (Specify) - - 0

120 Relatório Votorantim Industrial 18 ENVIRONMENTAL PERFORMANCE Emissions, Effluents, and Waste Each VC plant has internal controls for spills that were not previously fully reported to the corporate area, so it is not possible to compare the trends in indicator. As from 2012 we implemented a standard procedure “Registration and Reporting of Critical Environmental Events” and the reporting is made through the Environmental Performance Indicator (EPI) worksheet. Comments For the management of this indicator there is a standard procedure that sets guidelines for the Registration and Reporting of Critical Environmental Events. It is applicable to all of VC’s plants and contractors and subcontractors where the activities, products, or services performed could result in critical environmental events. The events are divided into 6 levels and, depending on the level, there is a different reporting channel. Products and Services

EN26 - Initiatives to mitigate the environmental impacts of products Pages 55, 60 and 92 and services, and extent of the reduction of impacts COMPLETED

Use of Materials Initiative Related Quantitative Impacts 2010 - - 2011 - - VCBR: CEMENT: Volta Redonda: Recovery of two Permanent Preservation Area (one still being finalized) within the grounds of the factory.

VCNA: CEMENT: Charlevoix: low carbon fuels, 2012 screening of waste landfill for co-processing. - Water Use Initiative Related Quantitative Impacts 2010 - - 2011 - - VCBR: CEMENT: Cantagalo: Increased reuse of water consumption (74.09%) with the transposition of the effluent discharge points from the oil and water separators, from mechanical maintenance and the machine and vehicles workshop, to the water basin for cooling bearings.

VCNA: CEMENT: St. Marys: Action plan for 2012 noise reduction. -

19 GRI Indices / Indicators Report for Votorantim Cimentos 121 ENVIRONMENTAL PERFORMANCE Products and Services Emissions Initiative Related Quantitative Impacts 2010 - - 2011 - - VCNA: CEMENT: Branford: Use of hydrated lime, use of low carbon fuels, use of artificial gypsum 2012 to replace gypsum, limestone addition. - Effluents Initiative Related Quantitative Impacts 2010 - - 2011 - - VCBR: CEMENT: Volta Redonda: Geo- environmental studies were conducted semi- annually in the slag storage area, in order to evaluate the level of groundwater contamination. Effluent analysis, Wastewater Treatment 2012 installation and suitability for drinking. - Noise Pollution Initiative Related Quantitative Impacts 2010 - - 2011 - - VCBR: CEMENT: Santa Cruz: In 2013 we plan to instal a silencer in the chimney of the mill fan, which has a noise level of 104 dB at source. With the installation of this equipment, there is the possibility of reducing the noise level to 85 dB. Another project for 2013 is the construction of a washer for cleaning tires using about 2012 40,000 liters of rainwater. -

122 Relatório Votorantim Industrial 20 ENVIRONMENTAL PERFORMANCE Products and Services Waste Initiative Related Quantitative Impacts 2010 - - 2011 - - VCBR: COMPLEMENTARY PRODUCTS Cajamar: Reduction of cement consumption in mortar/ Barueri: Reducing Waste Generation /

CEMENT: Itaú de Minas Civil construction waste is reused in the production process (EV crusher) / Poty Paulista: Improvement in the process of waste disposal, specially in the last two years / Sobradinho: Reuse of 1,285,432 tons of process waste (used in co-processing), instead of disposal in landfills/ Volta Redonda: The Volta Redonda plant produced only 9,327 tons of cement in 2012. For such activities, we use water trucks for wetting internal roads, along with sweepers Capivari de Baixo: Reduced consumption 2012 of coal per ton of dried ash. - The management of initiatives to mitigate the environmental impacts of products and services and the extent of reduction of these impacts is measured by specific indicators for each of the themes presented above, for the lines of business (Cement, Engemix, Aggregates and Complementary). Success story: The Zero Loss Program (ZPP) arose from the need and the opportunity to align the Engemix units with the Votorantim Group’s management model, specially in regard to its sustainability objectives: - “Being sustainable is to be able to ensure the continuity Comment: and growth of our business in the long-term, anticipating the demands of stakeholders and incorporating them into the company’s goals.” The objective of the program is to reduce environmental liabilities in the operating units. The volume of discarded concrete is reduced by a process of stabilization and reuse of the residual concrete, by the recycling of concrete waste in the production and by the use of Sustainable Aggregate Votorantim has developed a pozzolan production kiln with large-scale production. The kiln can produce 1,000 tons / day. The production

using pozzolan does not generate CO2 emissions from limestone, only from fuel combustion.

21 GRI Indices / Indicators Report for Votorantim Cimentos 123 ENVIRONMENTAL PERFORMANCE EN27 - Percentage of products sold, and their packaging materials, Table of Contents which are recovered in relation to the total products sold by category of product. NOT REPORTED Products by category 2010 2011 2012 Plant Cement - - Cubic meters Aggregates - - Cubic meters Complementary Products - - Cubic meters Engemix - - Cubic meters Other (Specify) - - Cubic meters Total 0 0 0 Cubic meters Packaging recovered (recycled or reused) 2010 2011 2012 Plant Cement - - Cubic meters Aggregates - - Cubic meters Complementary Products - - Cubic meters Engemix - - Cubic meters Other (Specify) - - Cubic meters Total 0 0 0 Cubic meters

Percentage of recovered products 2010 2011 2012 Plant Cement - - 0% Percentage Aggregates - - 0% Percentage Complementary Products - - 0% Percentage Engemix - - 0% Percentage Other (Specify) - - 0% Percentage Total 0% Percentage This is the first year of reporting on this indicator. No collection of data to report on this indicator. We have some initiatives, that are in the form of pilot studies, which aim to collect empty cement bags for sustainable disposal. In 2012, Votorantim Cement initiated a study on the reverse logistics of cement bags, i.e. to provide the sustainable disposal of empty bags that are currently left at construction sites and with retailers. For this, we have formed the Sustainability committee that is evaluating short Comments: and long-term opportunities. The first step of the project was to identify processes that are feasible for damaged and dirty bags. Some hypotheses are being studied such as using the bags as a raw material input for the fiber-cement and roofing industries or for co-processing in cement kilns. Another relevant point is the discussion of the roles and responsibilities of each link in the industry chain in a reverse logistics system including: paper manufacturer, ABCP, builders, shops, final consumer, cement manufacturer, and government. There are no short-term actions in progress, but the studies are being finalized prior to taking action with our customers.

In conformity EN28 - Monetary value of significant fines and total number of non- Table of Contents monetary sanctions for non-compliance with environmental laws and regulations COMPLETED Period 2010 2011 2012 Number of non-monetary sanctions - - 33 Total monetary value of significant fines - - 3,565,944.76 Legal actions moved through arbitration mechanisms - - 0 1. Implementation of the new corporate standard. 2. This includes the requests received and amounts paid, including both lawsuits filed and administrative proceedings. Comment: 3. VC: The VCNA plants are now included. 4. For this subject, the data began to be published in reports addressed to interested parties from 2012.

