Sustainability Report 2015 Base Year Message from the Ceo

SUSTAINABILITY REPORT 2015 BASE YEAR MESSAGE FROM THE CEO

It is my great pleasure to present the Sustainability Report for Fiscal Year 2015.

In it, we sought to record the main events and indicators of our management during the period. At the base of its all is our commitment to transparency and to showing the social, environmental and economic aspects of Usiminas.

From the social point of view, we contribute to the progress of the communities we operate in.

In regard to the environment, the management of our business units increasingly seeks greater awareness and efﬁ ciency in the use of natural resources.

From the economic standpoint, we report on the Brazilian outlook, with its consequences on the steel market and on our results.

We are aware of our challenges, but we also know our potential.

This undoubtedly allows us to always move forward, working towards a more sustainable Usiminas.

I hope you enjoy reading the report.

Rômel Erwin de Souza CEO A USIMINAS Profile

Fifty-three years after its incorporation, today Usiminas is one of Latin America’s largest steel complexes.

The Company’s vocation as an industry is to supply quality ﬂ at steel and services with innovative technology. Its solutions permeate the most strategic production chains: automotive and auto parts, household appliances, energy, industrial machinery, civil construction and more.

To this end, Usiminas invests in modernizing its facilities and products with differentiated technological content, always in line with world research and application trends.

At the base of it all, the Company’s qualiﬁ ed workforce combines experience and capability to achieve efﬁ ciency and productivity.

Those who seek excellence know that development can be shared. Usimi- nas works in a sustainable manner and as a good corporate citizen.

Through the São Francisco Xavier Foundation (Fundação São Francisco Xa- vier), we invest in education and healthcare. The Usiminas Cultural Insti- tute (Instituto Cultural Usiminas) supports culture and sport. And we also promote environmental initiatives such as the Xerimbabo Project, which has welcomed more than two million visitors over almost three decades.

Usiminas contributes towards building a sustainable future, with innovation, know how and quality. BUSINESS UNITS

Usiminas

Usiminas has two steel mills, in Ipatinga, in the Vale do Aço, MG region, and in Cubatão, in the Baixada Santista, SP. The integration of the mills makes it possible to offer the market a diversiﬁ ed portfolio of ﬂ at steel, in particular products of high technological content. The Ipatinga plant also has the Unigal facility, which makes hot dip galvanized steel. Find out more at usiminas.com.

Mineração Usiminas

The iron ore mines produce pellet feed, sinter feed and granulates for Usiminas’ own use and for sale at home and abroad. Investments in the production line have led to gains in scale and quality. Find out more at usiminas.com/mineracao.

Soluções Usiminas

A modern steel processing infrastructure transforms Usiminas products into rolls, blanks, pipes, welded assemblies, proﬁ les, structures, metal disks, etc. These parts are made to order for the market and delivered to customers through an efﬁ cient logistics system. Find out more at usiminas.com/solucoes.

Usiminas Mecânica

Manufacturer of capital goods for heavy industry, each of its projects bears the stamp of quality, technical rigor and credibility. It operates in the segments of industrial equipment, assemblies, railcars and foundry casting, bridges, structures and blanks. Find out more at usiminas.com/ mecanica.

EFFICIENT LOGISTICS

Usiminas offers differentiated services, with inventory management and scheduled deliveries. The company is linked to a major rail network, which generates efﬁ ciency. Of particular note is our sharehol- ding in MRS Logística, the concessionaire for a network of 1643 km in the States of Minas Gerais, Rio de Janeiro and São Paulo, connecting the country’s major consumer and production centers.

Two private mixed-use port terminals supplement the logistics structure and make it possible to deliver Usiminas products throughout Brazil and the world: the Praia Mole Private Terminal, in Espírito Santo State, in which Usiminas has a stake; and the Cubatão Private Mariti- me Terminal in São Paulo State. WHERE WE ARE TIMELINE

The 1960s

Usiminas starts up operations in Ipatinga, MG, on October 26, 1962.

1962 – The Intendente Câmara plant is opened on October 26, in Ipatinga, MG, with the ﬁ ring of the No. 1 Blast Furnace.

1964 – Steel exports start with the loading of the ﬁ rst shipment of labs to Argentina, on board the vessel “San Miguel”, at the port of Vitória.

1965 – Inauguration oh the Hot Strips Mill, the second coke oven battery, the Hot Strip ﬁ nishing line, the second blast furnace and Cold Strip Mill. This equipment completes the cycle and permits integrated production at the Ipatinga plant.

1969 – Usiminas ends the decade as supplier of 50% of domestic demand for heavy plates, mainly for the shipbuilding and rail sectors.

The 1970s

The pinnacle of the so-called “Economic Miracle”. Usiminas invests to meet the vigorous expansion cycle of Brazilian industry.

1970 – Usiminas Mecânica is founded to add value to the capital goods and infrastructure sector.

1971 – Inauguration of the Ipatinga Plant Research Center, the largest in the Latin American steel sector.

1974 – No. 3 Blast Furnace starts up at the Ipatinga plant.

The 1980s

Brazil falls into recession. The circumstances demand prudence, but without missing opportunities for modernization and enhancing quality in the long term.

1982 – Usiminas develops and initiates production of SAC steel (weldable, high-strength and more corrosion-resistant), for the civil construction and infrastructure industry.

1984 – The Xerimbabo Project gets under way, providing environmental education for the community.

1989 – Engineers begin to be certiﬁ ed by the American Society for Quality, a global leader in quality. The 1990s

With the liberalization of the Brazilian economy, Usiminas is the ﬁ rst state-owned company in the country to be privatized.

1991 – The Usiminas privatization auction marks the start of the National Privatization Program (Programa Nacional de Desestatização or PND).

1993 – The Usiminas Cultural Institute (Instituto Cultural Usiminas) is established. In this year Usiminas also acquires a part of the controlling interest in Companhia Siderúrgica Paulista (Cosipa), located in Cubatão (SP), broadening the group’s customer base.

1996 – Usiminas becomes the ﬁ rst steel mill in Brazil, and the second in the world, to obtain the ISO 14001 certiﬁ cate (for environmental management).

1999 – Inauguration of the most modern cold rolling line in the country – No. 2 Cold Rolling Line.

The 2000s

The Brazilian economy is expanding rapidly and Usiminas gets even closer to sectors that demand high added value.

2000 – Unigal is incorporated as a joint venture between Usiminas and Nippon Steel & Sumitomo Metal Corporation.

2007 – Usiminas products are certiﬁ ed under European ELV and RoHS standards, for environmentally correct manufacturing.

2009 – Soluções Usiminas is created.

The 2010s

Usiminas attains a new level of technology, operating on an integrated basis and investing in the future, in the face of market challenges.

2010 – Mineração Usiminas is created. The Sincron heavy plates line is also launched in this year, a high-performance product suitable to meet the needs of the pre-salt oil exploration and the shipbuilding industry.

2011 – Unigal starts up a new hot dip galvanization line.

2012 – New Hot-Rolled Strip line opened at the Cubatão plant, one of the most modern in operation worldwide.

2014 – Completion of Project Friáveis, increasing the production capacity of Mineração Usiminas from 8 to 12 million tons. The No. 3 Pickling line comes on stream at the Cubatão plant.

2015 – The Fiat-Chrysler Automobiles (FCA) group opens its Jeep factory in Brazil, in Goiana-PE, with Usiminas as a partner supplying steel for manufacturing vehicles. Soluções Usiminas is also involved, providing cutting services and product inventory facilities. CORPORATE GOVERNANCE

Usiminas has adopted a model of corporate governance that will create value for shareholders and business partners. This model is based on secu- rity for investors, transparency, management control and clarity in communications.

Corporate governance practices include the instatement of a permanent Fiscal Council, in addition to internal human resources and audit committees. The company is also structured to meet government and market requirements for listed companies, preserving and encouraging transparency in reporting.

Corporate governance at Usiminas also includes:

• Risk control; • Presentation of accounts according to international standards; • A code of conduct for all group companies; • Shares traded on BM&FBovespa (level I), in Brazil; on the over-the -counter market in the USA (ADR – level I); and on Latibex, in Madrid.

Usiminas shares are listed on BM&FBOVESPA, under codes USIM3, USIM5 and USIM6; in New York (OTC), as level 1 ADRs, under codes USDMY and US- NZY; and in Madrid (Latibex), under codes XUSI and XUSIO. Usiminas paper is included in some of the chief market indices.

The Company has 1,013,786,190 shares, about 50% of them common (voting) shares and 50% preferred. The voting capital is made up as follows: The Board of Directors, part of the Usiminas organizational structure, provides overall operating guidance, deciding on strategic issues, deﬁ ning policy and ensuring that the Company’s business purpose is observed.

The Board has four ordinary meetings per year, according to a ﬁ xed schedule, and holds extraordinary meetings when corporate interests so require.

On December 31, 2015, the Board consisted of ten full members, each with an alternate, elected at the Shareholders’ Meeting with a two-year term of ofﬁ ce, reelection being permitted.

Members of the Board of Directors*

Paulo Penido Pinto Marques Elias de Matos Brito Oscar Montero Martinez Yoichi Furuta Fumihiko Wada José Oscar Costa de Andrade Marcelo Gasparino da Silva Rita Rebelo Horta de Assis Fonseca Roberto Caiuby Vidigal Lírio Albino Parisotto, licenciado, sendo substituído pelo conselheiro suplen- te Mauro Gentile Rodrigues da Cunha

*on 31/12/2015

The Usiminas Board of Directors has two internal committees: Human Re- sources and Audit. Their key purpose is to advise, instruct and assist deci- sion-making by the Board on speciﬁ c matters.

Meetings may be attended by employees, specialists and others who may contribute to explaining the matters under discussion. Each committee has its internal regulations, approved by the Board, setting operating rules, res- ponsibilities and duties.

Members of the Human Resources Committee*

Rodrigo Piña (Coordinator) Horácio Autério Tatsuya Miyahara Paulo Penido Pinto Marques Rita Rebelo Horta de Assis Fonseca

*on 31/12/2015

Members of the Audit Committee*

Takaaki Hirose (Coordinator) Paulo Penido Pinto Marques Claudio Gabriel Gugliuzza Horácio Autério

*on 31/12/2015 The Fiscal Council consists of up to ﬁ ve members elected by the Sharehol- ders’ Meeting. It operates on a permanent basis, monitoring the management of the Company.

Full members of the Fiscal Council *

Lúcio de Lima Pires Domenica Eisenstein Noronha Masato Ninomiya Paulo Frank Coelho da Rocha Julio Sérgio de Souza Cardozo

*on 31/12/2015

The Statutory Executive Board of Usiminas is responsible for setting guidelines for the executives and for conducting the management of the Com- pany. Its objective is to ensure that products and services are of good quality and competitive in the market, and that the business is sustainable. Its members are elected by the Board of Directors for a two-year term of ofﬁ ce, with reelection being permitted.

Officers of the Statutory Executive Board*

Rômel Erwin de Souza – CEO and Vice President for Technology and Quality Nobuhiko Takamatsu –Corporate Planning Vice President Ronald Seckelmann –Finance and Investor Relations Vice President and Subsidiaries Vice President Sergio Leite de Andrade – Commercial Vice President Tulio Chipoletti –Industrial Vice President

*on 31/12/2015

CODE OF CONDUCT

The purpose of the Usiminas Code of Conduct is to guide the Com- pany’s relationship with its internal and external stakeholders. All employees, representatives and contractors must comply with the principles contained in the document, and observe and respect the law in force in the places where the Company operates. The Code of Conduct serves as a reference for relationships with customers, suppliers, investors, government, competitors and the public. STRATEGY MANAGEMENT’S FOCUS • To consolidate our share of the domestic market, through technology, quality and exceptional service, and to seek proﬁ table opportunities in the overseas market; • To cut production costs, keeping them in balance with the Company’s operating needs; • To align the industrial structure with the realities of the market, by adjusting the production scale; • To keep investments and working capital under strict control; • To invest in training, to ensure higher productivity and to keep internal stakeholders engaged; • To develop the company sustainably, balancing economic, social and environmental aspects.

CHANGES IN PRODUCTION

2015 was a challenging year for the steel sector, and this provided Usiminas an opportunity to ﬁ nd ways of reinforcing our competitiveness in the market. One of the key measures adopted was to align production capacity with the current reality of demand in the industry. Accordingly, some restructuring of operations began in May, with one blast furnace at the Ipatinga plant and another at Cubatão being shut down. This was followed in September by the shutting down of the heavy plate mill at the Baixada Santista unit.

In order to reposition the company on a more viable scale, in October Usiminas announced the temporary shutdown of production in the primary area of the Cubatão plant. The process was completed at the beginning of February 2015, with due care for safety and environmental standards. This adjustment, however, will not put at risk the ﬁ nal product delivered to the Company’s customers, since the rolling areas and the port terminal are continuing to operate. The Company is thus ensuring that the market for its products and services will be met in full by the Cubatão plant, together with the portfolio and structure of the Ipatinga plant. PRODUCTS AND MARKETS Usiminas is constantly improving the structure of its service to customers and expanding business opportunities. For this purpose, a differenciated product line and a high degree of technology is available.

GALVANIZED

SLAB CASTER SLABS HEAVY PLATES HOT COILS COLD COILS EG HDG

The integration of the range of products and services offered by Usiminas guarantees unique and competitive solutions for diverse strategically important segments of the market, such as:

Automobiles and Machinery and Household Civil Construction Oil and Gas Pipelines Auto parts appliances Equipment

COMPETITIVE ADVANTAGES

To meet competition and the challenges of the current economic scenario, Usiminas is relying on modernizing and integrating its production chain, in order to add more value to its products. The market recognizes Usiminas for its competitive advantages, ranging from exclusive products to integrated logistics, which set it apart from the competition: • Vocation and knowhow for developing steels with high technological content, such as high-strength steel for the auto industry and heavy plates from the Sincron line for the oil and gas chain; • The Usiminas Research and Development Center, a benchmark in Latin America, set up in 1971, which supports new product development and industrial processes; • Technologically modern rolling and galvanizing lines, which allow us to offer special steels with greater productivity; • Production and distribution units and a broad logistics network, strategically located to provide efﬁ cient service to customers in industrial hubs throughout Brazil; • Applied engineering services, which foment joint development with the customers and their markets.

RESEARCH

The Usiminas Research and Development Center in Ipatinga (MG) works to create, master, apply and disseminate scientiﬁ c and technological know how, which offers the Company competitive advantages. This knowhow is applied above all in developing new products; identifying and engineering steel applications; improving industrial processes; identifying and analyzing raw materials, inputs, by-products and diverse materials related to the steel production process; conserving the environment; and identifying and evaluating new technology and new business.

