CSN | Companhia Sirderúrgica Nacional

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Investor relations

Throughout 2008, CSN expanded its activities aimed at institutional and individual investors, seeking to improve market perception of its strategies, projects and investments.

Participation in conferences, meetings and trade fairs increased by 22% over the previous year to more than 170 events.

At the same time, we diversified our markets, participating in the Brics and Mena Conference, in Dubai, in the United Arab Emirates, and the São Paulo State Industry Federation’s Business Mission to Japan, as well as taking part for the first time in the London Stock Exchange’s Brazil Capital Market Day.

We also strengthened relations with sell-side analysts through a series of visits to theCompany’s main installations, notably the Casa de Pedra Mine, the Port of Itaguaí and the Presidente Vargas Steelworks. In addition, several important financial institutions, including Itaú Corretora, Banco Safra,Coinvalores, HSBC, Nomura, Unibanco, Link Corretora, Lopes Filho e Associados, SLW and Spinelli resumed coverage of the Company.

As in previous years, the Investor Relations area also expended considerable effort on building stronger relations with individual investors and we took part in the Expomoney events in Rio de Janeiro and São Paulo for the second and third consecutive year respectively. Expomoney is the most important national event geared toward the individual investor.

To establish a closer ties with international investors, the Company also participated for the first time in the World Money Show, in Orlando, Florida, the world’s largest trade fair for individual investors,

CSN also won the XII ANEFAC-FIPECAFI-SERASA Award for Transparency in Financial Statements.

CSN´s Shares on the Bovespa and Nyse - Top

CSN’s capital stock is composed entirely of common shares, i.e. each share is entitled to one vote at the Shareholders’ Meetings. More than 43% of total shares are traded on the São Paulo Stock Exchange (Bovespa) and also on the New York Stock Exchange (NYSE). At the close of 2008, CSN’s shares occupied sixth place in the Ibovespa’s theoretical portfolio.

The following graph gives a breakdown of CSN’s ownership on the same date:

Disclosure of Material acts and Facts - Top

CSN discloses material acts and facts and other market communiqués in order to provide investors with transparent and reliable information within the timeframes necessary for decision-making.

This policy complies with all the provisions of the Brazilian Securities and Exchange Commission (CVM) and the SEC, which establish the rules and procedures for investor relations. All communiqués and material facts are published in Brazil and the United States, where the Company’s shares are traded.

Strategic planning and Management - Top

Throughout 2008, CSN continued to implement the strategy management system created in the previous year. The strategic corporate map, drawn up in line with the Balanced Scorecard methodology (BSC), was approved by the Board of Directors in February. This map traces a chain of cause and effect between CSN’s goals and the actions needed to achieve them. As a result, five key areas were identified on which the entire Company will focus: operational excellence, client guidance, business expansion, sustainability, and management and learning.CSN’s businesses were divided into steel, mining, logistics, energy and cement.

Following approval of the strategic map, the strategy was subdivided for application within each general management team. Once the targets for the different management areas were set, performance indicators were established for each of the Company’s 2009 management teams, ensuring that all targets were aligned with the overall strategy.

In addition to BSC, goals were established in line with the GVA® (shareholder value generation) methodology, which had already been implemented in the Company’s main operational units with the support of the Getúlio Vargas Foundation (FGV). This methodology is based on four elements: personnel; safety, health and the environment; social responsibility; and processes.

The model links all corporate decisions to the intended results in accordance with a series of previously established targets. All initiatives are evaluated in line with GVA® and its metrics are designed to encourage managers to focus on cost and cash management and, at the same time, optimize the opportunity cost of the capital invested in the business, resulting in a better trade-off between short and long-term value creation. The aim is to ensure greater alignment between management and shareholders and more effective control, budgeting, strategic planning and variable remuneration processes.

In 2008, the focus was on disseminating the GVA® culture throughout all the Company’s units, aligning and mobilizing the entire organization in order to translate the strategy into concrete action. In January, all employees were made aware of CSN’s new mission and values, which strengthened the Company’s identity and the principles that guide the conduct of its business. Throughout the year, the results of each management unit were monitored in line with the established performance indicators.

