The combination of the domestic market shrinkage with the tough worldwide competition led the Brazilian steel plants to a halt, causing the shutdown or closing of production units, as well as eliminated job vacancies. Since January 2014, 29,740 industry workers were laid off and 2,296 contracts were terminated. Within the same period, 74 units were decommissioned or shut down, including 4 blast furnaces, 8 steel plants, 15 rolling mills, 5 mining units, 1 coking plant and 1 sintering plant, among others.

However, it is important to note that, despite such a difficult scenario, Brazilian steel production companies continue to meet standards of rational use of natural resources and feedstock, as well as to resort to operating technologies and practices that mitigate the impacts on the environment.

Similarly, the companies have strived to carry on with social responsibility projects in the cultural, professional qualification, health and income generation fields, to name a few.

Amid such relevant crisis in Brazil, we have been seeking to identify new opportunities. Firstly, we have been striving to ensure the survival of such an important industry to the economy of any country and, following to this, to resume growth, based on the belief in the creativity and entrepreneurship of our stakeholders.

We are confident that this crisis will be overcome through planning, hard work and ethical commitment. Each of us, Brazilians, is responsible for building up a future on par with the magnitude and strengths of our country. We trust this, and that is our tool to turn the game around.

From this issue on, the Report will be out within a new periodicity: it will become biennial. This year, there are layout changes, and a brand-new digital version.

The industry data and information are gathered by the staff of Brazil Steel Institute, counting on the aid from technicians and experts from several areas of its member companies. The document provided a management overview, pointing out the financial and economic, corporate governance and social and environmental performance results.

The reference period for the analysis and research of information were years 2014 and 2015. Unless otherwise in specific cases, information in this report concern all steel production industrial units of the member companies, namely Aperam, ArcelorMittalBrasil, CSN, Gerdau, Sinobras, ThyssenKrupp CSA, Usiminas, Vallourec, Vallourec & Sumitomo Tubos do Brasil, Villares Metals and Votorantim Siderurgia.

More than publicly disseminating the information and analysis on one of the most relevant industries for our country, Brazil Steel Institute intends to help further the dialogue with different players, such as consumers, suppliers, government, communication outlets and society at large. The purpose is also to cooperate with the preparation of an action plan for forthcoming projects and efforts that are aimed to ensure the endurance of our business.

Created 53 years ago, Brazil Steel Institute is a non-profit entity, which is targeted at promoting the competitiveness and sustainability of the Brazilian steel industry.

Sponsored by 11 business groups, Brazil Steel Institute has always been committed to the Brazilian sustainable development, which is showcased through efforts based on our economic, social and environmental cornerstones. The main functions of Brazil Steel Institute include the performance of assessments and research on production, equipment and technology, feedstock and environment, market trends, new steel applications and employment relationships.

The company is also responsible for gathering and consolidating data, analyzing it and disclosing statistics about its industry, as well as coordinating and standardizing steel products, developing programs and policies to support the steel industry, not to mention representing the concerned parties before public and private agencies and organizations, either in Brazil or overseas, promoting and supporting events connected to the production chain, and performing public relations actions.

Three core aspects for the industry’s performance are within the scope of Brazil Steel Institute:

Brazilian Steel Committee – ABNT/CB-28 was established in 1996, under the scope of ABNT – Brazilian Association of Technical Standards, with the technical and financial support of Brazil Steel Institute. CB-28 is responsible for drafting the Brazilian technical standards for steel and steel products, being open for the participation of all interested parties. Learn more on: www.cb28-acobrasil.org.br

Brazilian Center of Steel Construction (CBCA) has been working, for more than 13 years, in concert with the member companies, academy and production chain organizations with the purpose of furthering the share of steel in the domestic construction market. Besides this, CBCA carries out studies and research on areas of interest to the industry. The steel-intensive industrial systems, such as structures and covers, may overcome some construction challenges, boost productivity and help significantly reduce environmental and urban impacts. Brazil Steel Institute is the manager of the Brazilian Steel Construction Center. Learn more on www.cbca-acobrasil.org.br