TWO RESEARCH AND DEVELOPMENT HIGHLIGHTS

Development of FB580-EG steel for use in the auto industry

The opportunity to develop a product that doesn’t exist in the market, based on the demand from a company in the Brazilian automotive industry was the starting point for creating FB580-EG steel. To enable the customer to reduce the percentage of rejects and reworking in the manufacture of critical parts, Usiminas developed a steel grade with high yield strength, exceptional ability to absorb intense localized deformations and high anti-corrosion resistance.

The product was developed in record time, carried out initially at the R&D center where several options were investigated and tested to achieve the characteristics required, with the possibility of manufacture on an industrial scale. Thereafter, experiments were conducted at the Ipatinga plant, with emphasis on adjusting processes so that the ﬁ nal product could exhibit optimal conditions, taking into account quality and production costs.

Study of the mechanism for forming “bamboo shoots” ﬂ aw in rolled strips

Extremely smooth imperfections in cold rolled steels used in automotive panels, although only perceptible upon close inspection, can show up after painting, compromising the panel’s appearance. These defects lead to the material being rejected, which means productivity loss and higher costs. Thus, processing these steels requires rigorous control in all fabrication phases.

The hot-rolled process may generate to a defect known as “bamboo shoots”, which occurs on cold rolled and coated sheets. There was a high incidence of this problem in the ﬁ rst half of 2015. To resolve the problem, an R&D study was carried out to investigate in detail the mechanism that creates this defect.

Several sophisticated techniques were used, such as advanced statistical analysis of process data. When the results were analyzed, it became possible to reproduce a mechanism that creates the defect. As a result, several controls already in place in the hot rolling process were reinforced, as well as inputs for taking additional actions in the industrial process. As a result, the percentage of “bamboo shoot” defects has fallen to practically zero. PRODUCT DEVELOPMENT

A company’s sales strategy can be measured by its capacity to create new products in line with the needs of the market. This is true also of the steel sector, where it is necessary to constantly monitor the market and its demands, and to watch the competition closely. In this context, Usiminas has been outstanding, always seeking to develop products that will fully meet the requirements of an ever more de- manding market. The following products were of particular importance in 2015:

API X70 Sour Service API X70 is a steel grade in the fi nal phase of industrial development through the accelerated cooling method, which is able to resist an acid environment (“sour service”) and is extremely tough. It is employed in large-diameter pipelines for transporting oil and gas. This steel is also used offshore in deep-water drilling rigs, where special properties are required; SINCRON WHS 700T A steel with a 70 kgf/mm2 yield strength, developed specially with alloys of low carbon equivalent, controlled lamination and direct annealing, which is then tempered. It is used to make industrial machinery and equipment, highway implements and agricultural machines. With its low carbon equivalent content, this steel is excellent for welding; S890QL An ultra-high yield strength steel with a minimum fl ow limit of 800MPa, intended for the automotive market. Its high strength is obtained by ad- ding micro-binders, principally Nb, and by the presence of extremely hard components obtained by transforming austenite through rapid cooling. It is used mainly in highly rigid vehicle parts; S420M with stress relief A high strength steel, produced by accelerated cooling followed by stress relief, this product was developed especially for the construction of wind- mills that require light components that are easily tooled and very tough; API-5CTQ125 A steel produced in hot-rolled coil, for making ERW pipes for use as casin- gs, to replace the seamless pipes currently used for this purpose; HSLA800 An ultra-high yield strength steel with a minimum fl ow limit of 800MPa, intended for the automotive market. Its high strength is obtained by ad- ding micro-binders, principally Nb, and by the presence of extremely hard components obtained by transforming austenite through rapid cooling. It is used mainly in highly rigid vehicle parts; Complex Phase Steel - CP1000 A member of the family of advanced latest-generation steels, CP1000 offers high yield and is used like HSLA800, only differing in the way its strength is obtained, which is by transforming austenite through rapid cooling, creating a microstructure composed of acicular ferrite, bainite and martensite; Ferrite-Bainite Steel - FB580 Belonging to the family of advanced latest-generation steel, FB580 offers in a single product high yield strength and excellent edge stretchability performance, resulting in an excellent hole-expansion capacity, for use by the auto industry for parts subject to such strength. These properties come from a microstructure consisting mainly of ferrite and bainite; Zn-Fe alloy coated steel for hot forming Belonging to the family of advanced ultra-high yield strength steel of the latest generation, this product allows the rigidity of vehicle coachwork to be substantially increased, due to the strength obtained from transforming austenite into martensite, after hot shaping. In the specifi c case of this steel, the coating with a Zn-Fe (Zinc-Iron) alloy base is an innovative alternative to the product currently on the market.

CUSTOMER SATISFACTION SURVEY

At Usiminas, we constantly monitor customer satisfaction by analyzing information obtained during technical and sales contacts, and through surveys. The survey consists of customer interviews in four areas: purchase, re- ceipt, quality control and production. A quantitative result is obtained from the answers given by representative of our customers. Customers’ concerns and needs are also identiﬁ ed, and the Company decides how to position itself with each customer to face the competition. The results are contained in the report “Usiminas in the Eyes of its Custo- mers”, which is sent to the units involved in drawing up plans for improvement. Action plans are monitored in reports prepared by the divisions and sub- mitted to the customers. The Technical Assistance area monitors the implementation of the action plans. The Satisfaction Index has steadily improved. In 2013, it was 83.7%, rising to 84.9% in 2014, and attaining 86% in 2015. CERTIFICATIONS – MANAGEMENT SYSTEM

Usiminas believes that quality must be aimed at the requirements and needs of our customers. The Quality System is based on modern management practices and people are trained to the highest standards. For this purpose the Company has a service team working jointly with customers to ﬁ nd solutions throughout the production chain. The same is true of technical assistance, where a team supported by the production, research and product engineering areas is constantly scan- ning the demands of the market, in such a manner that development through innovation, updating and adaptation result in products and services that improve results for the customers. The following table shows the various certiﬁ cates awarded to the Usimi- nas Management System, which were still in force in 2015.

Company ISO 9001:2008 ISO TS 16.949 ISO 14001 OHSAS 18.001 Usiminas X X X X Usiminas Mecânica X X X Soluções Usiminas X X X X Mineração Usiminas X

PRODUCT CERTIFICATION

The Usiminas Product Inspection Certifi cate is a quality guarantee document certifying the chemical, mechanical and physical properties of a product, confi rming that it has been made in compliance with the standards of an international organization or to specifi c standards. In addition to specifi c information on products and customers, the certifi cate carries: RoHS and ELV seals The Restriction on Hazardous Substances (RoHS) directive details the action necessary to protect the environment and the health of people working with electrical or electronic equipment. The End of Life Vehicles (ELV) directive defi nes the rules for passenger vehicles sold in the Europe- an Union, with a view to reducing environmental damage by collecting and reusing or recycling the parts of these vehicles after they have reached the end of their useful life. Usiminas has held these certifi cates, issued by Bureau Veritas, since 2007. Identification of MSDS The Material Safety Data Sheet–MSDS is the offi cial documentation that provides information on various aspects of materials with regard to protection, safety, health and environment. The MSDS provides, for those aspects, basic knowledge on materials, advice on protective measures and emergency procedures. MSDS information includes physical data, transportation, storage and handling instructions, and emergency procedures. This information is available on Usiminas extranet for customer inquiries. Percentage of Local Content Percentages of Local Content are assessed in accordance with the guidelines of the Agência Nacional de Petróleo, Gás Natural e Biocombustíveis (National Petroleum Agency) - ANP, which created the product line “carbon steel heavy plates” (Report CCL 032/2012) for Local Content Certifi - cation (CCL) purposes. The concession contracts for exploration, development and production of oil and natural gas, signed between ANP and the Companies winning the bidding rounds, include a Local Content section, which focuses on the stages of production exploration and production. The percentages of Local Content, as per certifi cate issued by Bureau Ve- ritas Certifi cation (BVC), that cover the entire production of heavy plates from Usiminas, are: Ipatinga Plant – 99.2% Cubatão Plant – 99.4% PEOPLE VISION

Usiminas considers it essential to establish a relationship between the management staff and the other employees based on transparency and clarity when it comes to the role of each one in pursuit of the Company’s goals. The guidelines for human resources management regard employees as partners and as partly responsible for the results achieved and, therefore, support their initiatives at work and in the community, always based on the principles of ethics and mutual respect. For that reason, employees become the main agents of changes, and so their creative contribution and ongoing commitment in pursuit of quality and productivity are essential. Usiminas also seeks to maintain compensation compatible with those prevailing in the market, in recognition of staff contributions to the Com- pany’s results. Corporate channels of communication are structured with employees in order to encourage integration, agility and organizational rationality.

BENEFITS AND COMPENSATION

Usiminas compensation policy is based on job descriptions ranked by the HAY methodology, considering variables like knowledge, skill, complexity, responsibility and internal/external relations.

MANAGEMENT COMPENSATION

At the Annual Shareholders’ Meeting, held in April 2015, shareholders approved the budget of R$45.5 million for the compensation of Company managers up until the next Annual Shareholders’ Meeting in 2016. Out of this total, R$19.8 million were spent.

EXECUTIVE BOARD COMPENSATION

The compensation policy for Executive Board offi cers is based on the best market practices and aims to acknowledge the contribution of each offi - cer towards the Company’s results. The amounts paid in 2015 are divided into a fi xed portion and a variable one, being the latter in accordance with agreed individual goals. BOARD OF DIRECTORS COMPENSATION

The compensation policy for members of the Board of Directors is based on a ﬁ xed portion per director, and has no connection with compensation of the Executive Board.

MINIMUM AND MAXIMUM AMOUNTS OF ANNUAL COMPENSATION-

Body No. of members Annual – Total Individual Compensation Lowest Highest Average Executive Board 5,00 R$ 1,915,926.95 R$ 5,072,757.05 R$ 2,967,926.17 Board of Directors 8,17 R$ 389,169.60 R$ 899,865.60 R$ 483,046.17 Audit Committee 5,00 R$ 138,651.52 R$ 138,651.52 R$ 138,651.52

COMPENSATION RECOGNIZED IN THE FISCAL YEAR Body Executive Board Board of Audit Committee Total Directors No. of members * 5.00 8.17 5.00 18.17 Salary or Management Fees N/A N/A N/A N/A Direct and Indirect Benefi ts R$ 1,042,922.59 N/A N/A R$ 1,042,922.59 Compensation for participation N/A N/A N/A N/A in committees Other (Fees) R$ 6,833,814.53 R$ 3,735,388.29 R$ 579,559.25 R$ 11,148,762.07 Bônus *** R$ 2,121,091.44 N/A N/A R$ 2,121,091.44 Profi t sharing N/A N/A N/A N/A Profi t sharing compensation N/A N/A N/A N/A

Compensation for attending N/A N/A N/A N/A meetings Commissions N/A N/A N/A N/A Other ** R$ 2,053,747.42 R$ 571,773.34 R$ 115,911.85 R$ 2,741,432.61 Post-Employment Benefi ts N/A N/A N/A N/A Benefi ts on cessation of offi ce N/A N/A N/A N/A

Share-Based Compensation **** R$ 2,788,054.88 N/A N/A R$ 2,788,054.88 TOTAL R$ 14,839,630.86 R$ 4,307,161.63 R$ 695,471.10 R$ 19,842,263.59 N/A = not applicable since there is no such disbursement. * The number of members of each body corresponds to the annual average of the number of members of each body calculated monthly, up to two decimal places, as per the criteria established by the Brazilian Securities Commission (CVM). ** Refers to social charges borne by the company. *** Corresponds to the bonus paid in 2015, based on performance evaluation for the ﬁ scal year of 2014. **** The amount of share-based compensation refers to the beneﬁ t cost of the Company’s stock options plan, which is calculated based on the fair value of the options granted, according to the Black-Scholes methodology. VARIABLE COMPENSATION FOR THE FISCAL YEAR

Fiscal year ended December 31, 2015 Executive Board Board of Directors (**) Audit Committee (**)

Number of members (***) 5.00 8.17 5.00 Bonus Minimum amount estimated Nonexistent. It relates to the for the compensation plan achievement of goals. N/A N/A Maximum amount estimated R$ 45,500,000.00 N/A N/A for the compensation plan (*) Amount estimated for the compensation plan – in case the set Nonexistent. It relates to the goals were to be achieved achievement of goals. N/A N/A

Amount actually identifi ed (****) R$ 2,121,091.44 N/A N/A Profi t sharing Minimum amount estimated for the compensation plan N/A N/A N/A Maximum amount estimated for the compensation plan N/A N/A N/A Amount estimated for the compensation plan – in case the set goals were to be achieved N/A N/A N/A Amount actually identifi ed N/A N/A N/A

N/A = not applicable since there is no such disbursement. (*) The payment of Variable Compensation always occurs upon exceeding the goals set, on a continuous scale starting from zero. The Variable Compensation amount is included in the total annual budget set at the Annual Meeting, where R$45.5 million were approved for 2015. (**) Variable Compensation is not paid to the Audit Committee and to the Board of Directors. (***) The number of members of each body corresponds to the annual average of the number of members of each body calculated monthly, up to two decimal places, as per the criteria established by the CVM. (****) Corresponds to the bonus paid in 2015, based on the performance evaluation for the ﬁ scal year of 2014. - The calculation of amounts corresponds to the period of January through December; said budget refers to the period between the Meetings.

SALARY DIVERSITY

Salaries paid by Usiminas to its employees remained above the minimum salary of R$788.00 that was in force in Brazil in 2015. This same year, the lowest salary in the Company was R$868.60 and the highest was R$55,816.20. PERCENTAGE OF BASE SALARY BETWEEN MEN AND WOMEN

2015 Total Usiminas

Base salary Men (R$) Women (R$) % Ofﬁ cer R$ 28,933.11 R$ 27,080.35 106.84 Manager R$ 14,326.93 R$ 13,809.36 103.75 University student R$ 9,257.12 R$ 7,285.11 127.07 Technician R$ 3,990.05 R$ 3,275.86 121.80 Administrative R$ 3,127.29 R$ 2,683.17 116.55 Operational R$ 2,458.97 R$ 1,813.19 135.62 Total R$ 3,422.11 R$ 4,946.87 69.18

EMPLOYEES

Number of employees Total Usiminas by functional level Ofﬁ cer 85 Manager 310 University student 1,715 Technician 2,193 Administrative 427 Operational 14,578 Outsourced workers 11,397 Total 30,705 Deﬁ nite period 4,941 Undetermined period 14,367 Total 19,308 Interns 71 Trainees - Part time 498 Total 569 South region 340 Southeast region 15,251 Mid-West region 26 Northeast region 60 North region 3,631 Total 19,308

NOTE: active employees, apprentices, interns and statutory. EMPLOYEES BY GENDER, AGE GROUP AND MINORITIES

Number of employees under 30 years of age 5,095

Number of employees 30 to 50 years of age 11,893

Number of employees above 50 years of age 1,650

Men 17,600

Women 1,038

Afro descendants and mulattos 849

Disabled persons 511

Total employees 18,638

EMPLOYEE TURNOVER

Total - Usiminas Turnover rate by gender No. of terminations Total Employees (LA1) %

Male 7,113 17,600 0.40

Female 340 1,038 0.33

Total 7,453 18,638 0.40

Turnover rate by age group No. of terminations Total Employees (LA1) %

Under 30 years of age 2,738 5,095 0.54

30 to 50 years of age 3,809 11,893 0.32

Above 50 years of age 906 1,650 0.55

Total 7,453 18,638 0.40

Turnover rate by region No. of terminations Total Employees (LA1) %

South region 128 332 0.4

Southeast region 6,306 14,637 0.4

Mid-west region 621 26 23.9

Northeast region 11 57 0.2

North region 387 3,586 0.1

Total 7,453 18,638 0.40 TRAINING AND PROFESSIONAL QUALIFICATION

In 2015, Usiminas established a target of 50 training hours/employee, so as to meet the company’s technical and operational needs and expectations. Overall, Usiminas offered 911,009 training hours, resulting in an average of 63.4 hours/employee.