124 Relatório Votorantim Industrial 22 ENVIRONMENTAL PERFORMANCE General

EN30 - Total expenditure in investments and expenses for environmental Pages 55 and 56 protection, by type COMPLETED

Environmental investments and expenses (R$) 2010 2011 2012 CAPEX (Investments) 4,416,818 82,918,575 31,690,068

Environmental Education 900 0 0 Environmental Management 749,842 12,604,982 6,682,035 Conservation, Reforestation and Biodiversity 595,383 442,480 4,287,468 Environmental Prevention 335,046 667,425 864,373 Treatment of air emissions 1,242,650 59,114,376 18,036,477 Waste Treatment 712,952 1,651,704 230,896 Wastewater Treatment 569,518 2,048,483 1,464,911 HOD - Environmental Area 0 0 0 Decommissioning/Remediation (soil and water) 0 0 123,908 Environmental insurance 0 0 0 Other Environmental Expenses 210,527 6,389,125 0 OPEX (Expenses) 6,376,903 27,685,393 27,787,572

Environmental Education 99,183 225,913 524,545 Environmental Management 2,453,041 5,933,265 5,502,292 Conservation, Reforestation and Biodiversity 5,097 490,118 1,187,583 Environmental Prevention 242,328 291,769 805,861 Treatment of air emissions 2,101,568 10,978,160 3,292,975 Waste Treatment 960,900 3,063,099 5,939,534 Wastewater Treatment 446,427 553,964 1,475,410 HOD - Environmental Area 0 0 5,026,257 Decommissioning/Remediation (soil and water) 0 0 1,262,195 Environmental insurance 0 0 0 Other environmental expenses 68,359 6,149,105 2,770,920 Total 10,793,721 110,603,968 59,477,640 Environmental Education 100,083 225,913.00 524,545.00 Environmental Management 3,202,883 18,538,247.00 12,184,327.00 Conservation, Reforestation and Biodiversity 600,480 932,598.00 5,475,051.00 Environmental Prevention 577,374 959,194.00 1,670,234.00 Treatment of air emissions 3,344,218 70,092,536.00 21,329,452.00 Waste Treatment 1,673,852 4,714,803.00 6,170,430.00 Wastewater Treatment 1,015,945 2,602,447.00 2,940,321.00 HOD - Environmental Area - - 5,026,257.00 Decommissioning/Remediation (soil and water) - - 1,386,103.00 Environmental insurance - - 0.00 Other environmental expenses 278,886 12,538,230.00 2,770,920.00

Comment: OPEX values do not include the units of VCNA.

23 GRI Indices / Indicators Report for Votorantim Cimentos 125 SOCIAL PERFORMANCE - LABOR PRACTICES Employment

LA1 - Total workforce by employment type, employment contract, region Page 80 PARTIAL Period 2010 2011 2012 Monthly paid 7,756 8,349 9,339 Hourly paid Trainee 61 13 21 Own Subtotal 7,817 8,362 9,360 Own Subtotal VCNA 2,937 1,251 2,717 Intern and "Summer Student" 217 281 339 Apprentice 69 104 155 Subtotal Interns and Apprentices 286 385 494 Total 11,040 9,998 12,571 Employees per category 2010 2011 2012 Own employees

Director / Chairman 13 13 13 Manager 178 193 226 Coordinator / Consultant 264 302 398 Technician / Analyst / Supervisor 1,094 1,285 1,468 Trainee 61 13 21 Operational 6,207 6,556 7,234 Intern 217 281 339 Apprentice 69 104 155 Direct employees VCNA 2,937 1,251 2,717 Owner+Intern+Apprentice 11,040 9,998 12,571

For the number of employees reported in this report, the criterion used followed the pattern set by GRI methodology. Comment: As the number of employees of VCNA was not available, the calculation for these employees was acquired from the difference of total employees provided by HOD VC and the total number of employees published in the CSI spreadsheet.

LA2 - Total Number and Turnover of Employees by Age Range, Pages 81 and 82 Gender and Region PARTIAL Period 2010 2011 2012 Employees 9,854 Dismissals 2,231 Total Turnover 22.6%

Data reported include all units of the Organization, not only the units indicated in Granularity Table of Business. The values refer Comment: to the number of own employees laid off, not including employees with time-specific contracts and interns. The figures only consider employees VCBR. VCNA Employees were not included.

126 Relatório Votorantim Industrial 24 SOCIAL PERFORMANCE - LABOR PRACTICES Employment LA3 - Benefits provided to full-time employees that are not provided Page 81 to temporary or part-time, by major operations COMPLETED Benefits Required by Law Applicable to employees Illness and accident assistance VC Periodic and laboratory medical examinations VC, VCNA * Maternity/paternity leave VC, VCNA * Variable remuneration (PPR) VC, VCNA * Chartered transportation VC Uniforms VC, VCNA * Transport vouchers VC Additional Corporate Benefits Applicable to employees

Dental Assistance VC, VCNA * Medical Assistance VC, VCNA * Private Pension Plan (VotorantimPrev) VC, VCNA * Group Life Insurance VC, VCNA * Basic Food Hamper VC Company Arrangements with Pharmacies VC, VCNA * Company Arrangements with Opticians VCNA * Assistance for children with special needs VCNA * Child Day-care Assistance VC Funeral Assistance VC, VCNA * Christmas Toys/Children's Day AGRE, CIM, VCNA ** School Kit Christmas Hamper VC Company Arrangements with Private Gyms VCNA ** Company Arrangements with Social Clubs (S System - SENAI, SESI, SESC, SEST, SENAT). VC *, * VCNA Coverage for Disability/Permanent Injury VC, VCNA * Meal Vouchers/Food Vouchers VC Amounts Invested in Benefits (R$ Millions) 2010 2011 2012

Amounts Invested in Benefits (R$ Millions) 220,58

Comment VCBR: No changes in benefits from 2011 to 2012. Relations between workers and management

LA4 - Percentage of employees covered by collective Page 85 bargaining agreements COMPLETED Period 2010 2011 2012 Employees covered by trade union agreements (%) 98%

The value of LA1 reported includes only own active employees. The total number of employees considered for this indicator includes: Comment: all VCBR workers. The figures only consider employees VCBR. VCNA Employees were not included. LA5 - Minimum notice for advance communication of operational changes, Table of Contents including when it is specified in collective agreements NOT REPORTED Period 2010 2011 2012 The indicator was not reported because it was not considered material. - - -

25 GRI Indices / Indicators Report for Votorantim Cimentos 127 SOCIAL PERFORMANCE - LABOR PRACTICES Occupational Health and Safety LA6 - Percentage of total workforce represented in formal health and safety Table of Contents committee, composed of managers and workers that help monitor and advise on occupational health and safety programs COMPLETED Period 2010 2011 2012 None to 25% 25 % to 50% 50% to 75% Over 75% X

It is planned for the coming years that all VC employees will be represented by the formal health and safety committee. The number Comment: of total employees reported includes only own active employees. The total number of employees considered for this indicator includes: all VCBR and VCNA employees.