Sarbanes-oxley act - Top

The Company is in the final stages of certifying its internal controls, with regard to its consolidated financial statements, in accordance with Section 404 of the Sarbanes-Oxley Act (SOx).

In 2008, tests were conducted to assess the efficiency of these controls in CSN, CSN Export, Jaycee (now CSN Madeira), Inal, GalvaSud and Namisa, companies considered important for the purposes of SOx certification, whose assessment began in August. The managers of each process were responsible for testing and monitoring around 1,900 controls.

It is worth noting that financial reporting and entity level procedures are corporate in nature and therefore apply to the entire Group.

In 2009, the Company will implement a rationalization project primarily aimed at reducing the number of key internal controls to be tested and monitored by management.

Code of ethics - Top

Ever since 1998, the CSN Group companies have employed a Code of Ethics which is constantly being revised and updated. All employees receive a copy of the Code as soon as they join the Company, when it can be discussed and any uncertainties doubts can be clarified.

The Code not only establishes the standards of personal and professional behavior governing relations with employees, clients, shareholders, suppliers,communities, competitors and the environment, but is also a declaration of corporate conduct and commitment. Its content is in the public domain and is available at www.csn.com.br. www.csn.com.br.

The rules governing trading in the Company’s shares is just one of the many aspects covered by the Code since its creation.

Management - Top

CSN is controlled by Vicunha Siderurgia S.A., which retains 44% of its total capital, and management is exercised by the Board of Directors and Executive Board.

Annual Shareholders’ Meeting - Top

The Annual Shareholders’ Meeting, the Company’s sovereign body, meets once a year, in accordance with the prevailing legislation, to elect the members of the Board of Directors, examine management’s accounts and the financial statements, and decide on the allocation of annual net income and the payment of dividends, among other matters. Whenever necessary, Extraordinary Shareholders’ Meetings may be called to decide on specific issues that are not within the normal scope of the Annual Meeting.

Board of Directors - Top

The Company’s Board of Directors currently comprises eight members, four of whom independent, and meets on a routine basis on pre-established dates throughout the year and on an extraordinary basis whenever necessary. Members are elected for a one-year term of office, re-election being permitted.

Its role is to define and monitor the Company’s policies and strategies, oversee the activities of the Executive Board and decide on any matters relevant to the Company’s businesses and operations. It is also responsible for electing the executive officers and may, if necessary, constitute special advisory boards to help in the execution of these duties.

Benjamin Steinbruch – has been a member of the Board of Directors since April 23, 1993, Chairman of the Board since April 28, 1995, and CEO since April 30, 2002. He is also President Director of Vicunha Siderurgia S.A. He graduated in Business Administration from the Getulio Vargas Foundation in São Paulo, with postgraduate studies in Marketing and Finance from the same institution.

Jacks Rabinovich – has been a member of the Board of Directors since April 23, 1993, and is currently Vice-Chairman. He has a degree in Civil Engineering from Mackenzie University, with specialization in Textile Engineering from the Lowell Institute (Massachussets, USA).

Antonio Francisco dos Santos – has been a Board member since November 25,1997. He joined the Company in 1972 and held various positions of responsibility until 2008. Currently he is Chairman and Chief Executive of CSN’s investment club and a member of the consulting council of CSN’s pension fund - CBS. He is a graduate in Business Administration, with postgraduate studies in Organization and Finance, both at Cecope (Post-graduation and Research Institute), and holds a MBA in Industrial Strategy and Business Management from the Federal Fluminense University – UFF.

Mauro Molchansky – has been a Board member since April 24, 2001. He was an Executive Officer at Globo Comunicações e Participações S.A. (Globopar) from August 1994 to March 2002 and was also CFO and Investor Relations Of- ficer at Aracruz Celulose S.A. He has a degree in Economics from the University of Campinas (Unicamp).

Fernando Perrone – has been a Board member since September 26, 2002. He was CSN’s Infrastructure and Energy Officer between July 10 and October 2,2002. He was formerly CEO of Empresa Brasileira de Infra-Estrutura Aeroportuária (Infraero) and occupied the posts of Infrastructure Director and Administrative Director at the BNDES (National Development Bank). He has a degree in Business Administration, in a course sponsored by Chimica Bayer S.A. and a Law degree from the Federal Fluminense University, with post-graduate studies in Economics (Capital Markets) at the Getulio Vargas Foundation.