Annual average training hours/employee and functional category Functional Category Total Working Hours Total Employees in the Category Hours/ Employee

Ofﬁ cer / General Manager 568 85 6.7

Manager 19,111 310 61.6

University student 77,559 1,617 48.0

Technician 140,431 2,071 67.8

Operational 665,896 9,923 67.1

Administrative 7,444 361 20.6

Total 911,009 14,367 63.4

USIMINAS CORPORATE EDUCATION– EDUCAR

To continuously investing in employees’ qualiﬁ cation and development: This is the role of Educar – Usiminas Corporate Education, a distance-learning education process. Educar comprises all the Company’s actions aimed at the qualiﬁ cation and development of its employees.

The program’s focus is to combine employee qualiﬁ cation and growth with the Com- pany’s strategy. Therefore, Educar offers in-company tutorial and training sessions customized to each employee’s need and activity. To this end, Educar also relies on an e-learning training system, a remote educational and learning method through the Internet.

The amount of R$1.5 million was invested in language programs (En- glish, Portuguese and Spanish), bachelor’s degrees, graduate programs, Master’s degree, scholarships and others. Through Usiminas Performance Management Program, managers conduct an yearly assessment of their employees, thus enabling participants to be aware of their performance, as well as the development of their organizational competencies. Over the past years, the program has been evolving, and now also comprises Assessment of Potential. The objective is to have a more assertive knowledge of each professional at Usiminas – from performance through to capacity to grow in the organization. Having an understanding of people’s potential is a way of being prepared for the future, identifying and training successors over time. In 2015, 14,367 employees were assessed, that is, 100% of all employees comprising the audience to whom the Performance Assessment is intended in the company. From these assessments, Usiminas creates development and training plans aligned to the needs of the Company and employees, with development initiatives in order to enhance their competencies and leverage their performance.

YOUTH

Usiminas Intern Program aims at identifying potential talents for the future, seeking students’ development in real work situations and broadening the scope of their qualiﬁ cation. The initiative is an opportunity offered both for undergraduate and technical students. Job vacancies are opened in the States of Minas Gerais (Betim, Ipatinga, Itatiaiuçu and Santa Luzia), São Paulo (Cubatão) and Rio Grande do Sul (Porto Alegre). The Young Apprentice Program is a partnership between Usiminas and Senai. The objective is the apprentices’ professional training, developing basic competencies to work in several business areas of the Company, besides contributing to the youth’s personal and professional growth. Tech- nical courses are offered in the Ipatinga (MG) and Cubatão (SP) plants and may vary from one to two years. Those interested in this Program must be attending, at least, the second year of Senior High School.

HEALTH AND SAFETY

In 2015, Usiminas invested signiﬁ cant amounts in safety training. The Company contributed R$37.6 million to improve workplace environment. Besides obligatory training by law, a wide range of programs in safety tools was offered – working at heights, safety management, conﬁ ned environments, safety in the operation of moving equipment (overhead cranes and forklifts), safety tools, among others. Usiminas ensures the representativeness of all employees at the Accident Prevention Internal Commissions (Cipa). In 2015, the Internal Week on Oc- cupational Accident Prevention (Sipat) discussed the theme “Stop, think, work safely”, calling all workers to contribute to safety, with the “right of refusal” as the main tool.

Occupational health and In April 2015, the Company joined the WSA (World Steel Association) ini- safety indicators in 2015 Total tiative to celebrate the World Day for Occupational Health and Safety at Work, with 100% attendance of permanent employees at the plants. This TFcpt – Rate of attendance event was aimed at raising awareness and improving prevention against with loss of time 0.67 the main causes of deaths in the steel industry worldwide. TDO: Rate of occupational diseases 0.03 Regarding the Rate of Attendance, in 2015, the Company achieved the rate of 0.67 accident per 1 million hours worked, compared to 1.13 in 2014. TDP: Total days lost 1,770

TA: Total rate of absenteeism 4.49

Total deaths in the period 0 CELLPHONE AND SAFETY

With technology development, the cellphone is increasingly becoming a cause of distraction in the workplace. Therefore, since August 2015, rules on the use of electronic communication equipment have been in force effective in all Usiminas companies. Overall, such rules point out the need for choosing a safe place, whether when makinge or receiving phone calls. The company also warns about the forbidden use of cellphones while the employee is operating machinery and equipment, walking, driving vehicles or riding bicycles.

Several awareness campaigns were conducted during 2015 focusing on safety: • World Day for Health and Safety: an initiative of the World Steel As- sociation (WSA) focused on the main causes of fatal accidents in the steel industry worldwide. The theme in 2015 was “Every precaution is still not enough”; • Sipat: an initiative of Cipas organized on the corporate level and jointly with contractors, reinforcing the attitude “Stop, think, work safely”. It involved all employees and contractors in an important reﬂ ection about each one’s role for a safe work; • Safety gables: a campaign that involved employees’ families, por- trayed in advertising pieces placed at the plants to disseminate a relevant message on safe attitude and behavior; • Hand safety: the hands are the part of the body that is most affected in an occupational accidents; • Discussion about safety issues in 49 articles in monthly editions of the in-company journal Fala Aí (What’s Up) and 412 articles on the Intranet.

USISAÚDE

Present in the life of more than 150,000 beneﬁ ciaries, today Usisaúde (Usiminas health care plan operator) is Brazil’s largest operator in terms of philanthropy, and overall, the ﬁ fth largest operator in the State of Minas Gerais, offering high quality health and dental care. Usisaúde has a broad service network, with over 3,200 direct accredited entities and 188 hospi- tals in the states of Minas Gerais, São Paulo, Espírito Santo, Rio Grande do Sul and Rio de Janeiro. Headquartered in its supporting entity’s complex, the São Francisco Xa- vier Foundation (FSFX), in the city of Ipatinga (MG), Usisaúde also relies on two exclusive branches in the Vale do Aço region and more than 20 service branches, such as the Customer Service Centers (CAC) in the cities of Belo Horizonte, Itaúna, Vitória and Santos, and the Service Units installed in the company’s industrial areas. In order to offer differentiated health care plans, with quality assistance, competitiveness and sustainability, Usisaúde innovates in services, expanding its various communication channels and growth strategies. Over the past years, Usisaúde restructured areas, hired personnel, implemented new technologies, guidelines and processes, expanded the access to services and increased service providers and memberships. HEALTH PROMOTION

The Atitude Rima com Saúde (Attitude Rhymes with Health) Program is a benefi t offered to participants and family members by the health care plan operator, Usisaúde, which is owned by São Francisco Xavier Founda- tion, Usiminas’ social arm (see more about the Foundation in the chapter “The Company”). The idea is to help benefi ciaries become the main agents of their health, promoting change in habits and practices leading to improved life quality and prevention of diseases, in a light, participative and defi nitive manner. From its inception, 31,032 participants have already enrolled in the projects, including employees, dependents and retirees. This program was launched in 2010, in partnership with Usiminas, and currently relies on 13 different projects targeting adults, pregnant women, elderly people, adolescents and children. The most recent project, the Superar (Overcome) project, included in 2014, is focused on assessing and monitoring problems and injuries related to the Osteomus- cular System (bones, muscles and articulations), caused by the practice of sports, traffi c accidents or improper repetitive movements with the body. Initially implemented in the cities of Ipatinga, MG, and Cubatão, SP, the Superar Project has already benefi ted 1,145 employees. The Attitude Rhymes with Health Program results in gains to everyone. After all, a healthy and satisfi ed employee is synonymous with higher productivity and fewer chances of diseases and absenteeism. For Usisaú- de, healthy benefi ciaries indirectly result in reducing health care costs, contributing to balance the cost/benefi t ratio and ensuring business sustainability. Projects offered: • Respirar (Breathe): for asthmatic children; • Gerar (Generate): for pregnant women; • Planejar (Plan): contraceptive methods; • Inspirar (Inhale): for smokers who want to quit smoking; • Equilibrar (Balance): healthy food; • Buscar (Seek): healthy mind, essential to deal with daily challenges, build healthy relations and have life quality; • Cuidar (Care): destined to people with diabetes, hypertension, heart diseases and chronic renal failure; • Transformar (Transform): adolescent’s health; • Acompanhar (Accompany): for people with chronic diseases and who have diffi culty moving to get medical care; • Movimentar (Move): promote the practice of physical activities; • Antecipar (Prevent): stimulate preventive examinations; • Compartilhar (Share): destined to third age benefi ciaries; • Superar (Overcome): assistance to overcome injuries and osteomus- cular diseases pain. UNION RELATIONS

Usiminas establishes relationships with several Unions and negotiate with them, based on the principles of transparency, mutual respect, ethics and open dialogue. The company maintains communication channels continuously opened in order to prevent any conﬂ ict and allow any de- adlock to be solved through negotiations. In 2015, 100% of employees were covered by Collective Bargaining Agreements.

PRIVATE PENSION PLAN

Previdência Usiminas is one of the pioneering pension funds in Brazil’s steel industry. Founded 44 years ago, the fund undertakes the commitment to its participants, members assisted and sponsoring entities to grant private pension benefi ts, besides strongly contributing to the country’s growth. Previdência Usiminas’ membership base ended 2015 with 11 sponsoring companies and 39,166 participants. Out of this total, 19,351 are active/ self-sponsored and 19,815 are assisted members, who turn into thousands of benefi ciaries under private pension coverage. During 2015, the entity paid R$532.41 million in retirements and pensions and R$38.84 million in redemption of contributions. Four benefi t plans are under its management: PB1, PBD, COSIprev and USIPREV, the latter being the only one that accepts the entry of new participants. Considering the consolidated assets related to the administered benefi t plans, in 2015 Previdência Usiminas was ranked 7th in Brazilian ranking of privately sponsored Pension Funds, according to a statistical report by the National Superintendence of Private Pensions (PREVIC). Such position ratifi es the relevant role of Previdência Usiminas in the private pension segment. COMMUNICATION

Amid a highly competitive market, Internal Communication performs an increasingly important role, conveying information, democratizing knowledge, as well as promoting debates and interaction among several segments of the company. The consolidation of the Fala Aí Platform in 2015 conveyed to its internal public relevant information about how the crisis affected the steel industry, in a clear, transparent and continuous manner. During 2015, Fala Aí published important articles to show the cascade effect on customers and a direct impact on our business. A special edi- tion was dedicated to this theme. The Intranet also published notes on a weekly basis, which contributed to enhancing the perception about this scenario, with approximately 2,000 interactions (like/dislike) with the articles and a number exceeding 300 comments, reinforcing the open forum to freely exchange ideas, cri- ticisms and suggestions. In order to increase participation, new features were made available in 2015, such as Usiminas customized emoticons and the possibility to “like” the comments. This is another way of fostering participation, which reached the record of 50,891 “likes” and 5,297 “dislikes”, totaling 19,463 single users and 13.7 million page views. During 2015, safety was another priority focus on the agenda. Over 400 notes were published on the Intranet, nearly 20 articles in the Fala Aí newsletter and 10 campaigns in our units. In order to reinforce this issue and facilitate understanding, 10 videos were produced for Usiminas TV, accounting for almost 40% of total productions, which recorded a 32% increase compared to 2014, most of them produced in-house. In 2015, Usiminas also consolidated the Facebook fan page Fala Aí Ipatin- ga (What’s up Ipatinga) and strengthened its ties with the community of its largest business unit even more through dialogue and transparency. At the end of 2015, one year after its launch, the new communication channel reached 31,063 page fans, 67% of these users living in the Vale do Aço region. The company recorded over 171,000 interactions in the period, with 147,150 “likes” in posts, 12,158 comments and 11,990 sharing. The highlights were the issues connected with the history of the company and the city, training of young professionals, safety and culture. The objective is to prioritize channels that enable easy understanding, interaction and a prompt and transparent relationship of the company with its different stakeholders.

THE COMPANY TRANSPARENCY

As an integral part of Usiminas controls system, Canal Aberto (Open Channel), administered by the Internal Audit, is one of the main tools to identify, monitor and mitigate the risks related to corruption practices. Canal Aberto receives complaints about irregularities seen in the Com- pany’s operations, also including its subsidiaries. This management tool creates a communication space not only for employees, but also for customers, suppliers, investors and society in general, so that they may alert the Company about any situation of fraud, corruption, bribery, harassment and theft. This channel preserves the claimant’s secrecy, in line with the best corporate governance practices and precepts of the Sarbanes-Oxley Act con- cerning publicly-held companies listed on US Stock Exchanges. The com- plaint is treated with transparency and if deemed valid is subject to an Internal Audit report, which will be forwarded to the Committee of Ethics and Compliance, and subsequently to the Audit Committee. Canal Aberto may be accessed via the Internet, Intranet or telephone.

INTERNAL AUDIT PLAN

The Internal Audit, which reports directly to the Board of Directors, takes an active role in the development of works and projects relating to improvement of internal controls.

The Audit Plan carried out in 2015 prioritized processes showing the highest risk exposure to the Company’s strategic objectives and was based on the following assessment factors: strategic relevance, ﬁ nancial materiality, fraud, legal and image risks. It also prioritized implementation of the Continuing Audit methodology at Usiminas, which will enable a better assessment of the internal controls and the potential risks on an ongoing basis.

It should be noted that the Board of Directors approves the Internal Audit Plan to be carried out in the year.