LA7 - Rates of injury, occupational diseases, sick days, absenteeism Pages 70 and 72 and work-related fatalities by region PARTIAL Direct and Indirect Employees Period 2010 2011 2012 Direct deaths of Employees (on-site) 0 0 2 Fatality rate (per 10,000 direct employees) 0 0.00 1.59 Indirect deaths of Employees (On-site) 2 0 2 Indirect deaths of Employees (Off-site) 1.64 2 6 Deaths of third parties 0 2 5 Number of Accident with lost time (Lost Time Injury), of direct Employees 40 33 29 Frequency Rate of Injuries with lost time by direct employees (LTI Frequency Rate) (per million of worked hours ) 1.65 1.27 1.06 Number of aciddent with lost time (Lost Time injury), of indirect employees 14 26 16 Frequency Rate of Injuries with lost time by indirect employees (LTI Frequency Rate) (per million of worked hours ) (onsite) 0.51 0.77 0.47 Number of Days Lost (direct employees) (Calendar days) 3,141 3,335 2,927 Number of Days Lost (indirect employees) (Calendar days) 725 888 515

For this indicator CSI methodology was adopted that considers the deaths of direct employees (2) and indirect on-site (2), as shown above. The CSI methodology (Cement Sustainability Initiative - Cement Sector Initiative) also considers the indirect deaths off-site (6). Comment: CSI also considers third parties deaths (5). Not included in this classification are any people directly or indirectly employed in Votorantim Cimentos. Third parties usually include customers and visitors of the Company. Also included are drivers or passengers involved in accidents with vehicles off-site of the Company, but only if there is culpability of the Company.

128 Relatório Votorantim Industrial 26 SOCIAL PERFORMANCE - LABOR PRACTICES Occupational Health and Safety LA8 - Education, training, counseling, prevention and risk-control programs Page 74 in place to assist workforce members, their families or community members regarding serious illnesses COMPLETED Does the organization have training programs for employees, their families or community members regarding serious illnesses? The program covers 100% of employees and their families. Does the organization have training programs for employees, their families or community members regarding serious illnesses? The program covers 100% of employees and their families. Does the organization have training programs for employees, their families or community members regarding serious illnesses? The program covers 100% of employees and their families. Does the organization have training programs for employees, their families or community members regarding serious illnesses? 51.71% of the employees, and the program covers the family. Are there workers involved in occupational activities who have a high Principal risks: noise and mineral dust, working at heights, incidence or high risk for specific illnesses? confined environments, vehicles of varying sizes, high voltage; • Healthy Eating Program • More Life Program • Program for the Promotion of Health and Quality of Life • Program for the Prevention of Cardiovascular Risk • Prevention of Neoplasms Program • Program for Pregnant Women • Vaccination campaigns • EAP - Employee Assistance Program (professional service offers assessment, referral and brief counseling in order to assist employees and their families in resolving personal problems, Major Programs in 2012 • Risk Control and Prevention Program (nutrition, quality of life, respiratory protection, hearing conservation, ergonomics (for prevention of osteo-musculo-articular disease) • Therapeutic approach for risk factors in the orientation program to encourage giving up smoking and doing physical activity • Risk Control and Prevention Program (nutrition, quality of life, respiratory protection, hearing conservation, ergonomics (for prevention of osteo-musculo-articular disease) • Therapeutic approach for risk factors in the orientation program to encourage giving up smoking and doing physical activity • Daily Dialogues on safety

The value of LA1 reported includes only employees own assets. The total number of employees considered for this indicator includes: all Comment: of funcionáris VCBR and VCNA.

27 GRI Indices / Indicators Report for Votorantim Cimentos 129 SOCIAL PERFORMANCE - LABOR PRACTICES Training and Education Page 83 LA10 - Average hours of training per year per employee by employee category COMPLETED Calculation of the average number of hours of training per year, per employee, and per employee category 2010 2011 2012 Average Hours of Training - - 57.7 President/Director - - 11.9 Manager - - 30.7 Coordinator/Consultant - - 7.8 Technician/Analyst/Supervisor - - 10.6 Trainee - - 203.2 Operator - - 195.8 Intern - - 1.2 Apprentices - - 0.0

Comment: The number of employees considered for this indicator covers only Brazil. There is no traceability to the data for 2010 and 2011. Page 81 LA12 - Percentage of employees receiving regular performance and career development analysis COMPLETED Performance Assessment 2010 2011 2012 Employees with performance assessed (%) 99% Career Development Assessment 2010 2011 2012

Employees with performance assessed (%) 99%

The value of LA1 reported includes only own active employees. The total number of employees considered for this indicator includes: all employees VCBR Employees considered for this indicator cover: Comments Profit Sharing Program Assessment: Employees GS ≤ 28 Variable Pay Assessment: Employees GS ≥ 29 Employees holding positions from GS 36 to GS 39 (managers and general managers), shall be assessed by Differentiated Variable Pay.

130 Relatório Votorantim Industrial 28 SOCIAL PERFORMANCE - LABOR PRACTICES Diversity and Equal Opportunities LA13 - Composition of governance bodies and breakdown of employees Table of Contents per category according to gender, minority group membership and other indicators of diversity PARTIAL Composition of minority groups in the organization 2010 2011 2012 Employees over 50 years 662 726 856 Female 1,075 1,191 1,398 Composition of leadership 2010 2011 2012

Directors/President 13 13 13 Managers 178 193 226 Breakdown of employees per category according to gender and age range Position Age (%) Men Women Employees “Time of 2012 less than 30 30 to 50 over 50 years permanence (Years)” % % Director / Chairman 13 0 6 7 11.49 13 0 Manager / General Manager 226 7 179 40 8.5 190 36 Coordinator / Consultant 398 50 299 49 8.2 89 309 Technician / Analyst / Supervisor 1,468 331 991 146 7.65 342 1,126 Trainee 21 21 0 0 0.98 14 7 Operational 7,234 2,555 3,962 717 5.27 700 6,534 Subtotal employees 9,360 2,964 5,437 959 42.09 1,348 8,012 Intern 339 329 10 0 0.61 168 171 Apprentice 155 155 0 0 0.61 56 99 Total Intern / Apprentice 494 484 10 0 1.22 224 270 Total timed employees 9,854 3,448 5,447 959 43.31 1,572 8,282

Comments: The total number of employees does not consider VCNA employees. Interns and apprentices. LA14 - Ratio of basic salary of men to women Table of Contents by employee category NOT REPORTED Ratio of basic salary of men to women by employee category 2010 2011 2012 We do not manage salaries by gender. VC has not differentiate salaries between men and women. Our practice is to describe and evaluate job positions, classifying them into salary - - - groups (GS) according to their responsibilities such as operational, technical, managerial and financial, without any distinction or connection to the gender of the employee who holds, or may hold, the position.

