Gerdau prepares new investment of BRL 5 billion in MG – 05/03/2023 – Market

Steel group Gerdau is internally discussing a new investment package of R$ 5 billion in Minas Gerais, said the company’s chief executive, Gustavo Werneck, this Wednesday (3).

“It won’t run away much from what we have invested in the last few years”, said Werneck in a conference with journalists about the company’s results in the first quarter.

According to him, the investment period would be until 2030. The previous investment package in Minas Gerais, which concentrates important Gerdau operations, was announced in 2019 in the amount of R$ 5 billion and has already had a good part carried out, said the executive.

The investments evaluated in the new package, said Werneck, include the areas of mining, steel and energy, with emphasis on environmental improvements in operations, in addition to expanding the company’s forestry base in the state.

In mining, in which the company follows the vision of producing only for its own consumption, Gerdau wants to eliminate the use of tailings dams and possible environmental damage caused by the activity, being “state of the art” in the area, said the executive.

The steel plant in Ouro Branco (MG) will follow the strategy of migrating semi-finished steel operations to finished products, said Werneck. “Investments for us to add value to Ouro Branco will be present in the future,” he said without giving details.

Currently, Gerdau is investing in the construction of a hot coil rolling mill in Ouro Branco, which is expected to start operating in 2024.

“We are going to expand the forest mass, growing land and planting eucalyptus”, said the executive, explaining that Gerdau uses the tree to reduce the consumption of coal in its furnaces, thereby reducing CO2 emissions in steel production.

Werneck also mentioned the company’s focus on investments in solar and wind energy, to reduce the impact of steel production operations with scrap, which are intense in electricity consumption. “We are going to invest in wind and solar parks and farms in the state of Minas Gerais, which has a very suitable characteristic as a solar and wind corridor”, he said.

INTERN MARKET

Earlier, Gerdau announced a drop of around 19% in adjusted net profit for the first quarter in the annual comparison, to 2.39 billion reais, and a 25% decline in adjusted Ebitda, in better performances than the market expected.

Werneck stated that, currently, the Brazilian demand for steel does not concern Gerdau, although the entity that represents the sector, Aço Brasil, has reduced for about two weeks forecast sales of the alloy in the country this year, to fall of 0.7 %.

“The concern (about Brazilian demand) is too strong… despite some segments having more difficulties than others”, said the President of Gerdau, citing vehicle assemblers as an example. “Right now, there are eight producers of heavy and light vehicles stopped” in Brazil, he said.

“But when you look at the construction sector, which is a major concern, it is very resilient. We have our backlog taken up until the end of the year. There have been launches. In general, demand (for steel) has not it is an issue in Brazil”, he added, citing, however, problems in recovering the profitability of steel operations. “Our focus in Brazil is not so much demand, but recovering profitability.”