Good morning, ladies and gentlemen, and thank you for holding. At this time, we would like to welcome everyone to CSN's conference call to present results for the second quarter '22. Today, we have with us the Company's executive officers. We would like to inform you that this event is being recorded, and all participants will be in listen-only mode during the Company presentation. Ensuing this, there will be a question-and-answer section at which time further instructions will be provided. We have a simultaneous webcast that may be accessed through CSN's Investor Relations website ri.csn.com.br/english, where the presentation is also available. The replay of this event will be available soon after the closing for a period of one week. Please feel free to flip through the slides at your own convenience. As a reminder, some of the forward-looking statements made herein are mere expectations or trends and are based on current assumptions and opinions of the company management and they may differ materially from the results, performance and events as they do not constitute forecast. In fact, actual results, performance and events may differ materially from those expressed or implied by forward-looking statements as a result of several factors, such as general and economic conditions in Brazil and other countries, interest rate and exchange rate levels, future rescheduling or prepayment of debt denominated in foreign currencies, protectionist measures in the U.S. Brazil and other countries, changes in laws and regulations and general competitive factors globally, regionally or nationally. I would now turn the conference over to Mr. Marcelo Cunha Ribeiro, CFO and Investor Relations Executive Officer. He will present the operating and financial highlights for the period. Mr. Cunha Ribeiro, you may proceed, sir.

Good day to all of you, and thank you for participating in our conference call. Here, we have the executive directors of the Company as well as our Chairman, Benjamin Steinbruch, who will participate in the Q&A. We begin with the presentation on page 2. And this was a period marked by enormous uncertainty and volatility in the steel and mining market. The diversification of our businesses allowed us to have strong results, although mining was impacted by the drop of prices in the quarter, a spotlight on the cement segment, which presented record results with a recovery of prices. As a qualitative highlight of what we do, we announced investments in energy, a solar plant and Quebra-Queixo as well as with the company CEEE-G, which will allow us to become self-sufficient and become very competitive in terms of our businesses. We go on to page number 3 and the evolution of the EBITDA. It's very clear that the Company has been through ups and downs within a scenario of very volatile prices, especially in mining. 2021 was marked with very high iron ore prices that continued during the second quarter, bringing our EBITDA closer to the present day levels. In the first quarter, a rising iron ore price, we had a reversion of the provision for provisional prices, which helped us in the results. But in the second quarter, we were impacted with a drop in price in iron ore, a reversal of provisional prices, and we had a negative result for the period. EBITDA reached BRL 3 billion, with a variation of 1.5 negative in mining, offset by a stable quarter in steel with good volumes and an increase in prices and margins, very close to a record. And speaking about cement, a growth of 64% in operational…

A good day to all of you. We're going to speak about ESG, and I would like to highlight the publication of our 2021 integrated report. And we will include indicators, KPIs that are relevant and of importance to the Company, and you will be able to follow up on these quarter-on-quarter. This enables us to be very transparent with our audience. We have reports that were published in the second quarter for mining, cement and steel. And as we had mentioned, we're presenting all of this according to the TCFD reporting format. We have had a continuous evolution in our ESG ratings. And once we analyze the new cycle, we will have further enhancements. We have also launched the Company's new ESG website, where you can find more updated information. In this last quarter, we signed with Shell and Itochu a memorandum of understanding to work jointly on decarbonization and operational efficiency initiatives for coal projects, fleet projects that are presently already being tested in the company. Now, when we speak about decarbonizing, we have had some highlights in the cement operation with the co-processing operation kickoff at Cimentos Arcos with a quarterly reduction of 8% in CO2 emissions. And Arcos will have electric trucks, and these are the first trucks in Brazil. And they are being tested at CSN Mining. We have also made great strides in terms of our dam management. The Auxiliary Vigia dam was definitely unregistered as a dam, and we're following the schedule for the decharacterization of dams, with the completion scheduled for the next quarter. In safety, we had the best performance in the historical record of the Company. And we feel that this is our best year. When we compare this quarter with the same period last year, we had a reduction 27% in the accident frequency rate and 26% in the number of total accidents. Once again, the very best figures we have ever had in terms of our safety background, and we continue to make strides in terms of making the company more social and diverse. We had an increase of 70% in the participation of women in the Company. We have a higher representation when compared to the same period last year. Well, with this, we can now go on to our question-and-answer session.

Our first question comes from Isabella Vasconcelos from Bradesco BBI.