29 GRI Indices / Indicators Report for Votorantim Cimentos 131 SOCIAL PERFORMANCE - LABOR PRACTICES Investment and Procurement Practices HR1 - Percentage and total number of significant investment agreements Table of Contents that include human rights clauses or that have undergone screening on human rights COMPLETED Total number of significant Total number of contracts investment that led the organization agreements that to a majority shareholding include human or to start an investment rights clauses Percentage of significant investment Total number project that has been or have undergone agreements that include human rights of significant considered relevant in a screening of clauses or have undergone a screening contracts the financial statements human rights of human rights 2010 2011 2012 260 256 98.46% Comments The contracts for the acquisition of strategic inputs have the above-mentioned clause, as well as the Terms of General Conditions for hiring contractors and buying materials. Only contracts that do not pass by one of those cited areas may not have such a clause. The human rights clause has been defined in a standard form to be inserted in all formal contracts.

HR2 - Percentage of significant suppliers and contractors that have Page 78 undergone screening on human rights and the measures taken COMPLETED

Percentage of contracts Total number Percentage of contracts with significant suppliers and with significant suppliers of significant contractors that have been rejected or required performance and contractors that included suppliers and conditions, or were subject to other actions as a result criteria or screening of contractors of screening related to human rights human rights 2010 2011 2012 139 47% 0% The information on the percentage of significant suppliers and contractors that have undergone screening on human rights and the actions that were taken began to be collected in 2011. In 2012, for providers of critical services, according to the procurement risk matrix, all suppliers must undergo a process of approval. In this case the supplier signs a document where it declares that it does not use Comments: compulsory or child labor. As from 2012 we began to use an indicator for approved suppliers. This evaluation is not audited; a self-assessment report is issued. The criteria for a significant supplier are: continuous service plus the critical nature of the input for production.

132 Relatório Votorantim Industrial 30 SOCIAL PERFORMANCE - LABOR PRACTICES Non-discrimination Pages 43 and 44 HR4 - Total number of incidents of discrimination and actions taken COMPLETED Discrimination cases 2010 2011 2012 Complaints received by the ombudsman - - - Cases deemed founded - 63 104 The number of complaints increased when compared to the previous year for the following reasons: • New communication strategies • Greater involvement of managers • Increased confidence of the users in the tool.

The data generated by the system is monitored daily. This information is reported monthly to the Audit Committee, and bimonthly Comments: to the Conduct Committee, in order to discuss the strategies to be adopted. Opportunity for improvement: Using data obtained by the ombudsman system in a strategic way, i.e. as a management tool to foster improvements in business ethics. Example: Focus on major cases and motives and using the tool for management. Success story: The implementation of policies and procedures for the Audit Committee and the Ombudsman was considered good practice, since it standardized guidelines, objectives, roles and responsibilities. We do not have a survey of discrimination cases which we reported through the complaints received by the Ombudsman.

Freedom of Association and Collective Bargaining HR5 - Operations identified in which the right to exercise freedom Pages 78 and 85 of association and collective bargaining may be at significant risk, and the actions taken to support these rights COMPLETED Period 2010 2011 2012 Operations where the right of employees to exercise freedom of association is at risk - - 0

In relation to the indicator which measures the operations identified in which the right to exercise freedom of association and collective bargaining may be at significant risk, and the actions taken to support these rights, there were no cases to report. Comments: The data generated by the system is monitored daily. This information is reported monthly to the audit committee, and bimonthly to the Conduct Committee, in order to discuss the strategies to be adopted.

31 GRI Indices / Indicators Report for Votorantim Cimentos 133 SOCIAL PERFORMANCE - LABOR PRACTICES Child Labor HR6 - Operations identified as having significant risk for incidents of child Pages 43 and 78 labor, and measures taken to contribute to the abolition of child labor COMPLETED Period 2012 The issues of compulsory and child labor are handled through the code of conduct and also through operational control audits. In the ombudsman system there is not presently any specific topic called compulsory or child labor. This will be inserted into the tool in 2013. However it is Number of operations that may be at risk for cases of children or young possible to make a complaint in these cases in other topics, workers being exposed to hazardous work such as image and reputation. Suppliers included in the blacklists of IBAMA or the Ministry of Labor are excluded by the SAP system. There is a control that automatically deletes these suppliers. In addition, there are specific clauses in contracts related to this topic.

Annual audit plans are prepared, in order to assess the main risks of each business unit. These plans are discussed and validated with the senior management of the business units so that they have a reasonable level of coverage according to the number of units of each business, applying also the principle of rotation of emphasis. Additionally the existence of an ombudsman, supported by a systemic tool that has proved to be reliable, facilitates the access of employees and other stakeholders if infractions are observed. Comment: The management process to collect information about operations identified as having significant risk for incidents of child labor, and measures taken to contribute to the elimination of child labor, includes the daily monitoring of the data generated by the system. This information is reported monthly to the Audit Committee, and bimonthly to the Conduct Committee, in order to discuss the strategies to be adopted. Forced or compulsory labor HR7 - Operations identified as having significant risk for incidents of forced or Pages 43 and 78 compulsory labor, and measures taken to contribute to the elimination of forced or compulsory labor COMPLETED Period 2012 Number of Operations with Risk of Forced or Slave Jobs 0

Annual audit plans are prepared, in order to assess the main risks of each business unit. These plans are discussed and validated with senior management of the business units so that they have a reasonable level of coverage according to the number of units of each business, also applying the emphasis rotation. Additionally the existence of an ombudsman, supported by a systemic tool that shows already Comments: consolidated, it makes the access of employees and other stakeholders easier if they see deviations.

Follow-ups of data generated in the system are performed daily. This information is reported monthly to the Audit Committee, and bimonthly to the Conduct Committee, in order to discuss the strategies to be adopted.

134 Relatório Votorantim Industrial 32 SOCIAL PERFORMANCE - LABOR PRACTICES Community SO1 - Nature, scope and effectiveness of any programs and practices Page 76 that assess and manage the impacts of operations on communities, including entering, operating and exiting PARTIAL There are Number of operations Percentage The organization’s How many people current programs for which the programs of Operations programs to were affected by to evaluate are applied for which manage impacts these programs the impacts the programs on the community of operations on are applied were effective local communities: in mitigating the negative impacts and maximize positive impacts 2010 2011 Before entering 2012 the community 3 N/A N/A 12,300 During operations in the community 22 16.5 N/A 88,769 During the decision-making process in order to leave the community N/A N/A N/A N/A Report examples of how feedback and analysis of data on community impacts provided information on measures aimed at the continuity of community engagement by the organization 2010 2011 2012 N/A The projects are managed by GPSV, which is a project management system developed by the Votorantim Institute to facilitate the flow of information and storage of projects supported by the Votorantim Group. It is available in a intranet environment, with access restricted to Votorantim management and registered external organizations, and includes the following functions: Registration of applicant organizations; sending of an invitation letter to the applicant to access the system; Inclusion of projects with flow analysis for different levels; monitoring of project results (Monitoring Report completed by the partner organization); registration of visits by Votorantim officials to the projects (Visit Report completed by the unit); preparation of reports with consolidated data on the results of supported projects (tool implemented in the 2nd half of 2012); and a database for presentations, supplementary reading and tools to support the social investment (ISE) planning.