Brazil Steel Co-Products Center (CCABrasil) was established in 2010 within the scope of Brazil Steel Institute, counting on the support of the member companies of Brazil Steel Institute and external stakeholders. With the purpose of continuously improving the rates of reuse of the steel industry co-products, CCABrasil has been promoting the development of new application alternatives, as well as optimizing those already existing to meet the consumption sector’s demands with respect to technical quality, meanwhile safeguarding sustainability. CCABrasil discloses the technical and environmental advantages of using co-products to replace other materials. Learn more on: www.ccabrasil.org.br  

On average, Brazilian plants operated at 68% of their installed production capacity in 2015. It is worth to note that, owing to levels of minimum profitability of plants, they should operate always above 80% of their installed capacity — a scenario which was far from that taking place over the 2014-2015 span.

Export stands out as a possible way to minimally compensate the weak performance of the domestic market, but the steel industry has a worldwide capacity surplus of about 700 million tons and is undermined by unfair trade practices.
Boosted by the strong depreciation of Brazilian Real, the outcome of exports in 2015 was significantly higher than that in 2014, with a 40.3% increase. However, owing to the international steel price drop, the revenue in dollars from exports was 3.3% smaller, which means that exports were unable to allow an increase in the sales of this industry.

In 2014 and 2015, the member companies of Brazil Steel Institute employed, respectively, 122,139 and 111,509 direct (own and third party) employees. With respect to indirect and induced impacts, the industry contributed to the generation of around 2.6 million employments*, figures that underline its social and economic relevance.

The worsening of the domestic political and economic scenario was decisive for the low industry performance over the last two years. The industry was negatively impacted as a result of the smaller performance of the steel-consuming sectors. The activities of civil construction, machinery, equipment (capital goods) and automotive industry — which account for nearly 80% of steel consumption in Brazil — underwent drastic decreases in their results, following a troublesome domino effect up the supply chain.

The automotive industry, which accounts for 19.8% of the domestic steel consumption, posted an output decrease of 39%, cumulatively for 2014 and 2015. In turn, the capital goods sector, which accounts for 20.7% of the domestic steel consumption, decreased 27%. A key activity for the industry that already amounts to 39.1% of the country’s steel purchase, civil construction also recorded loss: a 19-percent drop over the two years in question.

Owing to the strong recession in the domestic market, even the steel import underwent a decrease, which underscores the low activity of the group of domestic economy sectors. The sales of steel industry products to the Brazilian market, in 2015, were 16.3% smaller compared to 2014 (from 21.7 to 18.2 million tons).

In spite of the surplus international market capacity, the Brazilian industry managed to increase its export performance in 2015, compared to the previous year, managing to trade 13.7 million tons, an increase of 40.3% compared to the exports in 2014 (9.8 million). In the same year, the industry recorded an increase of 20.9% compared to the volume exported in 2013 (8.1 million). This result is connected to the depreciation of Brazilian Real with regard to dollar and, especially, to the intercompany transactions for the supply of semi-finished products in Europe and USA and the industry emergency efforts to prevent an even higher decrease in the installed capacity utilization driven by the low domestic market performance.

Even exporting more tons, the volume reached a threshold quite close to that 10 years ago — in 2005, considering that 13 million tons were traded overseas.
The steel industry in Brazil also faced a decrease of 3.3% in its dollar revenue from sales abroad in 2015 compared to the previous year, reaching USD 6.6 billion. This indicates that the strategy to resort to the foreign market to reduce inventories and prevent equipment idleness failed to post significant increase in the sales of this industry.
Besides this, although a less attentive analysis may lead to the conclusion that the depreciation of Brazilian Real compensated company exports, the truth is that the currencies of some of the main competitors also depreciated, thus outweighing the comparative advantage that steel would have.

While total steel imports to Brazil increased 245.2% between 2000 and 2015, those coming from China grew 13,418% — with the latter country accounting for 1.4% of imports in 2000 and, in 2015, reaching 50.2%.

The steel industry has been investing mainly in the technological updating of its production complex, disbursing, from 2005 to 2015, USD 31.4 billion. Thus, the industry seems to be ready to meet the domestic market’s demands and to compete abroad, provided that the Brazilian systemic asymmetries are solved.