The tools and policies adopted by Usiminas to assist in anti-corruption and anti-bribery practices cover all its business units. In 2015, the Internal Audit, by means of the Corporate Communications area, conducted a campaign to publicize Canal Aberto in all of the Com- pany’s business units, with the following objectives: reinforce the tool’s purpose, disclose the several forms of contact and strengthen the message of preserving the claimants’ anonymity. The campaign included outdo- ors and posters, besides articles on the Intranet and Fala Aí in-company’s newsletter. In 2015, employees also continued to receive training on the Anticorrup- tion Law, now through e-learning, made available online. This new course interactively discusses several aspects of the Law. PUBLIC AUTHORITIES

It is Usiminas’ proposal to maintain a transparent and systematic dialogue with representatives of the federal, state and municipal executive and legislative branches. The Company regularly monitors the issues being handled at the National Congress, State Houses of Representatives and Municipal Chambers in the cities where it operates, working indi- vidually or jointly with professional associations and/or sector entities, complying with all the effective rules and laws in the defense of its interests. In 2015, Usiminas participated in various actions intended to defend its speciﬁ c interests, the interests of the steel sector and of the Brazilian industry, contributing efforts to improve legal provisions and seeking to prevent unfair practices in the domestic and international trade of steel products.

SUPPLIERS

Usiminas’ suppliers are selected and hired on the basis of technical, professional and ethical criteria, always aiming at the best return in terms of quality, cost/benefi t, technical and fi nancial feasibility and compliance with legal, environmental and labor requirements, especially Occupa- tional Health and Safety. Usiminas’ practice is to prioritize the hiring of local suppliers as a way to foster the development of the communities where it operates. Invitation to participate in bids, a closer relationship with companies by means of works with local associations and long-term agreements are examples of the Company’s actions to prioritize entities located in its performance area. To this end, Usiminas considers the following factors when assessing the hiring of suppliers: logistics, social and environmental responsibility, geographic location, technical capacity, certifi cations, performance, business and technological competitiveness. The development of local suppliers follows the geographic defi nition described below:

Usiminas, Unigal e Usiminas Mecânica These companies select suppliers located in the metropolitan region of Vale do Aço (Ipatinga, Santana do Paraíso, Timóteo and Coronel Fabri- ciano) and in cities located within a radius of 100 km of Ipatinga. They also select suppliers located in the region of Baixada Santista region, including the cities of Cubatão, Santos, São Vicente, Guarujá and Praia Grande.

Soluções Usiminas Suppliers are selected in cities located in the metropolitan region of São Paulo, in Vale do Paraíba and in Campo Limpo Paulista, SP, Porto Alegre, RS, Betim and Santa Luzia, MG, and in the region of Suape, PE. Mineração Usiminas Comprises, besides the city of Itatiaiuçu, the cities of Mateus Leme, Itaú- na, Igarapé, Brumadinho, Divinópolis, Formiga and Pará de Minas, all in the state of Minas Gerais. EXPENSES WITH SUPPLIERS– TOTAL USIMINAS

Total expenses with suppliers Expenses with local suppliers %

R$ 10,044,608,970 R$ 2,187,238,253 22%

CONTRACTING DYNAMICS

Suppliers with an active registration with the Company were evaluated during the qualiﬁ cation process, and one of the mandatory requirements of the preliminary registration process is the company’s positioning regarding compliance with requirements, such as social responsibility, human rights, environment and safety. This process includes questionnaires, which suppliers must complete and formalize with electronic consent before they are approved as Usiminas supplier).

In order to become an Usiminas supplier, companies must submit documents eviden- cing environmental, tax and labor good standing, which include copies of documents and debt clearance certifi cates (CNDs). In addition, information is checked with external public sources disclosed by governmental authorities, such as the National Registry of Non-reputable and Suspended Companies (Transparency Portal of the Offi ce of the Federal Controller General) and the list of legal entities and individuals notifi ed due to slave labor (MTE – Ministry of Labor and Employment).

After registration, the contracted supplier is evaluated for performance requirements regarding compliance with deadlines and quality (raw materials, materials and inputs), as well as planning and control requirements, quality management, personnel training, resources, safety and environment (service providers).

Strategic suppliers undergo external audits, and, in 2015, Usiminas quality auditors checked the premises of 40 suppliers for technical, as well as legal, social and environmental responsibility aspects.

At Usiminas’ business units, services agreements and agreements for supply of raw materials, materials and equipment contain clauses providing for respect for essential labor conditions, and making clear to contractors the principles deﬁ ned by the Com- pany.

RECOGNITION FROM SOCIETY

Throughout the year, the company received several awards and recogni- tions for its actions in different areas of society. They included: Partner (John Deere) For the ﬁ fth consecutive year, Usiminas was appointed a Partner Supplier of John Deere, a world leader in the manufacturing of agricultural equipment. The Company is the ﬁ rst steel company outside the US to achieve this mark, having entered John Deere’s Hall of Fame. This recognition is part of the “Achieving Excellence” global program, which evaluates all suppliers to John Deere. Comunidade em Ação (Community in Action), A Tribuna newspaper

The Mantiqueira Project won the Popular Voting category of the 13th Co- munidade em Ação Award, granted by A Tribuna newspaper. The project is a partnership between Usiminas and CAMP - Centro de Aprendizagem Metódica e Prática (Methodical and Practical Learning Center) in the city of Cubatão, which offers sports, cultural and leisure activities, as well as technical learning, to young residents of the Pedreira da Mantiqueira community. It received over three thousand votes, having competed with another 12 initiatives of the Baixada Santista region.

The Year’s Best (Sports Department and Education Department of the State of Minas Gerais) Usiminas won the 2015 Year’s Best award granted by the State Depart- ments of Sports (SEESP) and Education (SEE) of the Minas Gerais, as the second company that most invested in education and sports projects in the State from January 2014 to October 2015. The Company participates in the Minas Olímpica Sports Incentive program, which offers tax incentives to ICMS taxpayers supporting sports projects approved by SEESP.

Transparency Trophy, Anefac Usiminas was among the eight winners of Troféu Transparência, which recognizes the technical quality of the ﬁ nancial statements presented by companies. The award, organized by Associação Nacional dos Execu- tivos de Finanças, Administração e Contabilidade (the National Associa- tion of Finance, Administration and Accounting Executives) - Anefac, in partnership with Fundação Instituto de Pesquisas Contábeis, Atuariais e Financeiras (the Institute for Accounting, Actuarial and Financial Resear- ch Foundation) - Fipecaﬁ , and Serasa Experian, was granted to Usiminas for the eighth consecutive year.

Companies with the Best Communication with Journalists (“Negócios da Comunicação” magazine/ Centro de Estudos da Co- municação (Communication Studies Center) – CECOM The survey regarding the year 2014, which included 25 thousand journalists in Brazil, was conducted by the Negócios de Communicação magazine and audited by BDO Brazil. In the four editions of the award, 207 business have already been recognized at least once. However, only 23 companies won the award at all editions of the survey, including Usiminas.

100 Most Innovative Companies (Valor Econômico newspaper) In the ranking published by the Valor Econômico newspaper in partnership with Strategy& consulting ﬁ rm, Usiminas appeared among the 100 Most Innovative Companies in Brazil, ranking 46th. The survey was the ﬁ rst to assess innovation in companies operating in different economic activities in Brazil. REI (Automotive Business magazine) Usiminas was among the winners of the REI Award, which is offered by the Automotive Business magazine to the professionals and companies with the best performance in the automotive supply chain. The company won the “Inputs” category with the “Development of Dual Phase 1000 Steel” project, a product with ultra-high mechanical resistance.

2015 Quality and Partnership AutoData Ranking Usiminas was recognized by the 2015 Quality and Partnership AutoDa- ta Ranking as a major supplier for the Brazilian automotive sector. This ranking, disclosed by the AutoData magazine, listed 50 award-winning suppliers for the three-year period from 2013 to 2015. Usiminas was the steel company with the best position, ranking 25th.

Cost Excellence (Toyota) Usiminas was recognized as the best Brazilian supplier for Toyota in 2015 in the “Cost” category, Excellence level. This award refers to services provided in 2014, when Usiminas surpas- sed the expectations of the car manufacturer regarding costs reductions that were put into practice. Usiminas also received an award during the Global Suppliers Convention 2016, which recognized the best suppliers to Toyota globally in 2015.

Herity Certification The Usiminas Cultural Center obtained the certifi cation granted by Heri- ty, a global organization that certifi es Quality in Cultural Heritage Mana- gement. With this recognition, the center became the second in Minas Gerais and the 12th in Brazil to receive this quality seal. This international entity based in Italy is recognized by Unesco, having certifi ed several world cultural heritage.

Ser Humano (Human Being) - ABRH-MG Mineração Usiminas received the 14th Ser Humano Award for its initiative in the areas of people and social responsibility management. The prize is awarded by the Minas Gerais Chapter of the Brazilian Association of Human Resources (ABRH-MG), in partnership with Rhumo Consultoria.

Excellence in Brazil’s Mineral-Metal Industry (Minérios & Mine- rales magazine) Three studies conducted by Mineração Usiminas received the 17th Prize for Excellence in Brazil’s Mineral-Metal Industry, awarded by the Miné- rios & Minerales magazine. The prize promotes the best technologies, processes and concepts used by mining companies in the country. The projects awarded were “Increase in the useful lives of bits”, “Water recirculation” and “New process route.” Bim.bon Senai The Casa Chassi (Chassi House) project, manufactured with 3 tons of USI- CIVIL 300 structural steel, produced by Usiminas, was awarded the 2015 Bim.bon Senai prize in the Professional Architecture category. Architects Bernardo Horta and Pedro Haruf were responsible for the Project. The objective of the prize is to bring the construction materials industry closer to creative professionals.

SOCIAL INITIATIVES

Strengthening the relationship with the communities where it operates is a permanent focus for Usiminas, which seeks to contribute to local economic and social-environmental development. The Company’s policy to act in partnership with society enables both of them to grow and develop together. Usiminas invests in the development of local communities through its own projects or projects carried out in partnership with non-governmental organizations and local governments. In 2015, some R$7 million were invested in the Company’s own projects or partnerships. Of this total, R$4.4 million came from tax credits that were invested in approximately 30 projects in the regions of Baixada Santista (State of São Paulo), Vale do Aço and the mid-western region of the Sta- te of Minas Gerais, contributing to the sustainability of the creative economy chain in these regions.

MANTIQUEIRA PROJECT

Since its beginning, more than 10 years ago, the Mantiqueira Project has enabled the entry of several residents of the Pedreira do Mantiqueira community into the labor market. The community developed on the hill- side of an old quarry, next to the Industrial Complex of Baixada Santista. The project’s activities are carried out in the municipality of Cubatão (Sta- te of São Paulo), at Centro de Aprendizagem Metódica e Prática (Methodi- cal and Practical Learning Center) – CAMP, which is a partner of Usiminas, and in the Anilinas Park. It offers assistance to families, fun learning, cooperative games for children from 6 to 11 years old, sports activities for be- ginners, digital inclusion, in addition to preparing and referral of 16-year old students to the labor market through the Young Apprentice project. The Mantiqueira Project contributes to greater family and social integration, and improves attendance and school performance of children and youths, since their participation in the initiative depends on the achievement of a good performance in their studies. As a result, the possibilities of social and professional insertion of students in society and the labor market increase. In 2015, the Mantiqueira project received the Comunidade em Ação 2015 (2015 Community in Action) award in the Popular Vote category, with more than 3 thousand votes. The award results from a partnership between A Tribuna newspaper and the company Ultracargo. Its purpose is to recognize voluntary actions in beneﬁ t of social causes in Baixada Santista, based on social impact, mobilization, competence and originality criteria.

OUTREACH

At Usiminas, volunteering is more than an act of citizenry and mobilization in favor of human rights. The Company believes that involvement and engagement in activities that beneﬁ t the communities bring positive results for the personal growth of its employees, who have the opportunity to experience concepts such as cooperative action and teamwork and increase their awareness and responsibility for the construction of a better world. The Company’s volunteer outreach had the participation of over 800 persons, including employees, their friends and relatives. Over 200 entities are registered and receive assistance from the Company’s volunteers, be- neﬁ ting thousands of persons in municipalities of the States of Minas Ge- rais and São Paulo through the following programs:

• Warm Clothing Campaign: 77 thousand pieces of clothing collected in 2015; • V Day: Over 800 volunteers and 30 entities served; • Solidarity Christmas Campaign: 27 thousands items collected.

USIMINAS CULTURAL INSTITUTE

Instituto Cultural Usiminas manages the projects supported by the Usimi- nas group with focus on assurance of the social rights of people and the communities in which the Company operates, assuming its share of responsibility for the development of these regions by generating solutions, experiences, learning and knowledge. In 2015, Usiminas companies invested over R$4 million, through tax incentives (Culture and Law Incentives Laws), in some 30 projects managed by the Institute. The Company invested in actions to foster social participation, the democratization of culture, and social and cultural development. The cultural projects supported by the Company in 2015 included:

Circuito Usiminas de Cultura (Usiminas Cultural Circuit) The Usiminas Cultural Circuit takes playful, educational, artistic and interactive activities to the towns of the interior of the States of Minas Gerais and São Paulo. In 2015, the cities of Itatiaiuçu (Minas Gerais) and Cubatão (São Paulo) received attractions such as theater plays, circus, workshops, movies and shows that were performed in squares and schools, with free presentations for the whole family. The project also helps to redeem the local memory and heritage through artistic and educational activities. Over 480 artistic performances and 110 workshops were carried out under this initiative, which contributes for social and cultural education and provides access to enriching, comprehensive and completely free attractions. Over 158 thousand persons were already beneﬁ ted with the actions of the Circuit.

Bracher Exhibition The “Bracher – Pintura e Permanência” exhibition was seen by over 500 thousand visitors in the cities of Belo Horizonte, São Paulo, Rio de Janeiro and Brasília, having wound up its season at the Usiminas Cultural Center, in Ipatinga (Minas Gerais). This interactive exhibition that included multi- media and scenography spaces was a restrospective of the long career of the well-known painter Carlos Bracher, born in Minas Gerais. In addition to the paintings, the exhibition included drawings, books, catalogs, pictures, personal objects and poems written by the artist. Visitors were also able to participate and follow Bracher’s cathartic and explosive process through live interventions. Focusing on the access to and democratization of culture, Usiminas maintains the Usiminas Cultural Center in Ipatinga (Minas Gerais). Founded in 1998, the space became an important cultural center for the State, particu- larly for the Vale do Aço region. The Center was designed to receive local, national and international artistic productions at no cost or at popular prices, thus contributing for the development and strengthening of the region’s culture. Since its creation, the space has seen a signifi cant increase in the participation of the public. In 2015, the Usiminas Cultural Center received approximately 120 thousand persons and celebrated 17 years of activities, always featuring a permanent schedule of programs, events and diversifi ed artistic activities, and consolidating Usiminas’ close relationship with the region. As a result of a management focused on quality, and in line with the wishes of the communities, in December 2015 the Usiminas Cultural Center received the International Herity Certifi cation, a seal that ensures quality and excellence in the management of cultural spaces deemed as a heritage of the localities where they operate. The Herity system is audited and renewed every three years, based on a careful analysis of Services, Relevance, Commu- nication and Conservation items, which may get different scores.