I have two. The first referring to your price dynamic. How you look upon this and if there are pressures to offer greater discounts? The second question refers to capital allocation. Recently, you have carried out three acquisitions in energy. I would better like to understand the mindset of the Company at present. The amounts that you had mentioned of BRL 3.29 billion, if those are now out? And what has changed in your scenario? Is it more challenging? And if you're going to make investments outside of Brazil? Thank you very much.

Good morning, Isabella. This is Marco speaking to you. An important point that I read in your report to Dave and the Goldman report as well is that in your report, you speak about a rebound in the second half of the year led by China. And in the report of Goldman, they say that we were better than China in August. What do we believe will happen in the international scenery and what will happen in Brazil as well? We have a positive overbooking in several sectors, air conditioning, automotive. What is interesting is that our steel, coal, cement and iron ore inventories are low. This market dynamic and the possible rebound in China in the second half of the year will leverage the situation worldwide. I would like to remind you that if you think of premiums, we have a BK in China that reached a level that is impossible to continue with. We're referring to $596 per ton FOB. And 3, 4 months ago, it reached $845 in the USA. The lever of BQ is 280, 920, in Europe, 780, and they have both reached $1,600. So, when it comes to premiums in BQ, the premium still is very relevant, representing 20% to 24%. Perhaps what is more uncomfortable is the premium of 34% in rolled products, laminates. What will be the dynamic in the third quarter? We should have a more stable price situation. We're going to fight more in the markets of interest where we have zinc products and domestic products vis-Ã -vis imported products, and we have 8% to 10% sales more in the third quarter than in the first quarter. Therefore, the scenario is positive. We're observing what is happening in economy, the reality. The signs are very interesting. There is more money…

Well, thank you. Thank you very much. That is very clear.

The second question, I will begin answering it, but Benjamin is here with us. Without a doubt, he will also complement it. From the financial viewpoint, we do have to be more cautious there's greater volatility in the price of commodities, the scenario of China, inflation, the potential of recession, all of this, given our strategy of maintaining our leverage low, makes us become more cautious when it comes to new investments. We do want to grow during the period doubtlessly, but we still haven't announced projects because we're not fully convinced about each of them. We're carefully serving each product and we will only put them in place when we're truly convinced that they will maintain our conservative capital structure as it was planned.

Our next question comes from Daniel Sasson from Itau BBA.

My first question still refers to capital allocation. Marcelo remarked on the leverage ending the year at 1.4% vis-à-vis EBITDA already considering the disbursements with Holcim Lafarge. My question refers to how this impacts your short-term capital allocation plans if you have slowed down the pace in the last two months in June and July? Are you awaiting to see if there is more visibility in the second half of the year to resume your program, or will you be more aggressive in your capital allocation program? Perhaps you think your assets have been under-evaluated, and there's still a good source of cash for you. My second question refers to steel volumes in Brazil. A question for Martinez. In the first half of the year, your total volumes had a drop of 14% vis-à-vis the first semester and the guidance is an increase of 11%. What do you expect for the third quarter? Martinez had a more positive viewpoint. But, is there room for a review of that growth guidance in terms of steel if it will have a drop? These are my questions. And thank you very much.

Well, let's begin with capital allocation. It's a follow-up of the answer I gave Isabella. The buyback of shares as part of this context. We continue to think that the shares are unpacked from the fundamentals of the Company, and we do prioritize a sound capital structure because of the uncertainties we're proceeding at a different pace. But we will maintain our dividend policy. As always, we have high profitability. This will mean high dividends for CSM and mining, and the acquisitions will take place when we have a better visibility of capital allocation. And this, of course, includes M&A opportunities or greenfield acquisitions in the USA. One priority may replace another. This is how we have made decision in terms of the buyback. In mining, we're very careful with liquidity. And we have to think carefully. In terms of this, we're quite concentrated on having low leverage and maintaining our dividend policy, the same policy we have had in the last few years. I would like to complement the answer, both for Isabella and yourself regarding capital allocation. It mirrors what we're thinking in terms of the business. We had a second quarter that was a completely different, disorganized in terms of the change of prices, the change of logistics and with symptoms that are completely different in terms of raw material and the end product. We were working at full prices for raw materials, and we now observe a significant retraction in terms of prices in Asia. This still has not had a reflection in the USA and Europe, the drop of prices, aggressive drop of prices. We have a logistics lack of organization, delays in deliveries, enormous lack of consistency within the variables that we normally work with. So, I can say that it was a second…

Our next question comes from Carlos De Alba from Morgan Stanley.