Nonetheless, owing to the signs of weakened demand and the still significant level of idle capacity, several investments in 2015 had to be put on hold. Even though, total steel industry investments over the year reached USD 2.4 billion in 2014 and USD 1.3 billion in 2015.

In 2015, the added value generated by the steel industry recorded a significant decrease, accounting for 37% and reaching BRL 18.1 billion. The result was mainly triggered by the sales decline in the domestic market. In the previous year, the industry had already undergone a slight drop of 3.69% (from BRL 30 billion in 2013 to BRL 28.9 billion in 2014).

Steel is a material that has always been closely connected to the concept of circular economy. It refers to the world’s most recyclable and recycled material. Automobiles, fridges, rebars and all other products made of steel are, by the end of their useful lives, collected and returned to steel plants, to produce steel at the same quality.

Currently, in Brazil, about 30% of all steel produced comes from recycling. Whatever is the scrap origin, the recycling cycle of steel produces new steels that may be used for any of its purposes: automobiles, construction, packages etc. Economy takes benefit from the reduced waste, and so does the planet. The end is nothing but a fresh new start.

In 2015, the companies responsible for the production of 86% of the raw steel were already ISO 14001 certified, which bears witness of the industry’s commitment with pollution prevention and continuous improvement.

In the case of ISO 9001, the companies responsible for the production of 86% of the raw steel, in 2014, and 87%, in 2015, already had such certification, which supports the national and international recognition of the company quality management systems.

In turn, OHSAS 18001 was adopted by the companies responsible for the production of 48% of the raw steel in 2015. In 2014, this percentage was 38%, and the pace of companies seeking such certification continues to grow.

In 2014 and 2015, most of the steel produced based on charcoal had certification of forests planted by FSC (52% and 47%, respectively) and 13% and 21% by CERFLOR (the Brazilian Forest Certification Program, which has Inmetro as its executive body).

Launched in 2012, the Charcoal Sustainability Protocol was a Brazil Steel Institute and member companies’ initiative to encourage the sustainable production of charcoal.

Eight were the commitments undertaken, including the yearly reporting of the activities performed. The chart below shows the efforts performed throughout the 2014-2015 span.

In 2014 and 2015, respectively, 11% and 10% of the Brazilian steel were produced based on charcoal. Out of the timber used to produce charcoal, in 2014, 85% came from own forests, 8% from forests planted by third party and 7% from legal forest waste. In 2015, 86% came from own planted forests, 10% from third party and 4% from duly legal forest waste.

Still over the 2014/2015 span, 842.4 thousand hectares of reforestation areas were cultivated to produce charcoal. The environmental protection and restoration areas kept by the companies as a result of legal requirements account for 33%. In turn, the protection and restoration areas cultivated at will, i.e., that surpass those provided for under the law, amounted to 11%. Economic use forests accounted for 56%.

In general, the consumption of raw material was kept at stable levels, with upward or downward variations of low scale, as shown by the tables.

The industry’s approach to the circular economy has been allowing the smart and effective reuse of raw material, inputs and residues.

The steel industry energy matrix underwent little change over the past few years. In 2014, the share of coal/coke, which stands as the main industry energy input, decreased 1% in the composition of the energy matrix, an aftermath of the increase in the consumption of the oil byproducts. In 2015, there was change only in the consumption of electricity, which reached 1%.

The steel industry invests in its own energy generation, either through the reuse of the gases generated in the production process in thermal power plants or own hydropower plants. In 2014, 54% of the electricity consumption of plants was supplied by self-generation (44% of it from thermal power plants and 10% in hydropower plants). In 2015, there was a decline in the total generated and an increase in the energy purchased: the reuse of gases in thermal power plants accounted for 42% of the consumption and the own hydropower plants, 8%, totaling 50% of the electricity consumption at plants via own generation.

The implementation of measures to mitigate the emissions of Greenhouse Gases (GHG) is currently one of the industrial sector’s main challenges. This way, the member companies of the Brazil Steel Institute are endeavoring their best efforts to ascertain and reduce the carbon footprint associated with the production and use of steel. The measures implemented include the survey of several GHG emission inventories, the development of studies aiming to optimize the energy efficiency of production processes and the recycling of steel and byproducts.