EDUCATIONAL ACTION

Among the various projects the Usiminas Cultural Center carries out, there is the Ação Educativa (Educational Action) Program. The goal is to cultivate audiences, provide training, and drive technical improvements in the community, playing a key role in bringing arts and education closer to the audience, which comprises children, adolescents, young people and families, interfacing with schools, artists, and communities.

Through workshops and courses with educators, workshops for artists, and family activities, the program beneﬁ ted more than 27,000 people in 2015. Participants had access to various activities, such as Theatrical Visits, a Series of Educational Shows, a Literary Soirée Series, Guided Visits to Art Exhibitions, Teacher and Art Educator Trai- ning Courses, in addition to the Art in Family (Arte em Família) project.

Educational Action invests and believes in cultural qualiﬁ cation and public awareness as a multiplier so that issues relating to art, education, and culture can unfold and drive local development through the increase in social wealth. ENCOURAGING SPORTS

Usiminas believes that access to sports is essential to build citizenship and that sports are a pillar that support relevant changes in our society. Based on this view, the company has been active in supporting and fostering sports projects in the regions where it has operations, such as:

Education through Sports The project carries out sports activities at three municipal public schools in Cubatão (SP). Approximately 300 children and young people take part in the activities and in volleyball, indoor soccer, handball, and dance championships, with area professionals, who teach classes at the schools themselves. In addition to keeping students in school longer, the goal is to foster concepts through sports that the students will need in their personal and professional future, such as teamwork, attaining goals, challenges, and multidisciplinarity.

Soccer and Citizenship This program promotes the social inclusion of children and youth from Cubatão, through the work of trained monitors who serve 150 children and young people aged 11 to 15 years. The project includes free soccer lessons.

ECOMOV Volleyball This program beneﬁ ts 72 athletes from Minas Gerais’ Vale do Aço by providing scholarships that cover daily volleyball training to improve technical levels and physical and psychological conditioning and travel expenses for competitions.

ECOMOV Swimming This program offers 80 children and adolescents aged 9 to 14 years daily swimming practice, uniforms, and it pays expenses incurred in participa- ting in regional and state championships.

SÃO FRANCISCO XAVIER FOUNDATION

The São Francisco Xavier Foundation (FSFX) is a private philanthropic entity. Established by Usiminas in 1969, FSFX operates in the health and education areas and endeavors to attain excellence in the provision of services based on actions that range beyond the boundaries of the Vale do Aço. It currently consists of ﬁ ve units: The Márcio Cunha Hospital, the São Francisco Xavier High School, the Usisaúde health insurance operator, the Integrated Dental Center, and the Occupational Safety, Occupational Health, and Environment Service. Committed to human development and sustainability in its management practices, FSFX multiplies business opportunities with effective results. MÁRCIO CUNHA HOSPITAL

The Márcio Cunha Hospital (HMC) is a general hospital, licensed for high-complexity procedures and service provision in the outpatient, emergency room, hospitalization, and diagnostic service areas. With 530 beds in two units, in addition to a third unit used exclusively to treat cancer patients and a Diagnostic Medicine unit, it is a reference to some 800,000 people residing in more than 35 cities and towns in eastern Minas Gerais. The Márcio Cunha Hospital Oncology Unit, a regional reference in the fi - ght against cancer, currently performs more than 74,000 procedures per year, including chemotherapy, radiotherapy, nuclear medicine services, and consultations. The fi rst in the country to be accredited with Excellence by the National Accreditation Organization (ONA), in 2003, the Márcio Cunha Hospital achieved another hallmark in 2014, this time on the international scene. Det Norske Veritas (DNV) recommended the HMC for the DNV Internatio- nal Accreditation Standard (DIAS) certifi cation, the hospital accreditation standard based on the National Integrated Accreditation for Healthcare Organizations (NIAHO), which is formally recognized by the United States Health Department. All this recognition is a key differentiating factor in providing health services to patients served by Usisaúde, by the Unifi ed Health System (SUS), and by health insurance companies. The following table shows the number of services performed by the HMC in 2015:

Clinical Pathology Tests 1,501,108 Diagnostic Tests 325,794 Outpatient Consults 266,277 Emergency Room Services 117,417 Hemodialysis Sessions 54,051 Hospitalizations 31,692 Obstetric Center Services 16,285 Surgeries 14,874 Radiotherapy (number of ﬁ elds) 52,438 Chemotherapy 20,635 Deliveries 6,023 Blood Transfusions 7,225 Kidney Transplants 37 SPOTLIGHT ON ONCOLOGY

Unprecedented in Eastern Minas Gerais, the HMC’s Pediatric Oncology unit has become a reference in the provision of care to children and adolescents with cancer from 85 municipalities that make up the East macro-region, where there is an approxi- mate population of 1.47 million people. The service minimizes the inconvenience of the long commutes families of children and adolescents aged up to 19 years used to have to make to seek care in other cities, such as Belo Horizonte and São Paulo. Based on regional demand data, it is estimated that 116 care sessions are provided per month, and, on average, over 100 new cases are expected per year.

HMC’s Oncology Unit has two new linear accelerator radiotherapy devices. Imported from the United States, the devices are part of the Foundation’s investment package for the expansion and modernization of the unit. Linear accelerators allow radiotherapy treatment, which is extremely useful and effective in the treatment of several types of tumors.

The equipment was purchased thanks to FSFX’s partnership with the Ministry of Health, through an agreement worth R$4 million. The ﬁ rst device arrived at the unit in late 2014, and has been in operation since April 2015. More efﬁ cient and the state-of-the-art in this area, the new linear accelerators can perform treatments anywhere on the patient’s body by producing high-energy radiation with high pene- tration and interaction rates with the body.

In order for the second linear accelerator to be installed, the bunker - a room built to house the device in special shielding conditions designed to contain the radiation - must be refurbished (in progress). To reinforce the second bunker’s shielding, the Foundation had the support of Usiminas, which supplied the steel plates. Over and above the bunkers with the new accelerators, the upgrade and expansion work that is in progress at the Oncology Unit will also allow the receptions and the number of chemotherapy seats to be increased and the creation of an exclusive space for blood transfusion procedures. The support areas will also be taken into account with the construction of sterile equipment rooms for minor procedures, of a room to be used exclusively for risk classiﬁ cation, and with an increase in the number of ofﬁ ces. The works are expected to be completed in the second half of 2016.

Using funds raised by the Ministry of Health’s National Support for Oncology Care Program (Pronon), which gives tax breaks to funding coming from private companies, the São Francisco Xavier Foundation has already earmarked investments for the acquisition of brachytherapy equipment (therapeutic supplementation for patients with cervical and endometrial tumors, for example) and radiosurgery equipment (applied to primary or metastatic central nervous system pathologies that cannot be treated through surgery), and also to overhaul the HMC’s Oncology Unit. This has allowed the services rendered in ﬁ ghting cancer to be improved.

In all, R$14 million were raised, and another R$10 million will be invested in these projects: Pediatric Oncology Unit, Palliative Care Unit (reception, comfort, and pain control), Training Program in Oncology (24 months) and, through the Pronas (National Support Program for Caring for the Health of Persons with Disabilities), the implementation of the Rehabilitation Center will continue the care given during hospitalization to patients in need of physical rehabilitation. SÃO FRANCISCO XAVIER SCHOOL

The São Francisco Xavier School (CSFX) provided schooling to generations of professionals and citizens who today contribute to the country in the fi elds of science and politics, in social and business areas. A benchmark in the number of students passing public university admission tests, it was the fi rst school in Brazil to secure certifi cation for its Quality Management System for Elementary and High School Education Institutions, in accordance with ISO 9001. The School portfolio also includes Early Childhood Education, Elementary Education, High School Education, Technical Courses, a Sports School, Full- -Time CSFX, in addition to Language and Continuing Education Courses with partner institutions (PUC Minas and FELUMA). In partnership with Usiminas and the São Francisco Xavier Foundation, in 2015 CSFX launched a transformational project to foster a culture of protection of life and accident prevention in different environments and situations among the students. A class on Education in Safety and Heal- th will be included in the High School’s curriculum from 2016. Initially, it will cover early childhood education and the 1st to 5th grades of primary education, progressively reaching the remaining Elementary Education II and High School levels. The workload is expected to be one weekly class covering subjects appropriate to the age groups. The class will address issues such as fi ghting drug use, accident and disease prevention, and safety measures for the use of means of transportation and the media, among others. It will also drive the students’ critical view, enabling them to recognize environments and situations conducive to accidents.

SCHOLARSHIP PROGRAM

By granting São Francisco Xavier School scholarships to low-income students, FSFX contributes to emancipating citizens and transforming the reality of many families. In 2015, 618 students were accepted to one of the best private schools in the area, becoming competitive in college entrance exams, civil service examinations, and selection processes. In addition to the Bolsa Social (Social Scholarship) - Philanthropy Program, FSFX reinforces its commitment to education, extending the Scholarship Program to its employees’ dependents at the School. With the support of Usiminas as a founder and as the main customer of FSFX, scholarships for Regular Education (Elementary, and High School) and Technical Courses at CSFX have also been maintained over the years. TECHNICAL CSFX

In 2010, the São Francisco Xavier Foundation created the Technical CSFX, with emphasis on vocational courses. In 2015, the institution was already offering eight Technical Courses: Nursing, Clinical Analysis, Mechanics, Occupational Safety, Information Technology, Management, Buildings, and Aesthetics. In addition to the Scholarship Program, CSFX’s Technical Courses are accredited by the Federal Government’s PRONATEC (the National Program for Access to Technical Education and Employment). The following actions were also worth of mention in 2015: • Offer of short training courses at the Technical CSFX: AutoCAD, Caregiver for the Elderly, Surgical Instrumentation, Quality Collection. • Launch of new technical courses: Buildings and Aesthetics.

INTEGRATED DENTAL CENTER

Aiming to offer comprehensive oral health services, the Centro de Odon- tologia Integrada (Integrated Dental Center) - IOC, was created in 1981 and has achieved one of the best oral health indicators in Brazil and in the world. The IOC has 45 ofﬁ ces located in Ipatinga, MG, Belo Horizonte, MG, Cuba- tão, SP, and Porto Alegre, RS, 13 of which operate at companies belonging to the Usiminas group. Additionally, the Center provides its services at the Health Promotion Dental clinics; Basic Rehabilitation clinics, and at the Specialties and High Complexity Clinics, comprising Orthodontics, Implantology, and Rehabili- tation.

OCCUPATIONAL HEALTH AND SAFETY

FSFX’s Occupational Safety, Occupational Health, and Environment Servi- ce provides specialized services both to the Foundation’s units and to the companies that hire it. The actions the unit carries out in the Occupational Safety and Health and Hygiene areas beneﬁ t more than 84,000 lives in 17 cities located in ﬁ ve states. Through the Specialized Service in Safety Engineering and Occupational Medicine (SESMT) implanted at the Ipatinga Plant, Usiminas employees and service providers are involved in permanent accident prevention and health promotion activities. USIFAMÍLIA

Introduced in December 2014, Usifamília is a unique health care proposal based on the model known internationally as Primary Care. It has an exclusive service center, located at Unit II of the Márcio Cunha Hospital, in Ipatinga, MG, and relies on nine health teams composed of a general practitioner, pediatrician, nurse, technician, pharmacist, nutritionist, and a social worker, in addition to administrative support teams. This ensures service - intended for Usisaúde benefi ciaries aged more than 60 years - to respond continuously and systematically to most of the benefi ciaries’ health needs, integrating preventive and curative actions. One of Usifamília’s unique features is that it provides care to the patients by means of a same team at a same place. This model educates the benefi ciary, keeping them from having to frantically search for different ex- perts on their own - often wrongly - every time they feel ill. Another advantage is drug overuse prevention, an issue that causes a high rate of mortality among the elderly. In short, Usifamília allows a qualifi ed professional and his or her team to make a detailed diagnosis and to have deep knowledge of the living conditions of both the patient and his or her family, allowing for better chronic disease management.

SIGNIFICANT RESULTS

Usifamília ensures quality indicators not only to FSFX and Usisaúde, but, above all, to the health insurance users’ health and pocketbook. Check out the key ﬁ gures in the ﬁ rst year:

8,217 beneﬁ ciaries brought on board from Dec/14 to Dec/15

59% of the beneﬁ ciaries are more than 60 years old

24,394 consults made - 87.5% of the total available

8,121 tests done

5.1% drop in the number of elective consults, and 24.2% fewer hospitalizations among Usifamília’s target population

7 minutes is the average waiting time for service

1:06 hour is the average amount of time spent at the unit

96% is the beneﬁ ciaries’ satisfaction rate ENVIRONMENT ENVIRONMENTAL COMMITMENT

Usiminas is committed to continuously improving its environmental performance, especially through the rational use of natural resources and the management of its impacts. The Company invests in the pursuit of sustainable solutions to combine industrial production with environmental conservation, combined with actions for social equity. Innovation and sustainability will be key business competitiveness ele- ments in the coming years, and, attentive to this trend, Usiminas undertakes programs, projects, and actions to promote the sustainability of its industrial operations. The Environmental Management System implemented at the company since 1996, the date of its certifi cation under Standard ISO 14001, enables an effi cient management of the company’s impacts and promotes the continuous improvement of its processes. The maintenance of the environmental certifi cation and of the ecolabels that Usiminas has secured over its history show that the company has always sought economic development in balance with the environment. The Company was the fi rst in the Brazilian steel industry - and the second in the world - to secure the ISO 14001 certifi cation. The marketed products meet the stringent requirements imposed by the European RoHS and ELV directives, world references in ecolabels.

ENVIRONMENTAL INVESTMENTS

Usiminas has always invested in the Environment, and, in 2015, it was no different. The investments were in engineering, maintenance and process improvement, education, and environmental management projects. The main 2015 highlights were investments made in engineering in the amount of approximately R$232 million. The revamping and start-up of Coke Oven Battery #3, with the stoppage of Battery #4 at Ipatinga and Coke Battery #2, are among the largest investments. Expenses associated with equipment maintenance and operational expenses made to prevent and minimize environmental impacts totaldes around R$120 million. In addition to those disbursements, there were also investments in environmental programs and projects external to production that summed R$237,000. SUSTAINABLE RESEARCH

Throughout 2015, the Usiminas Research and Development Center conducted several studies that have made signiﬁ cant contributions to improving the company’s environmental performance. The main ones were:

• Studies focusing on optimizing fuel burn in plate reheating furnaces and boilers aiming to reduce air pollutant emissions to levels below the new and more stringent environmental standards.

• Methods especially designed to characterize sedimentary particles have been developed. These have allowed emission sources to be identiﬁ ed and have made it possible to undertake more precise environmental control actions.