Maybe this is repetitive, but just to make sure that I understood all the explanation. If we can summarize it. So, for the third quarter, you guys expect higher revenues on the back of higher volumes as you will destock iron ore and steel. Prices for iron ore probably will be lower in the third quarter. What about prices for steel? You had a very good realized price in steel in the second quarter, but we have seen at least for HRC, the benchmark has been coming down in recent weeks/months. So, what do you see in terms of prices for the third quarter in steel? And given that you'll be selling more volumes with higher costs that you incurred in the past quarters, does this mean that EBITDA will probably increase on a quarter-over-quarter basis because of the higher volumes, but your EBITDA margin will probably drop? I just want to make sure that I understand, in a sustained way, the message. Thank you.

Carlos, I'm going to repeat what I said about prices. In the second quarter, we preferred prices over volume. In the third quarter, we have a somewhat higher inventory. We have to destock,, and part of this destocking has to be in the domestic market. We're counting upon a market improvement. The scenario is quite positive. And in the third quarter, we will have more stable prices with a significant drop of imports in the third quarter. In the case of CSN, we cannot forget that we have 120,000 tons of imported material coming into the country. 75% is part of the material that we manufacture. With a premium of 30%, you can act. You have to operate based on those volumes. In the third quarter, we have a higher sales volume already sold out in several sectors. We don't put all of our eggs in the same basket, an increase of 8% to 10%. And in the fourth quarter, we're counting on a recovery of prices at international level. All the Chinese steel plants, without exception, are working with a negative EBITDA. Europe and the United States are also having a profitability that is not very desirable in this sector. I think there will be a recovery. And in the fourth quarter perhaps we can see a recovery beyond volumes, a recovery for prices, but we will recover our volumes and maintain the prices very stable.

All right, excellent. Thank you. And just on the slab cost. If I understood correctly or heard correctly, you are targeting BRL 3,700 per ton. That is a significant drop from the 400 -- sorry, BRL 4,386 that you did in the second quarter. Is this mostly a reduction in iron ore and coking coal, or can you break down how do you expect to get to the 3,700, and by when do you think you're going to get there?

Yes. Carlos, those are the figures for the end of the third quarter, perhaps September, beginning of the fourth quarter. And of course, we're counting with the curve of the ships that have been acquired with different raw material coal, coke and iron ore. And they're also including a higher production. In my presentation, we produced 900,000 tons of slab this quarter. We should produce more in the third quarter, and we're going to maintain our fixed costs stable. This is the cost of slab loaded into our rolling mill. And these were acquired at specific moments during the last weeks at good moments and this will lower the average. Now, dilution of fixed cost and an increase in slabs will enable us to reach that level of 3,700.

Our next question comes from English. Mr. Morris?

There are headlines that you've been discussing with Sao Marco bondholders. Could you let us know what exactly were the topics here? I guess, it's about making an offer, but I was thinking about what's your framework of thought, what's potential timing, and what kind of financing alternatives you're considering given the current high interest rate environment? Thank you.

Thank you for the question. We need to take into account what the Sao Marco shareholders want. We respect that. What happens is that there is a process, there's a situation where a group of creditors could have as a result of the debt conversion a share part -- share stake in the company. We're conversing with these groups. It's a typical situation. Because of this, we have hired an advisor who was more assertive in our interaction. We have no control over the timing, nor the result. This is a very complex situation with multiple factors. There's a low probability that this will advance, but as we're dealing with a unique asset in the sector, we do want to remain well informed. That is why we're having the conversations.

As we have no further questions, we will return the floor to Mr. Marcelo Cunha Ribeiro, the CFO and IRO Executive Director, for the closing remarks. You may proceed, sir.

Well, thank you all for the questions. Thank you for attending our call. We bid you farewell with a message that our expectation is for third quarter that will be excellent. Operationally, we will have a drop in inventories, a production that is better in terms of mining and steel and with the cement business doing its very best. Now, there is a very volatile and complex environment in terms of raw material and others, but we're going to do our best in terms of volumes, prices, and we are going to be very competitive. We hope to see you again soon at the call for our third quarter. Have a good afternoon.

The earnings release call for CSN ends here. We would like to thank all of you for your participation. Have a good afternoon. You can now disconnect.