Dionísio Dias Carneiro Netto – has been a Board member since April 30, 2002.Since August 1985, he has been a professor in the Economics Faculty of the Pontifical Catholic University of Rio de Janeiro. He has also been a Director of Galanto Consultoria since 1993 and a Director of the Casa das Garças Economic Policy Study Institute (IEPE/CdG) since 2003. A graduate in Economics, he also has a Master’s degree in Economics from the Getulio Vargas Foundation and Vanderbilt University (M.A. – 1971).

Darc Antonio da Luz Costa – has been a Board member since April 29, 2004. He has acted as a planning consultant for various institutions and is currently a guest professor in the Production Engineering postgraduate program at the Federal University of Rio de Janeiro (UFRJ), where he gives courses in National Strategy. He also takes part in conferences at the UFRJ’s School of Public Policies and Government. He is a member of the Board of the Brazilian Centre for Strategic Studies (Cebres); the Editorial Board of the newspaper Monitor Mercantil; and the Board of the Center for Strategic Studies at the Escola Superior de Guerra.

Between 2003 and 2004 he was a Vice-President of the BNDES, where he began his professional career after passing a public examination. He has a degree in Engineering from the Pontifícal Catholic University of Rio de Janeiro, a Master’s degree in Production Engineering from the same institution and a doctorate in Production Engineering from the Federal University of Rio de Janeiro. He has also written several books on national strategy.

Yoshiaki Nakano – has been a Board member since April 29, 2004. He is a professor of Economics at the Getulio Vargas Foundation (FVG), heads the Economics Department of PAE-FGV/EAESP and is a Director of the FGV/EAESP School of Economics. He has also been a professor of Economic Theory at the University of Campinas; a professor at the FGV’s Center for Graduation and Agricultural Development in Rio de Janeiro; head of the Economic Affairs Department at the Pão de Açúcar Group; head of Rural Credit at Banespa; a Vice-President of Badesp; Assistant Secretary of the São Paulo State Government and of the State Secretariat of Science and Technology; Special Secretary for Economic Affairs at the Finance Ministry; a World Bank consultant; Director of the Economic Policy Center; and Treasury Secretary for the State of São Paulo. He has a degree in Business Administration from the Getulio Vargas Foundation.

Executive Board - Top

The Executive Board is responsible for the day-to-day management of the business in line with the strategies and policies established by the Board of Directors.

It comprises six executive officers who meet periodically, each of whom being responsible for certain specific operations, processes and/or businesses of the Company. Officers are elected for a two-year term, re-election being permitted.

Benjamin Steinbruch – has been CSN’s Chief Executive Officer since April 30, 2002, a member of the Board of Directors since April 23, 1993, and Chairman of the Board since April 28, 1995. He is also the CEO of Vicunha Siderurgia S.A. A graduate in Business Administration from the Getulio Vargas Foundation in São Paulo, with postgraduate studies in Marketing and Finance from the same institution.

Enéas Garcia Diniz – has been an executive officer since June 21, 2006. He has been with CSN since 1985, having occupied the following positions: general manager of hot-rolling, general manager of maintenance, head of metallurgy and head of the Presidente Vargas Steelworks. He has a degree in Engineering from the Pontifical Catholic University of Rio de Janeiro, specializing in Mechanical Engineering, with postgraduate studies in Business Administration at the Federal Fluminense University and an MBA from the Dom Cabral Foundation in Belo Horizonte.

Isaac Popoutchi – has been an executive officer since March 27, 2006. Before that he was CEO of Coimex Trading, a group that operates in the logistics and foreign trade segments. He was also a director of Rede Ferroviária Federal (federal railways), where he coordinated the privatization process, and at CBTU- Companhia Brasileira de Trens Urbanos. He is a graduate in Architecture from the University of São Paulo.