Projects that took place during operations in the community: We considered the projects reported in the Votorantim Online Journal 2012. Among the projects that had a large number of beneficiaries were the following: Northeast Region: The project “Philharmonic - Nossa Senhora da Conceição”, organized by our Laranjeiras plant, cost R$ 350,000 and benefited approximately 4,500 people. The project “Jazz Festival”, organized by our Sobral plant, cost R$ 250,000 and benefited Comment: approximately 24,000 people. Southern Regional Projects: The project “Talking in the School”, organized by our Rio Branco do Sul plant, cost R$ 53,920 and benefited 3,880 people. The project “Athlete of the Future”, organized by our Rio Branco do Sul plant, cost R$ 400,000 and benefited 300 people. Regional Southeast: The project “Renovation and Expansion of Municipal Sports Gymnasium” organized by the Votorantim (SP) plant, cost R$ 495,000 and benefited 14,253 people. The project “Relampião - A Saga do Cansaço”, organized by the São Paulo unit, cost R$ 250,000 and benefited 6,400 people. North Central Regional: The project “Friends of Volleyball” (in Fercal, Guara and Planaltina), organized by our Sobradinho plant, cost R$ 446,000 and benefited 600 people. The project “Mato Grosso State Orchestra”, organized by our Nobres plant, cost R$ 175,000 and benefited 7,600 people. Innumerable projects are carried out even before the entry of the VC into the local community. For example, in 2012, projects were developed in the municipality of Primavera, where the plant is still under construction.

33 GRI Indices / Indicators Report for Votorantim Cimentos 135 SOCIAL PERFORMANCE - LABOR PRACTICES Corruption SO2 - Percentage and total number of business units analyzed for risks Table of Contents related to corruption COMPLETED Period 2010 2011 2012 Business divisions evaluated 226 208 Number of plants evaluated 44 18 Plants evaluated (%) 19% 8.65%

The reduction in the percentage of plants being evaluated was due to reevaluation of audit procedures in order to prioritize aspects Comments of management and strategy. SO3 - Percentage of employees trained in the organization’s anti-corruption Table of Contents policies and procedures COMPLETED Period 2010 2011 2012 Managers Trained (%) 47.1% Non-managers Trained (%) 28.2% Total Employees Trained (%) 29.5% All employees receive the company´s Code of Conduct, which presents the organization’s anti-corruption policies and procedures, which corresponds to 100% of employees We do not have indicators of previous years. “Managers”: employees in a functional category exceeding consultant. Comments: The values for this indicator refer only to VCBR employees. Apprentices and interns are not considered in the number of total employees. The total percentage of employees trained was calculated based on the total number of trained managers plus the total number of managers not trained.

Pages 43 and 44 SO4 - Actions taken in response to incidents of corruption COMPLETED Period 2010 2011 2012 Total number of employees punished or dismissed for corruption 19 39 Supplier contracts not renewed due to the occurrence of corruption 6 11 All employees (39) were dismissed and all suppliers (11) had their contracts blocked. In some cases a police investigation was initiated Comments: in order to recover amounts already paid. Public Policies SO5 - Public policy positions and participation in public policy development Table of Contents and lobbying COMPLETED 2010 Committee in which Company Representative they participate Name of Institution ABRAMAT - Brazilian Association of the Industry of Building Marcelo Chamma Director Materials Martin Vroegh Assurance Committee Coalition of Fair Construction Practices Martin Vroegh Environment Committee DRRCC - Durham Region Roundtable on Climate Change Luiz Alberto Castro Santos Chief of Strategic Planning FICEM- Federación Interamericana del Cemento Luiz Alberto Castro Santos Advisory Board SNIC - National Union of the Cement Industry Alan Svaiter Deri Board of Directors ABESC – Brazilian Association of Concreting Services John Moroz Vice Chair of Directors Board OSSGA – Ontario Stone Sand and Gravel Association Votorantim does not take a specific position in relation to public policy, but it takes positions in the formulation of public policy through Comments: the entities of which it is part. The lobbies and political positions taken by Votorantim go along with sustainability issues.

136 Relatório Votorantim Industrial 34 SOCIAL PERFORMANCE - LABOR PRACTICES Public Policies SO6 - Total value of financial and in-kind contributions to political parties, Table of contents politicians and related institutions by country COMPLETED Período 2010 2011 2012 Total das Contribuições (R$/Mil) * - 795,000 Up to now donations were made only to candidates in Brazil. The determination of total funds to be donated during an election period must be made by the Board of Directors. Votorantim makes electoral donations in a transparent and responsible way. All donations are recorded in the accounts of Votorantim. The accounting of donations and campaign spending may be monitored on the Superior Electoral Court’s website. Votorantim’s policy is to donate directly to the candidate for reasons of transparency. Donations are only made to political parties Comments: at the request of the candidate. The donation is for the establishment of public policies. Votorantim considers that the decision to donate funds to election campaigns by individuals is a personal matter, of exercising their citizenship, and that current legislation and ethical principles of democratic life should always be observed. It is worth emphasizing that no employee is permitted to link his/her personal donation to Votorantim’s name. Every donation is performed by VID, and is in alignment with the business divisions. Unfair competition SO7 - Total number of legal actions for anti-competitive behavior, anti-trust Page 37 and monopoly practices COMPLETED Period 2010 2011 2012 Total number of legal actions for anti-competitive behavior, anti-trust and monopoly practices - - 2 Legal actions which are ongoing for unfair competition, and monopoly and trust practices, up until 2012 Amount involved in administrative penalties received in the year - - 46,920 Amount involved in legal action filed against the company in the year - - 5,600,000,000

Comments: 1. The value of R$ 5.6 billion corresponds to a public civil action filed against the company for cartel formation. 2. For this subject, the data began to be published in reports addressed to stakeholders from 2012. In conformity SO8 - Monetary value of significant fines and total number of non-monetary Table of Contents sanctions for non-compliance with laws and regulations COMPLETED Period 2010 2011 2012 Total value of significant fines - - R$ 961,304,529.02 Number of non-monetary sanctions - - 2 Legal actions moved through arbitration mechanisms - - 0 In 2012 Votorantim conducted a review of internal procedures aimed at improving the management of this indicator. 1. The increase in the monetary value of fines was due to: • Implementation of the new corporate standard. Comments: • VC: The VCNA plants are now included. 2. This includes the requests received and amounts paid, including both the lawsuits filed and the administrative proceedings. 3. For this subject, the data began to be published in reports addressed to stakeholders from 2012. This includes the legal actions classified as “probable” and the values shown correspond to the amounts provided.

35 GRI Indices / Indicators Report for Votorantim Cimentos 137 SOCIAL PERFORMANCE - LABOR PRACTICES Customer Health and Safety PR1 - Life cycle stages of products and services in which health impacts are Table of Contents assessed for improvement, and the percentage of significant products NOT REPORTED and services categories subject to such procedures Period 2010 2011 2012 This indicator was not reported because it was not considered material - - - PR2 - Total number of incidents of non-compliance with regulations and Table of Contents voluntary codes concerning the health and safety impacts of products and services during the life cycle, by type of outcome COMPLETED Period 2010 2011 2012 0 0 0 Comments: We did not record any infraction notices regarding the use of VC products.