• Water scarcity in the region where the company has operations, exacerbated in 2015, intensiﬁ ed studies involving advanced analytical techniques to pinpoint the best opportunities for wastewater reuse, with the consequent reduction in water uptake.

• Signiﬁ cant progress has been made in the knowledge about the stabilization process for steel slag, a co-product generated during the steelmaking process. Such developments have allowed the increasing use of steel slag as a raw material in the cement industry, in fertilizer and agricultural soil correction fabrication, and in paving.

MITIGATION OF ENVIRONMENTAL IMPACTS AND INITIATIVES Eco-effi ciency management is one of Usiminas’ operating premisses and, accordingly, mitigating environmental impacts is part of the Company’s management activities. In line with the Environmental Management System, the business units work, in a structured and documented manner, on identifying and evaluating the potential environmental impacts of their activities and, based on such analyses, they establish programs and goals aimed at mitigating these impacts. Parallel to the programs and targets, the units have procedures in place that are observed and worked on permanently aiming at ensuring environmental control over their activities. Such procedures include, mainly, monitoring and controlling industrial waste; industrial, sanitary, and storm wastewater; air emissions; noise and vibration, in addition to monitoring fl ora and fauna. Concurrently, the company holds environmental education and degraded area recovery programs. Insofar as water resources are concerned, the Company undertakes campaigns to educate its employees to reduce water consumption, both at the industrial plants and at their homes. Usiminas is a signatory to the Pacto de Minas pelas Águas (Minas Pact for Water), a commitment made by the State of Minas Gerais productive sector before the State Gover- nment under which the entities have committed to act to reduce the demand for water resources in their processes - due to the water crisis that started in 2015 and is expected to continue in the upcoming years. Several actions have been carried out at the company to reduce water consumption at its sites, especially at the steel mills, which have great demand for this resource. Usiminas’ business units periodically monitor and control its plants’ noise levels and, thus, the nuisance to the community. This is done pursuant to the current technical standards. If any non-compliance is found, such as a noise level above the current legal standards, the issue is registered and addressed. The main goal of the company’s industrial waste management process is to reduce waste generation. Projects and actions are implemented to create value for the waste, through internal recycling, for use as input for the processes, or by selling it to third parties for use as raw materials. In 2015, work continued on the use of steel mill blast furnace slag in the cement industry. Additionally, the company is collaborating with a university to enhance the use of slag in agriculture. Other highlights were the consolidation of the internal recycling of the steel mills’ fi nes slurry in sintering, which used to be disposed of in land- fi lls, and the Caminhos do Vale (Valley Paths) Program, carried out together with the cities of Santana do Paraíso, Ipatinga, Coronel Fabriciano, and Marliéria, MG. The program’s objective is to use blast furnace slag on these cities’ secon- dary roads, improving accessibility to rural communities. Approximately 579,000 tons were applied, distributed among the municipalities, with 395 km of rural roads and 50 km of urban streets being benefi ted.

BIODIVERSITY

The conservation of biodiversity is one of the main sustainable development themes. To this end, Usiminas has programs in place designed for green area preservation and conservation and to provide special care to protected areas. Mineração Usiminas operates in a 7.46 km2 area in Serra Azul, between the municipalities of Mateus Leme, Itaúna, Itatiaiuçu, and Igarapé, MG. The Ipatinga Plant and Usiminas Mecânica, meanwhile, cover an industrial area of approximately 10 km2 in the city of Ipatinga, MG, and occupy an area adjacent to the Environmental Protection and Conservation Area - Rio Doce State Park. It should be emphasized that the Rio Doce State Park (PERD) was the ﬁ rst Conservation Area created in Minas Gerais and is home to the state’s largest tropical forest. PERD is classiﬁ ed as the Core Zone of the Atlantic Fo- rest Biosphere Reserve, recognized by UNESCO in 2008. The Ministry of the Environment considers it of “Extremely High Biological Importance,” the most important level in the analysis category, and the State of Mi- nas Gerais has declared it an “Area of Special Biological Importance.” The Rio Doce State Park region is the third largest lake ecosystem in Brazil. In 2010, the park was included in the Ramsar List, which features important wetlands worldwide. The Cubatão Plant, in turn, is located in a 12.5 km2 area, adjacent to the Serra do Mar State Park (SP). There is a management plan in place for the park, prepared taking into account the current situation in the region, namely the existence of an industrial hub in its buffer zone. IMPACTS ON BIODIVERSITY

In 2015, there were constant actions aimed at the prevention, control, and mitigation of Usiminas’ environmental impacts, especially at the mining and steel units, which have the greatest potential for pollution and impact on biodiversity. The highlight was the completion of the acid rain assessment study in the Rio Doce State Park due to the activities of the plant, and no such occurrence was found. The Cubatão Plant area is located in the Serra do Mar State Park buffer zone. There is an area registered as archaeological heritage in the Perma- nent Preservation Area, to which access is restricted. Scientiﬁ c research has been done at Morro do Casqueirinho, which is home to an archaeological heritage site (“sambaquis” and “caieira”). The archaeological program was completed in 2015, noting the historical heritage has been pre- served and that access to the area is restricted as a preventive measure. A forthcoming e-book is expected to be published in 2016 to disseminate the information collected at that archaeological site, with references to the history of occupation of Cubatão and of the Baixada Santista region. The Ipatinga Plant and Mineração Usiminas, meanwhile, continued monitoring and protecting their Environmental Protection Areas (EPAs) and Legal Reserves. In 2015, the RPPN - Usipa implementation process got underway, today an environmental preservation area of the Ipatinga Plant. The unit has protected areas, as shown in the table below.

Ipatinga Plant Located in the municipalities of Coronel Fabri- Riparian Forest Program ciano, Ipatinga, and Santana do Paraíso. Total area of 185.3 hectares Located in Ipatinga. Zoobotanical park Total area of 249 hectares Located in Ipatinga. Urban Woods Total area of 737.46 hectares Located at the Ipatinga Plant. Total area of industrial greenbelt 377 hectares Area due to the Environmental License Condi- tions. On the initiative of Usiminas the Private Natu- ral Heritage Reserve - RPPN Lagoa Silvana was Lagoa Silvana RPPN recognized in August 2014. Covering 255.86 hectares, the area was registered at the Real Estate Registry Ofﬁ ce in the municipality of Caratinga. Process underway for the creation of a RPPN in Ipatinga. Local Zone 15 - Usipa, covering the RPPN Zoobotanical Park. Area of 221.82 hectares. ÁREAS VERDES PROGRAM

Since its establishment, Usiminas has carried out green area implementation, restoration, and preservation actions in Ipatinga, MG, planting and supplying seedlings and doing fi rebreak maintenance work to prevent forest fi res. In 2015, 136,194 m2 of fi rebreaks were built and 22,399 seedlings of various species planted, of which 12,473 arboreal species seedlings, 5,531 fruit tree seedlings, and 4,395 ornamental plant seedlings. A total of 5,386 kg of humus were also processed.

XERIMBABO USIMINAS PROJECT

A pioneer in environmental education in Brazil, in 2015 the Xerimbabo Usiminas Project reached its 31st year in the Minas Gerais Vale do Aço and its 6th year in Itatiaiuçu, Belo Horizonte metropolitan area, where Mi- neração Usiminas is located. With the theme “Bios - What was it? What is it? What will it be?” the project invites us to examine possibilities when seeking sustainable solutions in the interaction with the environment. In 2015, the project, consisting of seminars for educators, competitions at schools, and cultural exhibitions, received a total of 61,317 visitors, among teachers, students, and members of the community. In 2015, the Xerim- babo Project hosted a cultural exhibition themed “Life is more,” presented by the Minas Gerais State Government and by Usiminas, which sponsored the event through the State Cultural Incentive Law. Throughout its history, the Xerimbabo Project has welcomed 2.4 million visitors, consolidating itself as a proposal for a comprehensive environmental education.

PLANTE UMA VIDA (PLANT A LIFE) PROJECT

The “Plante uma Vida” volunteer project is part of the environmental and sustainability actions carried out at the Cubatão plant. In all, 216 employees participated in the 2015 event, and 19 Atlantic Forest native plant species were used, among which Canjerana, Guanadi, Guabiroba, Jequeti- bá branco, Embaúba, Cedro/Cedro-rosa, Grumixama, Cereja do Rio Gran- de, Uvaia, Ingá de Metro, Ingá Feijão, Mirindiba, Dedaleiro, Araçá, Aldrago, Jerivá, Aroeira Mansa, Pau Cigarra and Ipê-amarelo-do-brejo. The seedlings are now part of the plant’s green area, which covers an area of more than 1 million m2, divided into natural areas, such as the Casquei- rinho and Tapera hills, and woodland and garden areas. ENERGY EFFICIENCY

Because it is energy-intensive, the steel industry is constantly on the lookout for technological and operational alternatives to increase its energy effi ciency. Over the years, Usiminas has been developing actions to reduce its operations’ consumption and increase energy effi ciency by adopting, among other measures, process control optimization, energy cogeneration through processes gas reuse, and alternative fuel use. Usiminas has an energy effi ciency diagnosis group for the steel mills, which was created to identify process and equipment improvement opportunities. In 2015, projects designed to reduce thermal energy consumption at Ipatinga Plant’s production lines stood out. The work afforded a 10.9% reduction in the specifi c consumption of thermal energy at the Heavy Pla- te Line and a 6.9% decrease in the specifi c consumption of thermal energy of the Hot Rolling Line. At Usiminas Mecânica, the work done to achieve energy effi ciency, which was directed to enhancing the energy management system and utilities, to acquire automated equipment, and to mechanized machinery retrofi t- ting stood out. Consumption by primary energy source

Non-renewable sources (GJ) Usiminas Mecânica Mineração Usiminas Steel Plants Total Energy (GJ) Coal 0 0 72,676,931 72,676,931 Crude oil 0 0 0 0 Gasoline 0 1 3,530 3,531 Diesel 633 288,413 150,305 439,351 Fuel Oil 0 0 24,702 24,702 Natural Gas 0 0 10,230,705 10,230,705 LPG 34,296 783 225 35,304 Purchased Coke 0 0 100,000 100,000 Subtotal 34,929 289,197 83,186,398 83,510,524 Ethanol 0 0 84 84 Oxygen 0 0 3,698,142 3,698,142 Nitrogen 0 0 4,915,456 4,915,456 Argon 0 0 61,134 61,134 Subtotal 0 0 8,674,816 8,674,816 Total Consumption of Direct Energy (GJ) 34,929 289,197 91,861,214 92,185,340

In steelmaking, in 2015 there was a reduction in total direct energy consumption of approximately 27 percent compared to 2014, mainly due to lower production levels. Indirect energy consumption by primary energy source Consumption of Electric Energy (GJ) Usiminas Soluções Mineração Steel mills Total Energy (GJ) Mecânica Usiminas Usiminas Purchased electric energy 43,886 61,935 141.049 22,288,348 22,527,967 Electric energy generated − − − 7,002,681 7,002,681 Total electric energy 43,886 61,935 141.049 29,291,029 29,530,648

The convention adopted by the Global Energy Balance report issued by the ABM (Brazilian Association of Metallurgy, Materials, and Mining) was used to convert MWh to Gjoules.

MATERIALS USED

The steel mining, manufacturing, and processing segments require the use of large volumes of raw materials and supplies. In 2015, the Ipatinga and Cubatão plants alone consumed 11.8 million tons, considering the main raw materials and non-renewable inputs needed for production. The lower consumption of raw materials in 2015, 17.4% less than the previous year, can be explained mainly by the shutdown of the blast furnaces at both plants. Mineração Usiminas Non-renewable materials Amount Argon, Natural Gas, LPG 39,736.9 kg Welding Consumables 4,290.0kg Paints, Solvents, Masses 2,360.9L

Ipatinga Plant Non-renewable materials Quantity (t) Steel and Aluminum 8,397 Anthracite 76,423 Limes and Slag 914,416 Coal 1,409,770 Coke 0 Petroleum Coke 370,155 Ores 3,921,899 Total of non-renewable materials 6,701,060 Cubatão Plant Non-renewable materials Quantity (t) Steel and Aluminum 6,675 Anthracite 112.436 Argon, Natural Gas, LPG 114,600 Limes and Slag 681,780 Coal 1,174,537 Coke 0 Petroleum Coke 277,939 Ores 2,770,109 Total of non-renewable materials 5,138,076

Usiminas Mecânica

Non-renewable materials Quantity (t) Argon, Natural Gas, LPG 27,017 Welding Consumables 40 Non-ﬂ at-rolled products 149,607 Flat-rolled products 23,378 Paints, Solvents, Masses 31,277 Total of non-renewable materials 231,319

Soluções Usiminas Non-renewable materials Amount Aluminum 1.10t Steel 726,553t Argon 40m3 LPG 105.96t Welding Consumables 1.62t Paints, Solvents, Masses 825.11L

MATERIALS COMING FROM RECYCLING

In 2015, the steel mills reused 3.6 million tons of recycled materials coming from the production process. Ipatinga Plant

Materials used originating from recycling Quantity (t) SINTER - RAF / DEGRADED 644,652 FINE GRANULAR ORE 81,575 SCALE 105,482 BLAST FURNACE COLLECTOR DUST 35,845 POWDER REMOVAL POWDER 9,371 STEEL MILL SLURRY 47,299 BLAST FURNACE SLURRY 0 INDUSTRIAL RECYCLED 218,753 TYPE C SCRAP 0 COKE / EXTINCTION FINES 122,748 CALCINED DOLOMITE SLURRY 16,851 SMALL SINTER 294 SMALL COKE 48,716 SCRAPPED IN-HOUSE SLAB 0 STEEL MILL B SCRAP 0 SCALE SCRAP 0 STEEL SCRAP 354,980 IRON SCRAP 0 STEEL MILL CONSUMPTION SCRAP STEEL 0 CLEANING PIG IRON SCRAP 30,943 PROCESSED SCRAP - STEEL / PIG IRON 50,903 STEEL SCRAP – PURCHASED 45,220 IRON PIG MADE INTO INGOTS - PURCHASED 29,094 TOTAL WEIGHT (t) 1,842,726

Cubatão Plant

Materials used originating from recycling Quantity (t) SÍNTER - RAF / DEGRADED 498,613 FINE GRANULAR ORE 106,097 SCALE 46,239 BLAST FURNACE COLLECTOR DUST 21,773 POWDER REMOVAL POWDER 0 STEEL MILL SLURRY 112,047 BLAST FURNACE SLURRY 58,467 INDUSTRIAL RECYCLED 397,057 TYPE C SCRAP 19,880 COKE / EXTINCTION FINES 92,687 CALCINED DOLOMITE SLURRY 0 SMALL SINTER 28,091 SMALL COKE 60,476 Materials used originating from recycling Quantity (t) SCRAPPED IN-HOUSE SLAB 0 STEEL MILL B SCRAP 18,517 SCALE SCRAP 66,829 STEEL SCRAP 96,244 IRON SCRAP 49,974 STEEL MILL CONSUMPTION SCRAP STEEL 44,950 CLEANING PIG IRON SCRAP 0 PROCESSED SCRAP - STEEL / PIG IRON 0 PURCHASED STEEL SCRAP 2,095 IRON PIG MADE INTO INGOTS - PURCHASED 0 Total Weight (t) 1,720,036

AIR EMISSIONS

Usiminas does extensive emissions control work seeking to reduce to a minimum its impact on air quality in the regions where it has operations. To this end, it has a monitoring program consisting of continuous mea- surement equipment, installed in the main stacks, and isokinetic monitoring equipment, both to control emissions coming from the dedusting systems and from the combustion processes at the industrial plants. In 2015, due to the crisis in the industry, the primary steel making area at the Cubatão Plant (Blast Furnaces, Sinter and Coke plants, and Steelworks) began shut-down. This will help reduce atmospheric emissions, especially, of particulate material and sulfur dioxide, among others. In 2010, aware of the importance of the climate change issue and of the importance of the steel industry in greenhouse gas emissions (GHG), Usi- minas started working with the help of external consultants. The fi rst steps were taken with the preparation of the GHG inventory. The methodology used was based on international standard ISO 14.064:2006 Part 1, “Specifi cation with guidance at the organization level for quantifi cation and reporting of greenhouse gas emissions and remo- vals” (ISO/TC ISO 207 2007) and on the “GHG Protocol.” Thus, a custom tool used to quantify GHG emissions associated with production processes was consolidated at the steel mills, which are major sources of emissions. Their inventories are calculated annually. In addition to this tool, the steel mills also prepare their inventories annually, in accordance with the ISO14.404-1 methodology (published in March 2013), as required by the WorldSteel Association to record the steel industry’s CO2 emissions. Usiminas contributes to the global database – “Data Collection System”, by sending the steel mills’ CO2 emissions results annually.

