OREANDA-NEWS. May 04, 2011. Usiminas, the leading player in the Brazilian flat steel market, ended the 1st quarter 2011 with BRL  16 million net income, down 94% from 4th quarter 2010 figures. The main factors behind this drop were non-recurring foreign exchange losses (in the amount of BRL  125 million) in connection with the divestiture of Ternium, the continued increase in raw material costs and an exchange rate that favors imports.

The EBITDA reached BRL  337 million in 1st quarter 2011, or 1.4% higher than in the previous quarter. The 11% EBITDA margin represented a 0.2 percentage points increase on the same comparison basis. The net revenue remained at the same level as that of the previous quarter, with a 1% decline in the period, totaling BRL  3.1 billion.

The crude steel output at the Ipatinga and Cubatao mills achieved 1.8 million tonnes, having risen 12% when compared to that of 4th quarter 2011. Taking the same comparison basis, the rolled steel output increased 8% to 1.7 million tonnes.

Usiminas’ shipments amounted to 1.6 million tonnes during the first quarter 2011, or 1% higher than the 4th quarter 2010 figures. When compared to the previous quarter, the domestic market took 15% more or 1.2 million tonnes in total. As a result of the stronger focus on meeting the domestic demand, the exports dropped 30% from the last quarter of 2010, having reached 0.4 million tonnes during the 1st quarter 2011.

Mineracao Usiminas

The iron ore output reached 1.6 million tonnes or 10% less than that of past quarter. Around 1.0 million tonnes were shipped to the Cubatao (SP) and Ipatinga (MG) mills, which corresponds to 6% more than the 4th quarter 2010 volume. For this year, Mineracao Usiminas estimates the production to total 8 million tonnes and exports around 1 million tonnes.

Focus on investments

The first quarter 2011 represents a major step for Usiminas in the consolidation of its investment strategy, which contemplates BRL  2.8 billion expenditures this year. Such expenditures amounted to BRL  1 billion in the first quarter, up 5% from the 4th quarter 2010 level.

Among the investment projects is the new galvanizing line in the Ipatinga mill, which will be started up still in the first half this year. The project will increase by 500,000 tonnes the production capacity of galvanized steels for the automotive industry, home appliance, civil construction and distribution. Another highlight is the on-going construction of the new hot strip mill in the Cubatao mill. It will add 2.3 million tons/year to the company’s hot-rolled steel capacity.

Iron ore, energy and coke

Mineracao Usiminas plans to reach a production capacity of 12 million tonnes/year by the end of 2012. This volume means approximately 70% growth from the present level of 7 million tonnes/year. In order to accomplish this goal, the mining subsidiary started an BRL  550 million investment plan this year, which will include two new sinter feed and pellet feed concentration plants. The overall investment over the next four years is estimated at BRL  4.1 billion, which will take the production capacity to 29 million tonnes of iron ore by 2015.

As an integral part of the strategy of vertical integration of its value chain, Usiminas will optimize the present electric power consumption with an aim to become self-sufficient by 2015. Among the contemplated alternatives to achieve such a goal are investments in technologies, fuel mix optimization processes and co-generation, as well as the acquisition of interests in energy-generating assets.

After the start-up of the coke plant no. 3 in 2010, which increased the yearly coke production capacity by 750,000 tonnes, the next step to be taken by Usiminas toward the self-sufficiency in this operating input is the revamp of the coke plant no. 2. This project will be implemented this year.