There are some methodologies for calculating the GHG of companies, including: (1) the Worldsteel CO2 Data Collection, used by steel plants for measurement and comparison between segments and (2) the methodology of the Intergovernmental Panel on Climate Change (IPCC), which is more generic and usually employed by the governments of countries in the measurement of their emissions. To compile data for GHG emission inventory purposes, Brazil Steel Institute started using these two methodologies, given that the IPCC methodology is used to send steel industry data to the federal government, to be entered on the national emission inventory. It is important to note that each of these methodologies considers different inputs, carbon contents and emission factors, thus leading to different final results as for the emission figures.

The tables below show the specific GHG emissions for 2014 and 2015, in accordance with the two methodologies.

Most of the water used in plants is applied in cooling systems, and most of it is flown back to closed circuits.
Concerned about the risk of scarcity of water resources, over the 2014-2015 span, the member companies carried out efforts to boost the efficiency of water use, as well as provided training/awareness-raising programs to employees, not to mention the use of rainfall water, the adjustment of effluent treatment systems for later reuse of such effluent and the arrangement of new alternatives of water reuse.

Co-products are materials that, jointly with steel, result from the steel production process, and for which technologies were developed, allowing their use in an environmental-friendly manner, as raw materials or source of energy in the generating activity itself or by third party. The main Co-products and the residues generated are blast furnace and steel plant slags, as well as powders and sludge coming for air control systems.

Materials that would be disposed of in landfill become the raw material for paving roads, soil improvers, cement manufacturing, ceramic materials etc. The benefits of the reuse of these resources in a circular economy include: the preservation of non-renewable natural resources and the reduction of CO2 emissions connected to the steel production process via iron ore. By means of the circular economy, everything may be transformed in the steel industry.

In that being so, co-products and residues* total 20.2 million tons in 2014 and 19.8 million tons in 2015. They were mainly reused to produce cement for agricultural purposes and land and landfill leveling.

Based on the concept of circular economy, Brazil Steel Institute created the Center of Byproducts of Brazil Steel Institute — CCABrasil with the purpose of performing research to identify alternatives for application of its byproducts and optimize the existing ones. In this sense, CCABrasil prepared a technical standard for specification of the steelwork aggregate (processed steel plant slag) in road infrastructure works within the scope of ABNT, and a similar effort has been developed with DNIT. It has also been working in concert with DNIT to perform tests for applying steelwork aggregate as foundation and sub-foundation in experimental stretches.

The outsourced workforce accounted for, in 2014, 41.5% of the total staff and, in 2015, 38.5% of the total. Most workers (55% and 50%, respectively) worked in production and maintenance activities. The others were included in production support (31% and 33%) and expansion (14% and 17%).

In 2014 and 2015, the percentage of women among employees of the companies’ in-house staff kept unchanged, at 8%, given that most of these women were employed in administrative positions. The member companies offer equal opportunities to their professionals, regardless of gender, although historically the male participation in steel industry is broader.

Data collected for this Report point out that, in 2014 and 2015, Caucasian employees reach the slight majority of the companies’ own staff (55.9% and 54.2%, respectively). African Americans and mixed-race employees occupied lower positions in this rank, with 41.7% and 42.5%, respectively.

In 2014 and 2015, most of the companies’ own staff ranged between 31 to 40 years old. Workers between 21 and 30 years old occupied the second position in this ranking. The presence of youngsters joining the member companies is noteworthy, mostly coming from the First Employment Program (Primeiro Emprego). Such practice helps not only refresh the corporations’ staff, but it also stands as a professional qualification effort.

The member companies of Brazil Steel Institute have also been endeavoring their best efforts to offer job opportunities to disabled people. Despite the efforts, the member companies still face challenges to meet quotas, either owing to the restrictions imposed by the concern about occupational safety in the steel industry activities, or owing to the lack of adequacy or interest of disabled people in the areas neighboring the operations.

In 2014 and 2015, most of the steel industry companies’ own employees (30.0%) had between 2 and 5 years at the company. In turn, with respect to the range of 6 to 10 years at the company, 20.2% and 21.0% were the values ascertained.