Juarez Saliba de Avelar – has been an executive officer between August 2006 and May 2009. Before joining the Company in November 2003, he was an Executive Officer at Portos e Participações Ferroviárias, CEO of Ferteco Mineração, and Director of the Southern and Northern Systems at CVRD. A graduate in Mining Engineering from the Federal University of Minas Gerais, he was also Head of Development at Casa de Pedra and Head of Mining for CSN.

Otávio de Garcia Lazcano – was CSN’s Chief Financial Officer between August 2006 and May 2009, and was also responsible for the investor relations area. He has been with the Company since 1996, having occupied the position of Financial Operations Manager until 2003, and Financial Officer from then on. He has a degree in Economics from Candido Mendes University and an MBA in Corporate Finance from the Dom Cabral Foundation.

Pedro Felipe Borges Neto – has been an executive officer since September 2005. He was previously a manager with the Ângelo Figueiredo Group (Fortaleza- CE), Usina Evereste S.A. (Fortaleza-CE) and Frutop Produtora de Alimentos (Fortaleza-CE) before joining the Vicunha Group in 1987 as Managing Director. In 1997, he became Vice-President and was Executive President between 2001 and August 2005. He has worked in the financial, construction, and real estate sectors. He is a graduate in Mechanical Engineering from the Federal University of Ceará.

Audit Committee - Top

The Audit Committee has autonomy to make decisions in all matters concerning Sections 301 and 407 of the Sarbanes-Oxley Act. Its main responsibilities include reviewing, analyzing and making recommendations to the Board of Directors on matters concerning the hiring and remuneration of the external auditors, as well as supervising the internal and external audits. In regard to the hiring of external auditors, special procedures are adopted to ensure that there are no conflicts of interest, dependence or loss of objectivity on the part of the auditors in their relations with CSN.

Internal audit department - Top

CSN maintains an internal audit department, as determined by the Company’sBylaws. It examines, analyzes, assesses and verifies the adoption of generally accepted auditing procedures by all the CSN companies, evaluating the integrity, appropriateness, efficiency and cost-effectiveness of the processes involved, as well as the effectiveness of the internal controls. The work of the internal audit department is defined in accordance with the Company’s risk matrix and approved by the Audit Committee, which also monitors its results.

Independent auditors - Top

In 2008, the independent auditors for CSN and its subsidiaries – KPMG Auditores Independentes – were hired to provide services in addition to auditing the financial statements. It is the belief of both the Company and its independent auditors that these services, basically due diligence and revisions of income tax declarations, do not affect the latter’s independence. These additional services,totaling R$ 99.3 thousand, accounted for 5% of the total external auditing fees. Services additional to the examination of the Company’s financial statements are submitted for prior approval to the Company’s Legal Department and Audit Committee, to ensure that they do not represent a conflict of interest or jeopardize the independence and objectivity of the independent auditors.

Risk Management - Top

CSN operates in an increasingly complex globalized market. It is therefore exposed to various risks that may affect its performance and hence its strategies. In order to improve the monitoring of these risks, in December 2007 CSN’s Board of Directors approved the constitution of the corporate risk area, staffed by specialists.

Its main aim is to identify measure and monitor risks and levels of corporate governance, ensuring compliance with Sections 302 and 404 of the Sarbanes-Oxley Act, and to keep CSN’s management and shareholders informed on all risks inherent to the business.

The Company takes a pro-active approach to risk management, seeking to minimize the impact on its business by considering a wide range of factors, including economic, financial, tax and regulatory issues, both in Brazil and abroad. CSN’s internal controls, responsible for mitigating these risks, are executed by the operational areas and overseen by the corporate risk area. They are monitored by the internal audit department, linked to the Board of Directors, and certified by the external auditors.

The risks described below are those known to CSN and which may currently pose a threat to the Company’s business.

Market risks

The steel industry is highly cyclical in nature, due to supply and demand swings triggered by changes in the global economy. Any significant decline in demand for steel in the Company’s markets in Brazil and abroad may have an impact on its operations, which are closely aligned with the performance of the auto, construction, home appliance and packaging industries.

However, the Company normally weathers such cycles with no undue impact on its business, thanks to its exceptionally low production costs and the integrated nature of its operations, which include mining, rail transport, port operations and energy.