INITIATIVES TO REDUCE GREENHOUSE GAS EMISSIONS

Over the past few years, the steel mills have been monitoring the GHG emissions in their various processes. The main energy source the steel industry uses is coal, which explains the large volume of greenhouse gas emissions it produces. Therefore, reduction efforts should focus primarily on coal use effi ciency and on maximizing the use of process gases and waste. Other alternative energy sources are gaining strength, especially using natural gas in the energy mix to replace the petrochemical oil and liqui- fi ed petroleum gas (LPG), which contributes to reducing GHG emissions. Opportunities to decrease GHG emissions are being investigated and evaluated by monitoring each process’ emissions, fuel consumption and raw material used, by reusing gas generated in the production processes, and through the internal and external recycling of the industrial waste the plant generates. Relevant to the greenhouse gas emission reduction process, the energy effi ciency the several sites work on and the effective participation of the steel industry energy effi ciency diagnosis group have allowed for unit performance improvements. One of the 2015 highlights was the reduction of thermal energy consumption in the hot strip rolling and heavy plate furnaces at Ipatinga, MG. This was achieved mainly by modifying the combustion control loop and the furnace heating model. A few business units also adopt measures relating to emissions caused by road transport. Soluções Usiminas (Steel Processing) owns modern fl eets with up to 36 months of use and uses ethanol-fueled fl ex vehicles, a less polluting fuel. In addition, the vehicles are tuned-up every 10,000 km, ensuring employee safety and the necessary adjustments to prevent pollutant emissions into the atmosphere

DIRECT AND INDIRECT GREENHOUSE GAS EMISSIONS

In the steel mill activity, there was a reduction in greenhouse gas emissions in 2015, primarily related to decreased production. In any event, Usiminas maintains and seeks to maximize actions that contribute to mitigating greenhouse gas emissions, such as the internal reuse gases produced in the steelmaking process, the internal generation of the electricity needed to power industrial processes, the deployment energy efﬁ ciency projects, and the management and monitoring of critical consumption by operational areas, focusing on process performance. Ipatinga Plant

Direct emissions Quantity (in tons of CO2) Generation of electricity, heat or steam 1,251,897 Physico-chemical processing 4,684,384 Transportation of materials, products and waste 3,569 Opening of vents ND Fugitive emissions ND Indirect emissions Generation of purchased electricity, heat or steam 163,954 Total direct and indirect emissions 6,103,804

Cubatão Plant

Direct emissions Quantity (in tons of CO2) Generation of electricity, heat or steam 1,671,683 Physico-chemical processing 3,903,264 Transportation of materials, products and waste 12,942 Opening of vents NA Fugitive emissions NA Indirect emissions Generation of purchased electricity, heat or steam 1,796,293 Total direct and indirect emissions 7,384,182

Soluções Usiminas

Direct emissions Quantity (in tons of CO2) Generation of electricity, heat or steam --- Physico-chemical processing ----- Transportation of materials, products and waste ----- Opening of vents ----- Fugitive emissions ----- Indirect emissions Generation of purchased electricity, heat or steam 2,140.23 Total direct and indirect emissions 2,140.23 NOx, SOx, and other significant air emissions

Ipatinga Plant Emissions Quantity (t) NOx 11,376.61 SOx 7,005.66 Volatile organic compounds (VOC) 68.52 Stack and fugitive emissions Included in particulate matter (PM) Particulate matter (PM) 6,745.10 Total 25,196

Cubatão Plant Emissions Quantity (t) NOx 4,774.59 SOx 6,005.23 Volatile organic compounds (VOC) ND Stack and fugitive emissions 150.00 Particulate matter (PM) 2,498.37 Total 13,428.19

Soluções Usiminas Emissions Quantity (t) NOx 0.09 SOx 4.57 Volatile organic compounds (VOC) 0.09 Stack and fugitive emissions - Particulate matter (PM) 4.85 Total 9.60

Usiminas Mecânica Emissions Quantity (t) NOx --- SOx ----- Volatile organic compounds (VOC) 3.50 Stack and fugitive emissions --- Particulate matter (PM) 18.54 Total 22.04 AIR QUALITY

Because they are major operations and potential sources of impact on air quality in the regions where they operate, Usiminas’ steel and mining activities are monitored systematically, and effective, operating, and maintenance controls are deployed in the various sources of emissions. An area’s air quality is affected by several sources. Thus, a few care and monitoring measures are implemented in the regions where mining and steel units operate. In the cities of Cubatão and Ipatinga, the legal air quality parameters are monitored and watched for possible deviations. If an abnormality is detected, analyses are made and, if it is found the Plants are contributing directly to the issue, actions are taken to correct them. In Ipatinga, monitoring is continuous and automated with online data. A pioneer in the environmental education area in the country, the Xerimba- bo Project, which relies on high-tech instruments to monitor air pollutant concentrations and also local meteorological variables, totaling 19 parameters, installed in the vicinity of the Plant and operated by Usiminas. The results of this monitoring are fed automatically to Usiminas’ database and to these government agencies: State Attorney’s Ofﬁ ce, State Envi- ronmental Foundation (FEAM) and City Government of Ipatinga. Aiming to disclose air quality information to the Ipatinga community in a clear, objective manner, Usiminas has implemented and maintains four digital panels in the city, which display the Air Quality Index (AQI) of each station according to the criteria set by the environmental agencies. In Cubatão, air quality monitoring is done by the CETESB monitoring network, and there are three air quality metering stations in the city: Vila Pa- risi Station, Vale do Mogi Station, both located at the Industrial Hub; and Centro Station, located in the residential area. Usiminas monitors the air quality indices in the region daily, and shares, when necessary and together with the other companies in the Industrial Hub, control actions such as wetting of the driving routes.

WATER

Water is an essential and strategic input to Usiminas. The company works with a focus on reducing consumption and its reuse, whether through improvements in its production process or via reuse techniques. Most of the water used is directed to recirculating facilities that have been installed, allowing for its reuse. A small part is returned to the rivers after treatment. Usiminas takes water from rivers nearby its plants and from deep wells duly approved by the competent environmental authorities. In 2015, the Company’s total water consumption added up to 160.7 million m3, 98% of which used by the steel mills. Despite this high consumption, the average freshwater recirculation rate at the steel mills was 96%, the outcome of the internal work done in the pursuit of maximizing water reuse and rational use. In mining, the total consumption of fresh water was 30% lower in 2015 compared to 2014 due to the fewer plants in operation and in the steady state. At the Ipatinga Plant, water consumption was 12.6% lower than in 2014, due to production and internal actions aimed to reduce consumption due to the water crisis.

Location Ipatinga Plant Cubatão Plant Usiminas Mecânica Soluções Usiminas Mineração Usiminas Total Water Quantity(m3) Quantity(m3) Quantity(m3) Quantity(m3) Quantity(m3) consumption by source Sea water ----- 96,521,645.70 ------Surface fresh water 42,038,111.60 18,635,150.00 76,420.00 ----- 119,480.00 Groundwater ------3,231,161.00 Supply by the city or ------NA 67,944.29 other water supply companies Total water 42,038,111.60 115,156,795.70 76,420.00 67,944.29 3,350,641.00 consumption (m3)

Volume of recirculated water Recirculated water Recirculation (m3/year) rate (%) Ipatinga Plant 851,997,600.00 95.0 Cubatão Plant 569,610,240.0 96.8 Usiminas Mecânica ND ND Soluções Usiminas ND ND Mineração Usiminas 19,598,957.0 85.40

DAM MANAGEMENT

Mineração Usiminas has iron ore exploration and processing operations in the Serra Azul region, in the so-called Minas Gerais Iron Quadrangle. Part of the mined and treated material, which is not used for sale, is called operation tailings (non-toxic, inert material), stored in three tailings dams (Central, Somisa, and Samambaia). These geotechnical structures are regulated and audited by the relevant public bodies, namely: National Department of Mineral Production (DNPM) and the State Environmental Foundation (FEAM/MG).

Additionally, Mineração Usiminas has permanent a specialized team that monitors the structures pursuant to the best engineering practices and to the provisions of the prevailing legislation. Also, the structures are inspected periodically by external auditors to validate internal controls and stability and safety conditions. Because of this intense prevention and control work, the company regularly possesses and reports the dam stability statements issued by an independent external consultant to supervisory agencies. WASTEWATER

Wastewater discharged from all Usiminas business units added up to 130.6 million m3 in 2015. All wastewater coming from the group’s companies is treated before being returned to the environment. The treatment process includes decanting, ﬂ occulation, and ﬁ ltration steps. Thus, Usimi- nas meets the legal standards for disposal.

SOLID WASTE

At Usiminas, the volume of solid waste computed in 2015 was 5.5 million tons, 6 percent less than in the previous year due to the drop in the steel industry’s production. Non-hazardous waste accounts for 98.4% of the waste generated by the business units, mostly reused, either internally in the production process, or marketed to external recycling, equivalent to 5.4 million tons. Hazardous waste, corresponding to 1.6% of the total, underwent speciﬁ c treatment procedures with the co-processing, incineration or disposal in suitable and licensed landﬁ lls. The major residues marketed were blast furnace slag, all of which intended for the cement industry, and steel slag, primarily intended for use in the base and sub-base for paving.

Hazardous waste Ipatinga Plant Cubatão Plant Usiminas Mineração Soluções Total Mecânica Usiminas Usiminas Weight (t) Weight (t) Weight (t) Weight (t) Weight (t) Weight (t) Co-processing 9,504.0 123.8 18.0 355.3 100.4 10,101.5 internal recycling 33,342.6 40,561.8 −− −− −− 73,904.4 Treatment/landﬁ ll 306.3 1,408.0 34.0 0.0 2,464.6 4,212.9 Marketed 0.0 103.2 −− −− 145.7 248.9 Subtotal 43,152.9 42,196.8 52.0 355.3 2,710.7 88,467.7 Non-hazardous waste Weight (t) Weight (t) Weight (t) Weight (t) Weight (t) Weight (t)

Landﬁ ll 7,447.0 3,123.8 259.0 0.0 317.5 11,147.3 Reuse 1,090,078.5 1,669,293.3 7,120.0 0.0 −− 2,766,491.8 Marketing 1,713,757.2 894,730.1 −− 1,120.3 30,206.7 2,639,814.4 Others (specify) 0.0 562.2 0.0 378.6 940.8 Subtotal 2,811,282.8 2,567,709.4 7,431.0 1,120.3 30,902.8 5,418,446.3 Total 2,854,435.7 2,609,906.2 7,483.0 1,475.7 33,613.5 5,506,914.0

LEGAL ISSUES

During 2015, environmental agencies (IBAMA and Supram) issued Usimi- nas fi ve notices of infraction for the following business units: administrative headquarters, Ipatinga Plant, Cubatão Plant, and Mineração Usimi- nas. Defenses were fi led for all cases requesting mischaracterization, and no fi ne was paid. FINANCE ECONOMIC OUTLOOK

The world economy continued to grow at moderate rates, driven by the good performance of developed economies, which continued to recover, while emerging economies experienced a slowdown. In the US, the 2.5% growth in economic activity in 2015, compared to 2.4% in 2014, according to an estimate from the International Monetary Fund (IMF), allowed the Federal Reserve (FED) to increase the interest rate by 0.25 percentage points in December. Economic activity in the Eurozone continued to grow at a moderate rate, estimated at 1.5% for 2015, compared to 0.9% in 2014, according to the IMF. Among emerging economies, China’s economic growth continued to fall, from 7.3% in 2014 to 6.9% in 2015. However, this slowdown was more intense in the industrial sector and in aggregate investment, affecting the world demand and the prices of commodities. In Latin America, most countries showed modest recovery. However, Bra- zil, which is currently facing deep recession, experienced a decline in its GDP. The weak economic activity resulted in the recession worsening in 4Q15, after a retraction of 1.7% in the 3Q15 compared to the 2Q15. The IMF estimates a decline in Brazil’s GDP of 3.8% for 2015. The recession Brazil is facing is already the longest since the 90s, and the increased deﬁ cit in public accounts, together with the unlikelihood of an economic recovery within the coming years, caused the country to lose its investment grade status from two of the main credit rating agencies at the end of 2015. In the Brazilian industrial sector, the situation became even more challenging. Industrial production declined by 8.3% in 2015. Considering the high inventories, coupled with consumer and entrepreneur conﬁ dence indicators at historical lows, there are no signs of an imminent recovery. Steel- -intensive industrial sectors recorded a decline of 25.5% in the production of capital goods, and of 18.7% in the production of durable goods.