Labelling of Products and Services PR3 - Type information on products and services required by procedures, Table of Contents and percentage of significant products and services subject to such information requirements COMPLETED Period 2010 2011 2012 Percentage of products covered by labeling procedures (%) 100% The information required by the organization’s procedures relating to information and labeling of products and services Outsourcing of parts of the product or service 100% Content, particularly with respect to substances that may cause environmental or social impact N/A Safe use of the product or service 100% Disposal of the product and environmental / social impacts 0%

Comments: 100% of products were covered by labeling procedures PR5 - Practices related to customer satisfaction, including results of surveys Page 55 measuring customer satisfaction COMPLETED Period Period between reports 2010 2011 2012 Results for Level of Customer satisfaction with products and services offered by Votorantim Industrial (%) VC Bi-annual 87% Total - 87%

Areas of Trade Marketing and Legal were consulted to answer this PR. As they indicated, there is no evidence of incidents Comments of non-compliance with regulations and voluntary codes relating to Marketing and Communication.

138 Relatório Votorantim Industrial 36 SOCIAL PERFORMANCE - LABOR PRACTICES Marketing Communication PR6 - Programs for adherence to laws, standards and voluntary Table of Contents codes related to marketing communications, including advertising, NOT REPORTED promotion and sponsorship The indicator was not reported because it was not considered material. PR7 - Total number of incidents of non-compliance with regulations and Table of Contents voluntary codes concerning marketing communications, including advertising, promotion and sponsorship by type of outcome COMPLETED Period 2010 2011 2012 Cases of non-compliance with marketing regulations that resulted in a fine or penalty - - 0 Cases of non-compliance with marketing regulations that resulted in warning - 1 0 Cases of non-compliance with voluntary codes 1 0

The areas of Trade Marketing and Legal were consulted to respond on this indicator. There was no evidence of incidents Comments: of non-compliance with regulations and voluntary codes relating to Marketing and Communication. In conformity PR9 - Monetary value of fines (significant) for non-compliance with laws Table of Contents and regulations concerning the provision and use of products and services COMPLETED Period 2010 2011 2012 Significant fines - - R$3,669,546.74 1. The increase in the monetary value of fines was due to: • Implementation of the new corporate standard. Comments: • VC: The VCNA plants are now included. 2. This includes the requests received and amounts paid, including both lawsuits filed and administrative proceedings. 3. This includes the legal actions classified as “probable” and the values shown correspond to the amounts provided. Mining Sector Indicators MM2 - Total number of units that have a biodiversity management plan Page 68 in accordance with the law COMPLETO Period 2010 2011 2012 The number of units that have a biodiversity management plan - - 2 Percentage of units that have a biodiversity management plan - - 2.44%

We considered 48 units in VCBR and 34 in VCNA with 57.32% overlap in areas of high biodiversity value. Analyzing units with rehabilitation plans, 48 VCBR units, 10.41% have rehabilitation plans. From the 34 considered VCNA units, 100% have rehabilitation plans. The weighted average value found and considering VCBR Comments: and is 48.78%. When evaluating units with Management Plan for Biodiversity values are: 48 VCBR units considereds 2.44% (2 units) have Biodiversity Management Plans. VCNA units do not have this survey. Table of Contents MM10 - Number and percentage of operations with closure plans COMPLETED Period 2010 2011 2012 Number of company operations that have closure plans - - 39 Percentage in relation to the total number of operations - - 49%

48 VCBR plants were considered, and of these five have decommissioning plan. For VCNA 34 plants were considered and all have decommissioning plan. Comments: We intend by 2020 to have decommissioning plans for all plants and mines. These plans follow international consolidated methodologies and management is carried out by the unit with corporate support and monitoring.

37 GRI Indices / Indicators Report for Votorantim Cimentos 139 SOCIAL PERFORMANCE - LABOR PRACTICES DMAs – DISCLOSURES ON MANAGEMENT APPROACH /FORMS OF MANAGEMENT DMA Dimension Aspect Level of Reporting Page 6, Table of contents Economic Performance Completed EC2 and EC3 Table of contents Market Presence Completed EC6 and EC7 Economic Table of contents EC indicators Indirect Economic Impacts Completed EC8 Materials Completed 31, 60 Energy Completed 31, 56 Water Completed 31, 61 Biodiversity Completed 31,68, 69 31, 62, 63,64, 65,66, Emissions, Effluents, and Waste Completed 67 Products and Services Completed 55, 60, 62, 63 Table of contents Conformance Completed EN28 Environmental Transportation Completed 31, 70 EN Indicators General Completed 55, 56 Employment Completed 80 Relations between Workers and Management Completed 80 Occupational Health and Safety Completed 72.73 Labor Training and Education Completed 80, 81, 81 LA Indicators Diversity and Equal Opportunities Completed 84 Management and Investment Practices Parcial 55, 78, 79 Non-discrimination Completed 44, 79 Freedom of Association Completed 43,80,85 Child Labor Completed 79 Forced/Compulsory Labor Completed 79 Human Rights Safety Practices Completed 72 HR Indicators Rights of Indigenous Peoples Completed 89 Community Completed 76 44, Table of contents Corruption Completed SO3 Table of contents Public Policy Completed SO6 Anticompetitive behavior Completed 37 Society Table of contents SO Indicators Conformance Completed SO8 Customer Health and Safety Partial 31 Labeling of Products and Services Partial 55 Table of contents Marketing Communications Partial PR7 Customer Privacy No Non-material Product Table of contents PR Indicators Compliance Completed PR9

140 Relatório Votorantim Industrial 38 Financial Statements

142. Consolidated Balance Sheet

144. Consolidated Income Statement

145. Consolidated Statement of Comprehensive Income

146. Consolidated Statement of Changes to Net Worth

148. Consolidated Cash Flow Statement

Financial Statements Report for Votorantim Cimentos 141 Balance Sheet

Assets Grade 2012 2011 Liabilities and equity Grade 2012 2011

Current Current Cash and cash equivalents 9 969,546 225,130 Loans and financing 18 615,813 413,551 Cash investments 10 2,032,431 1,450,510 Suppliers 856,226 662,532 Receivables from customers 11 910,690 786,077 Payroll and social security contributions 227,543 151,373 Inventories 12 1,182,101 890,668 Income tax and social contribution 51,186 132,882 Taxes recoverable 13 176,195 149,316 Taxes payable 207,497 181,473 Income tax and social contribution 13 83,920 23,554 Dividends payable 14 439,122 274,031 Advances to suppliers 110,174 118,425 Advances from customers 18,622 14,370 Dividends receivable 512 7,552 Accounts payable in purchasing shares 328,452 Other assets 138,957 140,336 Accounts payable - Trading 22 53,784 36,826 Accounts payable 105,315 57,993 5,604,526 3,791,568 Use of public property - UBP 19 23,561 22,005 Other liabilities 332,129 211,269 Assets held for sale 31 701,214 3,259,250 2,158,305 6,305,740 3,791,568 Liabilities with assets held for sale 31 274,104