Raw material supply risks

CSN’s operations are fully integrated and it is almost entirely self-sufficient in terms of steel production. In fact, the only raw materials acquired from third parties are coal and coke (30% of its needs are imported), and zinc and aluminum (purchased on the domestic market).

Aside from these, the Company makes use of resources from other firms within the Group, such as CSN - Casa de Pedra, Namisa, Arcos and Ersa (mining); MRS and Transnordestina Logistics (rail transport), CSN Energia (electricity) and Sepetiba Tecon (port operations). In addition, in order to protect itself against possible abusive pricing on the part of its suppliers, the Company seeks to vary the origin of its imported coal and coke.

Competitive risks

In recent years, the global steel industry has been experiencing a period of intense change, marked by a series of mergers and acquisitions aimed at increasing competitiveness by reducing costs, and Brazil has not been immune to this trend.The arrival of new players with a global presence has impacted local industry,especially in the auto sector.

CSN is constantly seeking closer proximity to its clients, offering higher addedvalue products more suited to their needs in terms of quality, service and delivery times. In order to meet the requirements of the national and international markets in the most efficient manner possible, the Company has acquired an interest in two rolling companies, CSN LLC in the United States and Lusosider in Portugal.This presence in North America and Europe ensures long-term expansion and closer ties with overseas customers.

Foreign exchange risks

Since the Company operates and raises funding abroad, part of its revenue (exports) and expenses (imports of inputs – coal and coke – and equipment) is in foreign currency.

Given that Brazil’s capital market is currently being developed and is undergoing intense transformation, CSN has been financing its investments and operations through international funding. As a result, it is subject to variations in exchange and interest rates, in turn altering the amount in Reais needed to honor these foreign-currency obligations. It manages this risk by resorting to several different financial instruments, including cash investments in dollars and derivative instruments(without financial leverage, such as put and call options), mainly swaps and future contracts.

Environmental risks

Although steel plants generate jobs and products that fuel the Brazilian economy,they also produce waste and effluents that may cause damage to the environment.For this reason, they are required to meet a series of requirements imposed by Brazil’s strict environmental legislation aimed at controlling atmospheric emissions,liquid effluents, and the handling and disposal of solid waste, in order to protect human and environmental health.

More than just complying with the legal requirements, CSN has adopted a preventive and pro-active approach to environmental issues, seeking to anticipate possible risks and/or problems.

Legal risks

CSN is involved in several ongoing lawsuits regarding civil, labor and environmentalclaims, as well as federal, state and municipal taxes and contributions. As a result, at the close of 2008 the Company maintained provisions of R$ 3.9 billion, as well as judicial deposits totaling R$ 2.0 billion. However, there is no guarantee that the outcome of these lawsuits will be favorable for the claimants; indeed, they may even be dismissed.

The Company also seeks to mitigate its legal risks through preventive consulting procedures, close monitoring of the legislation, participating in public hearings into the drawing up and improvement of regulations that have an impacton its activities, and joining professional associations and corporate representative bodies.

Insurance risks

Due to the nature of its operations, the Company has renewed its operational risk coverage with international reinsurance firms for the period between February 21, 2008 and February 21, 2009. This coverage includes all risks for the Presidente Vargas Steelworks, the Casa de Pedra and Arcos Mines, CSN Paraná, the Tecar coal terminal and Galvasud (material damage and loss of earnings), and the Tecon container terminal and Ersa – Estanho de Rondônia (loss of earnings), in the total amount of US$ 9.57 billion (material damage and loss of earnings), with maximum compensation, in case of a claim, of US$ 750 million (material damage and loss of earnings), equivalent to R$ 1.3 billion. The Company is currently negotiating operational risk coverage with Brazilian and foreign insurers and reinsurers for the period between February 22, 2009 and February 19, 2010, and has sufficient cash coverage to bear the cost of any claim that may arise.

The risk assumptions, given their nature, do not fall within the scope of a financial statement audit and, consequently, have not been examined by our independent auditors.

Credit Risks

Exposure to credit risks from financial instruments is managed by restricting counterparties in derivative instruments to major financial institutions with excellent credit quality. Management therefore believes that the risk of non-compliance by these counterparties is negligible

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