The average working time at companies in this industry, over the two years reported, was 9.55 and 9.59 years, above the average recorded at large in the country, which is about 5 years according to RAIS (Annual List of Social Information), instituted by Decree 76900, dated December 23, 1975.

In 2014 and 2015, the percentage of employees of the companies’ own staff in administrative working hours (51% and 50% of out the total, respectively) or per shift (49% and 50%, respectively) kept virtually stable.

In 2015, the dismissals in the country surpassed the admissions by 1.54 million registered employments, which was the worst result for a year-end in 24 years. Even during such economic crisis that has been shaking Brazil, the member companies of Brazil Steel Institute did not spare any effort to try to keep jobs, either reducing working hours or establishing a layoff regime to prevent dismissals. Even though, owing to the aggravation of the scenario, in 2014 and 2015, the number of dismissals surpassed that of admissions the steel industry. In 2014, members dismissed 7,796 employees and hired 5,969. In 2015, the number of dismissed professionals grew: 10,363 compared to 6,616 hired.

In 2014, the rate of turnover in the industry companies underwent a slight decline, reaching the threshold of 9.6%, resuming growth in 2015, thus reaching 12.1%.

The member companies have been continuously developing programs aimed at the safe and healthy behavior of their employees. In 2014 and 2015, 100% of the companies had a formal health and safety committee, which helped monitor and advise occupational health programs. All of the implemented and followed-up efforts were earmarked for preventing accident and diseases, not to mention trainings in accident prevention and follow-up of risk situations. All of them still had programs, efforts or campaigns for awareness-raising and control of the risk of severe diseases. This included efforts such as vaccination, physical activity at work, follow-up of risk groups, awareness-raising campaigns and introduction of methods for prevention and manners of treatment. These companies’ efforts connected to health were extended to relatives and surrounding communities. The continuous efforts to control and prevent accidents impact indicators, which decreased in 2014 and 2015 compared to 2013. In 2015, there were 1,403 accidents involving the companies’ own staff and third party staff, 7.4% less than 2014 (1,515). In the 2014-2013 comparison, there was also decrease, at 11.3%.

Annual Training Hours

In 2015, the number of training hours earmarked for steel industry workers increased, accounting for a total of 3.3 million hours compared to 2.8 million hours in 2014 and 3.1 million hours in 2013. It is worth to note that the growth is attributable to the fact that many companies adopted the regime of layoff and, in accordance with the law, during temporary suspension of employment contract, employers should supply dismissed employees with requalification trainings.

In the 2014-2015 span, 100% of the member companies had skill development programs — from internal trainings to educational development programs of technical, undergraduate and graduate levels. Most of the companies still had performance assessment and career development programs.

The trainings in years 2014 and 2015 were mainly earmarked for collaborators of the operating and technical levels, with 78.4% and 79%, respectively.

The member companies of Brazil Steel Institute follow a wage policy common to most markets — health insurance, meal allowance, private social security, profit and income sharing, daycare center allowance, commuting, life insurance, among others.

In the 2014/2015 span, the companies responsible for 99% of the crude steel production displayed programs and/or efforts to assess the impacts of their activities on the surrounding communities, in addition to formal policy or procedure specifically earmarked for encouraging the hiring of people in the communities neighboring the areas where they operate. In 2014 and 2015, respectively, 83% and 81% of the collaborators came from neighboring communities.

All member companies of Brazil Steel Institute established policies for the relationship with their suppliers that include the assessment of the compliance with legal requirements (labor, fiscal and tax duties), contractual requirements, as well as attention to issues connected to sustainability.

CEO
Marco Polo de Mello Lopes

Executive Directors
Cristina Yuan
Débora Oliveira

Acknowledgment

Brazil Steel Institute would like to thank collaborators of all member companies and other corporations that contributed to the preparation of this Report, caring for the quality and reliability of the information provided.

Coordination:
Brazil Steel Institute

Content:
Technical Staff of Brazil Steel Institute

Graphic Design:
6D

Drafting and Revision:
RPM Comunicação