3,533,354 2,158,305 Noncurrent Noncurrent Related Parties 14 16,418 52,764 Loans and financing 18 12,177,174 12,177,174 Deposits in Court 246,470 149,432 Related parties 14 486,597 486,597 Income tax and social contribution taxes 20(b) 971,979 759,140 Provisions 21 1,070,799 1,070,799 Taxes recoverable 13 41,296 14,923 Income tax and deferred social contribution 20(b) 842,721 842,721 Other assets 253,983 199,305 Payables with investees Use of public property - UBP 19 381,585 381,585 1,530,146 1,175,564 Pension plan 29 184,812 184,812 Other liabilities 377,166 377,166

15,520,854 11,052,475

19,054,208 13,210,780 Investiments 15 1,800,304 3,241,411 Fixed Assets 16 9,527,427 6,954,265 Net worth 23 Intangible 17 4,798,437 3,466,389 Joint-stock 2,746,024 2,746,024 Tax incentive reserve 544,441 360,648 16,126,168 13,662,065 Profit reserves 789,781 1,963,935 Equity valuation adjustments 577,725 155,762 Equity attributable to shareholders 4,657,971 5,226,369 Participation of non-controlling shareholders 249,875 192,048 Total equity 4,907,846 5,418,417

Total assets 23,962,054 18,629,197 Total liabilities and equity 23,962,054 18,629,197

On balance were considered VCEAA values. Detailed figures can be viewed in the VCSA DF grade 17 item d.

142 Balance Sheet

Assets Grade 2012 2011 Liabilities and equity Grade 2012 2011

15,520,854 11,052,475

Total assets 23,962,054 18,629,197 Total liabilities and equity 23,962,054 18,629,197

On balance were considered VCEAA values. Detailed figures can be viewed in the VCSA DF grade 17 item d.

Financial Statements Report for Votorantim Cimentos 143 Consolidated Income Statement

Consolidated Grade 2012 2011 Revenue 24 9,481,673 8,698,352 Cost of goods sold and services rendered (6,177,116) (5,684,439)

Gross profit 3,304,557 3,013,913

Operating revenues (expenses) With sales (609,992) (595,402) General and administrative (668,007) (529,991) Gain on sale of Cimpor 1(a) 266,774 Other net, operation income (expense) 25 284,779 (295,932)

(726,446) (1,421,325)

Operating profit before equity and financial results 2,578,111 1,592,588

Results of shareholdings Realization of other comprehensive income in decrease of Cimpor investments 1 (a) (170,075) Equity accounting 15 25,461 311,753 (144,614) 311,753 Net financial income Financial income 28 316,496 204,862 Financial expenses 28 (869,941) (723,633) Exchange rate changes, net 28 (381,819) (253,643) (935,264) (772,414)

Income before income tax and social contribution 1,498,233 1,131,927

Income tax and social contribution Current 20(a) (359,199) (478,071) Deferred 20(b) 501,449 200,936

Profit for the year 1,640,483 854,792

Net income attributable to controlling shareholders 1,616,799 835,445 Net income attributable to minority shareholders 23,684 19,347

Profit for the year 1,640,483 854,792

Basic and diluted earnings per share - R$ 14,61 7,57 Number of shares 110,635 110,410

144 Consolidated Income Statement

Consolidated 2012 2011

Profit for the year 1,640,483 854,792

Other components of comprehensive income in the year “Realization of other comprehensive income in the low investment in Cimpor“ 89,142 Participation in other comprehensive income of investees (7,692) (837) Gains (losses) with retirement benefit (36,273) (25,265) Hedge accounting of net investments abroad (107,085) (155,446) Exchange variation of investees located abroad 483,751 412,307

Other components of comprehensive income 421,843 230,759

Total of comprehensive income for the year 2,062,326 1,085,551 2,062,326 1,085,551 Comprehensive income attributable to shareholders Controllers 2,038,762 1,079,951 Non-controlling 23,564 5,600

- -

Consolidated Statement of Comprehensive Income

Year ended in December 31st

In thousands of Reais

Controller Consolidated 2012 2011 2012 2011 Net Profit for the year 1,616,799 835,445 1,640,483 854,792 Other components of the income Comprehensive year Realization of other comprehensive income in low investment from Cimpor 89,142 89,142

Participation in other comprehensive income of investees -7,629 -837 -7,629 -837 Gains (losses) on retirement benefits -36,273 -25,265 -36,273 -25,265 Hedge accounting of net investments abroad -107,085 -155,446 -107,085 -155,446 Exchange Variation of investees located abroad 483,871 426,054 483,871 412,307 Other components of the comprehensive Income in the year 421,963 244,506 421,963 230,759 Total of comprehensive income for the year 2,038,762 1,079,951 2,062,326 1,085,551 Comprehensive income attributable to shareholders Controllers 2,038,762 1,079,951 Non-controllers 23,564 5,600

Financial Statements Report for Votorantim Cimentos 145 Statement of Changes in Equity

Attributable to shareholders of the parent

Profit reserves Valuation asset Participation of Grade Joint-stock Legal Withholding Accrued profits adjustments Total non controllers Net worth

On January 01st of 2011 2,327,212 227,732 2,187,350 (88,744) 4,653,550 186,448 4,839,998

Total Profit for the year Net profit for the year 835,445 835,445 19,347 854,792 components of comprehensive income 244,506 244,506 (13,747) 230,759

Total comprehensive income for the year 835,445 244,506 1,079,951 5,600 1,085,551

Total contributions by shareholders and distributions to shareholders Increase in joint-stock 23 (a) 418,812 (400,000) 18,812 18,812 Allocation of net income in the year Constitution of reserve for tax incentives 92 (84,342) (55,585) (139,835) (139,835) Legal reserve 23 (b) 44,406 (44,406) Dividends (R$ 6.76 per share) 23 (e) (746,757) (746,757) (746,757) Retained earnings 23 (b) 735,454 (735,454) Total contributions by shareholders and distributions to shareholders 418,812 44,498 (495,645) (835,445) (867,780) (867,780) On December 31st of 2011 2,746,024 272,230 1,691,705 155,762 4,865,721 192,048 5,057,769

Attributable to shareholders of the parent Participation of Earnings reserves Valuation asset noncontroller Grade Joint-stock Legal Withdrawal Accrued profits adjustments Total shareholders Net worth

On January 31st of 2012 2,746,024 272,230 1,691,705 155,762 4,865,721 192,048 5,057,769 Total comprehensive income for the year Net profit for the year 1,616,799 1,616,799 23,684 1,640,483 Other components of the income comprehensive for the year 421,963 421,963 (120) 421,843

Total comprehensive income for the year 1,616,799 421,963 2,038,762 23,564 2,062,326

“Total contributions by shareholders and distributions to shareholders” Participation of Non-controllers in a business combination 1(a) 68,953 68,953 Incorporation of Votorantim Cimentos América (“VCA”) 2.2(d) (32,707) (32,707) Increase in shareholder participation Non-controllers Itacamba 1(c ) (1,983) (1,983) Allocation of net income Legal reserve 23 (b) 80,840 (80,840) Constitution of reserve for tax incentives (183,793) (183,793) (183,793) Interest on net equity (R$ 1.61 per share) 23 (e) (178,667) (178,667) (178,667) Dividends (R$ 21.95 per share) 23 (e) (1,562,988) (865,505) (2,428,493) (2,428,493) Retained earnings 23 (b) 307,994 (307,994) “Total contributions by shareholders and distributions to shareholders” 80,840 (1,254,994) (1,616,799) (2,790,953) 34,263 (2,756,690) On December 31st of 2012 2,746,024 353,070 436,711 577,725 4,113,530 249,875 4,363,405

