GOAU3 Metalúrgica Gerdau

Metalúrgica Gerdau S.A. is a Brazilian corporation founded in 1901 in Porto Alegre, originating from the nail factory Pontas de Paris, created by the Gerdau family. Over its history, the company evolved from a metalworking company focused on nail production into the holding company that directly controls Gerdau S.A., today one of the main steel groups in the country. The shares of Metalúrgica Gerdau, traded on B3 under the tickers GOAU3 and GOAU4, therefore represent a corporate ownership structure through which the Gerdau family maintains control of the steel conglomerate. This century-long history and its role as controlling holding company are central elements for understanding the company’s positioning in the Brazilian capital markets.

As a holding company, Metalúrgica Gerdau’s main operating subsidiary is Gerdau S.A., which concentrates the industrial business of steel production and sales on a global scale. Gerdau is mainly engaged in the manufacture of steel products through mills located in Brazil, Canada, the United States, Argentina, Peru, Uruguay and a joint venture in Mexico. The company operates integrated mills, which produce steel from iron ore, and mini-mills, which mainly use scrap metal in electric arc furnaces. As of December 31, 2024, Gerdau had 29 steel-producing units, annual installed capacity of 15.6 million tonnes of crude steel and 15.0 million tonnes of rolled products, placing it among the largest global producers. It was ranked by Worldsteel as the 33rd largest steel producer in the world in 2023, based on consolidated production.

Gerdau’s business model, which underpins the consolidated results of Metalúrgica Gerdau, is diversified in terms of products. The portfolio includes crude steel in the form of slabs, blooms and billets, which are inputs for rolling, as well as a broad range of finished products. For construction, the company offers rebar, wire rod, structural shapes, hot-rolled coils and heavy plates; for industry, it supplies commercial rolled bars, light profiles and wire; for agribusiness, it produces posts, plain and barbed wire, and other drawn products such as fences and welded wire mesh for concrete reinforcement. The company is also active in special steels, aimed at applications requiring higher mechanical performance, especially for the automotive supply chain and segments such as oil and gas, wind power, machinery and equipment, mining and rail. Additionally, it produces iron ore in Minas Gerais, an input that feeds the integrated steel route and enhances the competitiveness of its operations.

Gerdau’s operations are organized into four major business segments: Brazil, North America, South America and Special Steels. In 2024, consolidated net revenue totaled R$ 67.0 billion, distributed as R$ 25.96 billion in the Brazil segment, R$ 25.88 billion in North America, R$ 5.76 billion in South America and R$ 10.99 billion in Special Steels, before intercompany eliminations. This breakdown shows strong geographic revenue diversification, with significant weight from Brazilian and North American operations. In Brazil, in addition to steel, the iron ore operation is included, while the Special Steels segment includes plants in Brazil and the United States, as well as Gerdau Summit, which in 2025 changed from a joint venture to a wholly-owned subsidiary after the full acquisition of the stakes held by Sumitomo Corporation and The Japan Steel Works Ltd.

In terms of markets served and customers, Gerdau sells to a diversified base of sectors, especially industrial manufacturing, construction and agriculture, both in Brazil and abroad. In 2024, there were no customers individually responsible for more than 10% of net revenue, which reduces the concentration of risk in a few buyers. In Brazil, 80.8% of domestic segment sales were destined for the domestic market in 2024, with the remainder going to exports, which benefited from currency depreciation and contributed to the dilution of fixed costs. In the North America and South America operations (excluding Brazil), most sales are directed to the local markets where the mills are located, reflecting a strategy of proximity to customers and primarily serving regional demand.

From an operational standpoint, Gerdau combines a significant network of mini-mills and integrated mills. There are 27 mini-mills worldwide, based on electric arc furnaces that mainly use scrap metal, with advantages such as lower greenhouse gas emissions and operational flexibility. In Brazil, the company operates three integrated mills with blast furnaces, with Ouro Branco in Minas Gerais as the main unit, in addition to Divinópolis, which uses charcoal produced on company-owned farms, and Barão de Cocais, where production was suspended in 2024. The annual installed blast furnace capacity is 4.1 million tonnes of liquid pig iron, which feeds the steelmaking process through the BOF route (oxygen converters), followed by continuous casting and rolling. This combination of production routes, together with intensive scrap use, also supports Gerdau’s claim that it is one of the largest recyclers in Latin America, transforming millions of tonnes of scrap into steel each year.

The company also has a significant presence in the iron ore chain, with mines located in Minas Gerais, such as Várzea do Lopes and Miguel Burnier, integrated into its steelmaking operations. The mining rights cover 8,837.19 hectares, with concessions valid until the deposits are exhausted, subject to compliance with annual regulatory requirements. A technical report by SRK Consulting certified reserves of 476 million tonnes of iron ore at the Miguel Burnier mine. Mineral products include sinter feed, pellet feed/concentrate, “hematitinha” and lump ore, most of which are intended for internal consumption at the Ouro Branco mill. This partial vertical integration in mining complements Gerdau’s industrial strategy and affects its cost structure and raw material supply.

Gerdau’s industrial, mining and forestry activities are subject to extensive government regulation, requiring environmental licenses and authorizations from relevant agencies and authorities. The mining operations follow the Brazilian Mining Code, the Forest Code and regulations of the National Mining Agency (ANM), including obligations related to the Financial Compensation for Mineral Exploitation (CFEM), with a rate of 3.5% for iron ore, levied on gross sales revenue or current market price, as applicable. The company also highlights its compliance with the National Dam Safety Policy, occupational health and safety legislation, and environmental requirements for land reclamation and pollution prevention. In addition to the Brazilian regulatory framework, Gerdau’s exports are subject to trade defense measures in markets such as the United States and the European Union, which apply antidumping duties and safeguards to certain steel products, altering the international competitive dynamic and influencing the allocation of volumes.

In the environmental, social and governance (ESG) field, Gerdau, a subsidiary of Metalúrgica Gerdau, has a Sustainability Policy, Corporate Environmental Guideline and Environmental Management System, which guide the management of impacts, licenses and use of natural resources. The stated focus is to optimize resources and minimize environmental impacts in all regions where it operates. The company publishes an Annual Report with ESG and financial information, aligned with the guidelines of the International Integrated Reporting Council (IIRC), the Global Reporting Initiative (GRI) and the Sustainability Accounting Standards Board (SASB) for iron and steel producers and mining and metals. This report is assured by an independent third party and is available on the Investor Relations website, allowing investors in GOAU3 and GOAU4 shares to access structured information on corporate governance, environment, social responsibility, health, safety and people management, in addition to the economic performance of the group controlled by Metalúrgica Gerdau.

For retail investors analyzing Metalúrgica Gerdau shares on B3, it is important to keep in mind that the holding company’s results and prospects are intrinsically linked to the operating and financial performance of Gerdau S.A. across its various business segments. The diversified portfolio of steel products, broad geographic footprint, combination of integrated routes and mini-mills, partial integration with iron ore mining and exposure to different sectors of the economy, such as construction, industry and agribusiness, make up the context in which the company generates its revenue. At the same time, the company is exposed to steel industry cycles, exchange rate fluctuations, international trade policies and evolving environmental and mining regulatory requirements, factors that can affect both operations and the competitive positioning of the group controlled by Metalúrgica Gerdau.