THE CHALLENGES FACED BY THE STEEL INDUSTRY

In 2015, the world steel industry faced an extremely challenging business environment, marked by a drop in the world demand for steel and a high production capacity surplus. The World Steel Association (WSA) estimates a decrease of 1.7% in apparent world consumption for 2015. According to the WSA, the greatest impact comes from China, where the downturn in civil construction and investments reduced steel consumption by approximately 3.5%. This impact may be even greater considering the weakening of the demand from the major steel-consuming markets over the last quarter of the year. The economic slowdown in China and its consequent impact on the prices of commodities heightened risk aversion in global markets, generating signifi cant impacts on investment levels and global steel consumption. In Brazil, according to Instituto Aço Brasil (the Brazilian Steel Institute) - IABr, consumption of steel products dropped to 21.3 million metric tons, a decrease of 16.7% compared to 2014. Flat steel production, including steel slabs, decreased by 17.7%. The unclear economic scenario and the less optimistic expectations regarding a short-term economic recovery led customers to reduce their pur- chases, adjust inventories and postpone investments. Usiminas estimates that all segments of the fl at steel market were strongly impacted by the downturn in industrial activities during the period. Below we present the main fl at steel consuming sectors and their behavior in the Brazilian market during 2015:

Automotive Industry The economic scenario signiﬁ cantly affected the results of the automotive industry in Brazil. According to data disclosed by Associação Nacional dos Fabricantes de Veículos Automotores (the National Association of Mo- tor Vehicle Manufacturers) - ANFAVEA, there were declines in sales and production of 26.6% and 22.8%, respectively.

Manufacturing Industry According to Confederação Nacional da Indústria (the National Industry Confederation) - CNI, revenues in the machinery and equipment sector dropped by 22.8%. Therefore, 2015 will have been the third consecutive year of retraction for this industry.

White Goods According to data from the Industrial Survey conducted by Instituto Bra- sileiro de Geograﬁ a e Estatística (the Brazilian Institute of Geography and Statistics) - IBGE, the production of the appliance industry recorded a decline of 22.1% during the year. The industry continues to be affected by the higher unemployment rate, slower pace of increase in household income, and decline in consumer conﬁ dence. In the electrical and electronic sector, there was an annual reduction of 12.9%.

Civil Construction The civil construction industry continued to experience a slowdown in 2015. According to the IBGE, the production of traditional civil construction inputs (ICC) closed the year down by 12.9%. Investments, both in infrastructure and real estate market, were signiﬁ cantly reduced, leading to a decrease in the demand for construction materials.

Distribution According to Instituto Nacional dos Distribuidores de Aço (the National Institute of Steel Distributors) - INDA, ﬂ at steel sales in the distribution network dropped by 19.9% in the year. DEPRESSED PRICES IN THE IRON ORE MARKET

The prices of international commodities continued to drop signiﬁ cantly: from US$ 90.0/metric ton in 2014 to US$ 55.7/metric ton in 2015, a decrease of 37.8%.

The slowdown in China’s GDP growth rate, stabilization of steel production, decline in steel prices in the international market, and a possible increase of more than 50 million metric tons in iron ore supply in 2016 draw a pessimistic scenario for the mining industry, with international prices at very low levels.

NET REVENUE

In 2015, net revenue amounted to R$ 10.2 billion, against R$ 11.7 billion in 2014, due to the smaller volumes of steel and iron ore sold, caused by a market retraction experienced by the Company, except for Usiminas Me- cânica, whose net revenue posted an increase of 9.4% in the period.

Net Revenue Breakdown 2015 2014 Domestic Market 79% 85% Exports 21% 15%

Total 100% 100%

STEEL SALES AND PRODUCTION

In 2015, Usiminas sold a total of 4.9 million metric tons, against 5.5 million metric tons in 2014, a decrease of 11.3%. The domestic market, which is the Company’s largest market, recorded sales of 3.6 million metric tons in 2015, a decrease of 21.5% compared to 2014, due to the weak demand in Brazil. Exports reached 1.3 million metric tons, an increase of 36.8%, partially off- setting the decrease in sales in the domestic market. The domestic market accounted for 73% and exports for 27% of the sales mix.

Sales mix 5,541 4,915 17% 27% Domestic Market

83% 73% Exports

2014 2015 Main export destinations

16% 25% 1% 2% 4%

7% 18% 7% 15%

In 2015, production totaled 5.0 million metric tons, compared to 6.1 million metric tons in 2014, a decline of 17.3%, since the Com- pany had to adjust to the slowdown in the demand for steel, which presented a strong retraction in the domestic market in 2015.

Crude Steel Production Thousand tons 2015 2014 Ipatinga Mill 2,913 3,450 Cubatão Mill 2,094 2,605

Total 5,007 6,055

IRON ORE SALES AND PRODUCTION

In 2015, the Company produced 3.9 million metric tons of iron ore, a decrease of 36.2% compared to the production in 2014, of 6.1 million metric tons. The production volume had to be adjusted to match the volume of sales, which totaled 3.8 million metric tons, a decrease of 32.6% compared to 2014, due to logistic restrictions on exports, and a decline in steel consumption in Brazil. The volumes of iron ore produced and sold are presented in the table below:

Iron Ore Thousand tons 2015 2014 Production 3,868 6,067 Sales – Third Parties - Domestic Market 279 833 Sales – Exports 0 680 Sales to Usiminas 3,511 4,110

Total Sales 3,790 5,623 COST OF GOODS SOLD (COGS)

In 2015, COGS amounted to R$ 10.0 billion, against R$ 10.7 billion in 2014, a decrease of 6.5%. The gross margin in 2015 was 1.7%, compared to 8.8% in 2014, as shown in the table below:

Gross Margin 2015 2014 1.7% 8.8%

OPERATING INCOME AND EXPENSES

In 2015, selling expenses totaled R$ 258.1 million, compared to R$ 290.9 million in 2014, mainly due to a decrease in distribution costs and expen- ditures on third-party services, but were partially offset by an increase in the allowance for doubtful accounts and general expenses. In 2015, general and administrative expenses amounted to R$ 440.1 million, compared to R$ 501.5 million in 2014, which represented a decrease of 12.2%, resulting from a 9.0% decrease in direct labor expenses, 7.9% decrease in third-party services, and a 22.1% decrease in general expenses. Other operating expenses were negative by R$ 3.2 billion in 2015, compared to positive expenses of R$ 278.7 in 2014, due to the following factors:

• Impairment of assets in Mineração Usiminas, totaling R$ 2.1 billion, accounted for in 2Q15 and 4Q15; decline in the steel-making activity (mainly in the Cubatão coking plants), totaling R$ 357.2 million; and in Soluções Usiminas, totaling R$ 56.7 million, totaling R$ 2.6 billion in 2015. The impairment of assets accounted for in 2014 was not material. • Provisions for expenses related to the restructuring of the steel business (dismissals of employees in the Cubatão plant totaling R$ 93.8 million, due to the temporary stoppage of this plant’s primary areas, accounted for in 4Q15), and Mineração Usiminas (renegotiation of the domestic freight agreement with MRS on a take-or-pay basis, totaling R$ 163.0 million, accounted for in 4Q15). In 2015, the provision for restructuring amounted to R$ 256.8 million. No provision for business restructuring was accounted for in 2014. • Revenue from sales of electric power totaled R$ 65.4 million 2015, compared to R$ 378.8 million in 2014. • The result from sales and write-offs of assets was negative by R$ 56.7 million in 2015, compared to a positive result of R$ 54.0 million in 2014. Net operating expenses totaled R$ 3.9 billion in 2015, compared to R$ 513.8 million in 2014. The performance of the Company’s operating margin was as follows: Operating Margin 2015 2014 -36,6% 4,5%

EBITDA

In 2015, Adjusted EBITDA was R$ 291.5 million, against R$ 1.9 billion in 2014, due to extraordinary effects during the period, and the worse performance of the units, mainly due to the lower volumes and prices of steel and iron ore sales. Usiminas Mecânica was the only exception, reaching an EBITDA of R$ 86.8 million, a growth of 73.7% compared to 2014.

WITHOUT EXTRAORDINARY EFFECTS, EBITDA WOULD HAVE BEEN HIGHER

Excluding the extraordinary effects of the provisions related to the restructuring of the steel and mining businesses, totaling R$ 256.8 million; the result from sales and write-offs of assets, totaling R$ 56,7 million; and the result from electric power sales, totaling R$ 65.4 million; Adjusted EBITDA reached R$ 539.6 million, with an Adjusted EBITDA Margin of 5.3%, in 2015.

EBITDA Breakdown Consolidated (R$ thousand) 2015 2014 Net income (loss) (3,684,977) 208,479 Income tax/ Social contribution (1,189,922) (24,562) Financial result 1,245,693 522,831 Depreciation, Amortization 1,311,699 1,114,597 EBITDA – Instruction CVM 527 (2,317,507) 1,821,345 Equity in the Results of Associate and Subsidiary Companies (95,582) (183,780) Joint Subsidiary Companies proportional EBITDA 147,028 225,506 Impairment of assets 2,557,533 -- Adjusted EBITDA 291,472 1,863,071

FINANCIAL RESULT

In 2015, net fi nancial costs totaled R$ 1.2 billion, compared to R$ 522.8 million in 2014, due to the strong depreciation of the real (47.0%) during the year, resulting in higher foreign exchange losses: R$ 1.1 billion in 2015, compared to R$ 193.1 million in 2014. Consolidated Financial Result R$ thousand 2015 2014 Net Currency Exchange Variation (1,072,090) (193,118) Swap Transactions Market Cap. 240,389 27,883 Income and Infl ationary Variation over Financial 221,490 193,452 Applications Other Financial Income 207,048 143,836 Interest and Infl ationary Variation over Financing (607,943) (476,405) and Taxes Payable in Installments Other Financial Expenses (234,587) (218,479) FINANCIAL RESULT (1,245,693) (522,831) + Appreciation / - Depreciation of Exchange Rate (R$/US$) - 47.0% -13.4%

SHARE OF EARNINGS (LOSSES) OF ASSOCIATES AND SUBSIDIARIES

In 2015, the Company’s share of earnings of associates and subsidiaries was R$ 95.6 million, against R$ 183.8 million in 2014, mainly due to the worse performance of Unigal and MRS Logística, caused by the slowdown in Brazil’s economy.

NET INCOME (LOSS)

The Company recorded a net loss of R$ 3.7 billion in 2015, compared to a net income of R$ 208.5 million in 2014, mainly due to the recognition of impairment of assets totaling R$ 2.6 billion, and an increase of R$ 1.2 billion in ﬁ nancial costs in 2015, due to the 47.0% depreciation of the real during the year. The worse performance of the Company’s steelmaking, mining and steel transformation operating activities also contributed to this outcome.

WORKING CAPITAL

In 2015, working capital totaled R$ 2.3 billion, a decrease of 1.9% in rela- tion to 2014 (R$ 2.4 billion). Although the Company achieved a signiﬁ cant reduction of raw materials and steel inventories in terms of volume and millions of Real, this reduction was partially offset by the decrease in accounts payable and increase in accounts receivable. INVESTMENTS (CAPEX)

CAPEX totaled R$ 784.1 million in 2015, a decrease of 29.4% compared to 2014, as a result of the Company’s strategy for a strict control over CAPEX. The main investments made referred to sustaining CAPEX and the renova- tion of Coking Plant 2 in the town of Ipatinga. Of the total investments in 2015, 79% were in steelmaking, 15% in Mine- ração Usiminas, 5% in Soluções Usiminas, and 1% in Usiminas Mecânica, approximately.

INDEBTEDNESS

Consolidated gross debt was R$ 7.9 billion on 12/31/2015, against R$ 8.1 billion on 9/30/2015, a decrease of 2.8%, due to repayment of the debt and a 1.7% appreciation of the real against the US dollar during the period, which directly impacted the portion of the debt denominated in US dollars, which accounted for 47% of the total debt on December 31, 2015. In 2015, consolidated gross debt totaled R$ 7.9 billion, against R$ 6.7 billion in 2014, a decrease of 17.7%, due to a 47.0% depreciation of the real against the US dollar during the period, which directly impacted the portion of the debt denominated in US dollars, which accounted for 47% of the total debt at December 31, 2015. On December 31, 2015, 24% of the debt had a short-term maturity, and 76% a long-term maturity. Usiminas obtained the proper waivers from its creditors for the covenants it failed to comply with on December 31, 2015. The table below presents the indexes of consolidated debt:

Total Indebtedness by Index – Consolidated The chart below presents the cash position and debt proﬁ le, in millions of Real, on December 31, 2015:

CAPITAL MARKETS

The Usiminas common share (USIM3) closed the 4Q15 quoted at R$ 4.02, and its preferred share (USIM5) at R$ 1.55. USIM3 depreciated by 51.3% and USIM5 by 53.7% during the quarter. In the same period, Ibovespa was down 3.8%. Usiminas has American Depositary Receipts (ADRs) traded on the US over-the-counter market: USDMY, backed by common shares, and USNZY, backed by Class A preferred shares. On December 30, 2015, USNZY ADR, which has greater liquidity, was quoted at US$ 0.37, and recorded a depreciation of 56.5% in the quarter. Usiminas also has shares traded on LATIBEX, a segment of the Madrid Stock Exchange: XUSI preferred shares and XUSIO common shares. At De- cember 30, 2015, the XUSI share was quoted at € 0.35, down 55.1% in the quarter. At December 30, 2015, the XUSIO share was quoted at €0.98, down 47.9% in the quarter.

DIALOGUE WITH INVESTORS

Usiminas maintains an investor relations channel, both in Brazil and abroad, with a view to ensuring transparency and an open communication with its investors, as well as a wide dissemination of information, on a simultaneous basis, in all the markets where its securities are traded.

During 2015, a number of meetings were held with investors and market analysts, such as the public presentation organized by Associação dos Analistas e Proﬁ ssionais de Investimento do Mercado de Capitais (the Association of Capital Market Analysts and Investment Professionals) - APIMEC.

Usiminas attended several conferences, directly interacting with Brazilian and foreign investors. In order to serve analysts and investors, the Company also organized visits to its main manufacturing units (Ipatinga, Cubatão and Mineração Usiminas).

Detailed information on the Company’s results, by business unit, is available at www.usiminas.com/ri. ABOUT THE REPORT

COORDINATION AND CONTENT Corporate Communication Department

WORK TEAM Audit Department Customer Service, Quality and Product Assurance Department Controlling Department Legal Department Environmental Department Human Resources Department Investor Relations Department Workplace Safety Department São Francisco Xavier Foundation Usiminas Cultural Institute Previdência Usiminas

GRAPHIC PROJECT Leonardo Galvani

PHOTOGRAPHS Photo Collection of Usiminas Leonardo Galvani Marco Mendes Rodrigo Zeferino

USIMINAS- Usinas Siderúrgicas de Minas Gerais S.A. Rua Prof. José Vieira de Mendonça, 3011 – Engenho Nogueira CEP 31310-260 – Belo Horizonte – Minas Gerais www.usiminas.com