2,746,024 789,781 - 577,725 4,657,971 249,875 4,907,846

146 Statement of Changes in Equity

Attributable to shareholders of the parent

Profit reserves Valuation asset Participation of Grade Joint-stock Legal Withholding Accrued profits adjustments Total non controllers Net worth

On January 01st of 2011 2,327,212 227,732 2,187,350 (88,744) 4,653,550 186,448 4,839,998

Total Profit for the year Net profit for the year 835,445 835,445 19,347 854,792 components of comprehensive income 244,506 244,506 (13,747) 230,759

Total comprehensive income for the year 835,445 244,506 1,079,951 5,600 1,085,551

Attributable to shareholders of the parent Participation of Earnings reserves Valuation asset noncontroller Grade Joint-stock Legal Withdrawal Accrued profits adjustments Total shareholders Net worth

Total comprehensive income for the year 1,616,799 421,963 2,038,762 23,564 2,062,326

2,746,024 789,781 - 577,725 4,657,971 249,875 4,907,846

Financial Statements Report for Votorantim Cimentos 147 Statements of Cash Flows

Consolidated Grade 2012 2011 Cash flow from operating activities

Earnings before income tax and social contribution 1,498,233 1,131,927

Adjustments to reconcile net income to net cash provided by operating activities Depreciation, amortization and depletion 16 e 17 558,279 441,055 Decrease of noncurrent assets Loss on sale of investment in Yguazú 1(e) 7,657 Gain on sale of fixed assets (16,789) Realization of other comprehensive Income of Cimpor 1(a) 170,075 Equity accounting 15(a) (25,461) (311,753) Gain on remeasurement of fair value of initial investment in Cimpor 1(a) (266,774) Gain on asset swap 1(a) (20,896) Provision for doubtful accounts 11 11,077 1,922 Provision (reversal) for losses on inventories (16,217) (21,547) Interest, monetary and exchange rate 1,227,412 838,651 Provisions and tax liabilities 21(b) 138,432 153,817 Impairment de investments 586,538

3,285,924 2,799,714 Changes in assets and liabilities Cash investments (581,921) (266,530) Receivables from customers 166,802 (108,437) Inventories (14,311) (72,285) Taxes recoverable (11,524) (66,706) Related parties (65,183) (124,939) Other assets 153,456 (134,960) Suppliers (24,775) 24,004 Taxes payable (24,669) 10,558 Payroll and social security contributions 76,170 39,987 Advances from customers 4,252 (11,918) Accounts payable and other liabilities (303,492) (200,053)

Cash from operations 2,660,729 1,888,435 Interest paid 18(b) (719,109) (550,229) Income tax and social contribution paid (519,525) (531,553)

“Net cash from operating activities” 1,422,095 806,653

Cash flow from investing activities Increase in capital invested 15(b) (58,602) (11,759) Acquisition of Cementos Portland 15(a) (56,570) Acquisition of fixed assets 16 (1,500,091) (1,723,061) Increase in intangible assets 17 (41,332) (152,020) Increase in capital of VCEAA Net cash obtained in acquisition of VCEAA 17(d) 148,799 Cash from the merger of CCRG Proceeds from sale of investmentsYguazú 30,535 Proceeds from sale investment fixed asset 20,064 232,912 Dividends received 193,377 156,590

148 Statements of Cash Flows

Consolidated Grade 2012 2011 Net cash used in activities of investment (1,207,250) (1,553,908)

Cash flow from activities of financing Borrowings 18(c) 3,674,624 2,434,303 Payment of loans and financing 18(c) (513,499) (143,958) Share capital increase 23(a) 18,812 Changes in related parties, net (207,001) (692,693) Interest on net equity 23(e) (178,667) Dividends paid (2,263,402) (683,782)

Net cash used in activities of financing 512,055 932,682

Change in cash and cash equivalents to cash from companies abroad 17,516 14,755

Increase (decrease) in cash and cash equivalents 726,900 185,427

Cash and cash equivalents in beginning of the year 225,130 24,948

Cash and cash equivalents in the end of the year 969,546 225,130

- - 744,416 200,182

Explanatory notes are available on the website of Votorantim: http://www.vcimentos.com.br/htms-ptb/Institucional/DemonstracoesFinanceiras.htm

Financial Statements Report for Votorantim Cimentos 149 Report Production General Coordination and Production

Technical Directory – Corporate Environmental Management Independent Auditor of GRI Indicators and Financial Information Person Responsible: Patrícia Monteiro Montenegro PwC Auditores Independentes

Coordination: Janaina de Oliveira Barros GRI Opinion Global Reporting Initiative (GRI) Production Team: Elisa Badziack and Regiane Velozo Dias. Translation Support Team: Andressa Depetriz Marcelino, Lívia Ballot English: Richard Wightwick de Miranda, Isadora Maria Barbosa de Lima Araújo and Carolina Moreira Meira. Photographs Banco de Imagens Votorantim Cimentos, VC Contributors: Bruna Bedim, Barbara Almeida, Gisele Bagoli, Banco de Imagens VCNA Michelle Dias, Dirley Antonio Maya, Alexandre Teixeira Borges Padula, Simone Vilela Lopes, Patricia Barçante Pires, Adriana Graphic Design Laporta Cardinali, Maximiliano Echavarri, Paulo Borrego, Cristiano fmcom Fernandes da Silva, Edson Serapicos, Simone Vilela Lopes, Carolina Simonetti, Frederico Cruvinel, Camila Tosta, Patrícia Ramalho Diniz, Printing and Finishing Daniel Motta, Maria de Fátima Peixoto Nascimento, Martin Vroegh, Gráfica WE Joe Horton, Geoff Bingham, Stephen Gallagher, Colin Evans, John Vanderpas, John Moroz, James Munro, Richard Olsen, Adriana Print Run: 40 copies Villarinho de Lima, Maikon Cristofer Melo, Ana Paula Santana dos Santos and Maurício Caetano de Mello. Paper: FSC Certified Duo Design 300 g/m²

Instituto Votorantim Typography Rafael Luis Pompeia Gioielli Frutiger, Adrian Frutiger, 1975

Votorantim Industrial - VID Publication Date David Canassa October/2013

Editorial Consultant Contacts: Eduardo Dantas Votorantim Cimentos Praça Professor José Lannes, 40, 9º andar. GRI ConsultantI Itaim Bibi– São Paulo – SP Deloitte Touche Tohmatsu CEP: 04126-110 C/O: Corporate Environmental Management Independent External Assurer Cláudio José Andrade - Relatto Comunicação e Sustentabilidade Ltda. E-mail: [email protected]

150 www.votorantim.com [email protected] Integrated R eport 2012 Integrated