Companhia Siderúrgica Nacional (CSNA3) Earnings Call Transcript & Summary

Good morning, everyone. Thank you for attending the CSN Day 2020. This is a 100% virtual version of the event. And I hope that you -- we -- you and then we have no technical problems today. I have the pleasure of having Luis Martinez, Commercial Executive Director; Benjamin Steinbruch, the Chairman of the Board and CEO of the company; Enéas Diniz, Executive Director of Mining; Helena Guerra, Sustainability Director. I would also like to remind you that today's meeting is a public meeting of APIMEC. We have a representative of APIMEC with us today, who is going to say the final words today. And throughout this meeting, we will look back to the year 2020. And -- but we will mostly talk about the future, about our plans and our strategy. So once again, I'd like to welcome all of you. And now I hand it over to our CEO for his introductory words.

Good morning, everyone. Welcome to the CSN Day. I'm very happy to be here today with you to present what was achieved by the company -- actually, work that has been developed throughout the years and also the outlook for next year and the near future. I must tell you that today, we are surfing a very good wave of good news and good figures. But it's worth noting that this results not only from the market, but these good news are also resulting from measures that we have been taking in recent years, aiming to adjust the company for a new reality both in terms of its capital structure, also productivity and margin. This work was intensified as of March this year. When the situation -- the current situation evolved, we had to take some harsh measures that were extremely needed at the time. And also, together with the crisis, we had the problem of the COVID-19 pandemic, in which regard we took all the measures that we felt necessary at the time to minimize the effects of the pandemic and also the impact on the company's operations. I would like to show my solidarity to everyone who lost loved ones during the pandemic despite all our efforts and all of the measures that we took to minimize its effects. Today, we published a material fact, and I will read it to make you aware of what we published. And I would also like to comment on some of the numbers because this material fact actually synthesizes very concretely what was done by the company, what we set out to do and what we consider a top priority for the future. The material fact that we published today says that we are projecting to achieve less than 2.5x the net debt/EBITDA ratio after adjustment of the annual balance. And we're projecting to be under 2x the net debt/EBITDA ratio for the annual closing for 2021 and that without considering any deleverage effect of sales of assets or any other types of financial operation that would allow us to deleverage the company. So these are results of the operational numbers of the company and nothing else. [Foreign Language] We have this projection of BRL 23 billion net debt in the closing of 2021. So without considering any sales of assets, we are now expecting another BRL 20 billion reduction in the annual balance of 2021. We have a projection of 33 tonnes from third parties -- procurement from third parties in 2020. And this is a given. We are in mid-December, and this number that we set out to achieve is now confirmed. Projection of third-party procurement about 38 tonnes in 2021. So this is the proposal. The cash cost projection for mining, $17 per tonne in 2020, which is practically confirmed and $16 per tonne in 2021. Projection of an EBITDA of about BRL 7.650 billion in mining in 2020, which is also practically confirmed by now. CapEx projection for mining expansion for 2021, a total of BRL 1 billion. So this is what we plan to allocate to the quantity gain project. So we're planning to gain quantity with very low investments. Projection of mining expansion CapEx for '21 to '25, a total of BRL 14 billion. And this is to allow us to double our capacity. And as we presented in different visits to Casa de Pedra, we have that project to triple the quantities of iron ore produced in 10 years and double the current capacity in 5 years. Projection of sales volume, 4.76 million in 2020 and 5.158 thousand tonnes (sic) [ 5,158,000 tonnes ] in 2021, which is what we are planning to invest to remove any bottlenecks. Projection to achieve an EBITDA of about BRL 2.3 billion in steelmaking in 2020. The projection, EBITDA per tonne of about $165 per tonne in 2023, and this is due to coke-related and synthesization investments. CapEx for steelmaking in 2021, a total of BRL 1 billion. Projected CapEx for '21 to '25, a total of BRL 6.1 billion. And this is also coke and syntherization. Projection of our consolidated EBITDA of BRL 11.2 billion in 2020 with an EBITDA margin of 35%. And this is due to the operational improvement that we achieved. So this is a new figure that is being presented to you today, which is much better than the improvement that we saw in the rest of the market. The projected consolidated CapEx, BRL 1.6 billion in 2020 and BRL 2.8 billion in 2021. So this was the material fact that we published today. And considering that material facts have to comply with certain communication standards, for 2020, we have a consolidated EBITDA of BRL 11.2 billion, mining -- corresponding to mining, BRL 7.65 billion; and steel, BRL 2.3 billion. The difference comes from other activities of ours, such as cement and infrastructure. The CapEx for 2020, BRL 1.6 billion; in 2021, BRL 2.8 billion. Mining expansion, BRL 1 billion. Steel, BRL 1.05 billion. Between '21 and '25, mining expansion, BRL 14 billion; and steel, BRL 6.1 billion based on the projects that were already discussed and presented to the market. The leverage in 2020, under 2.5x. And this piece of data is very rewarding to us because we have always been held accountable for fitting a leverage level under 2.5x. And that was our commitment. For this year, we were expecting 3x, but we are delivering 2.5 with no demobilization whatsoever. So we're very happy to have achieved this level of deleverage. And we will continue to work towards our goals, which is to demobilize one of our assets to allow for a more drastic reduction in our leverage, to ensure that the company is prepared to move into the future, tapping all organic opportunities and any eventual opportunities that come up in any of our business lines. For 2021, without the sale of assets, under 2.5x and with a net debt of BRL 20 billion. Mining volumes, 33 million tonnes in 2020, and for steel, 4.8 times (sic) [ 4.8 million tonnes ]. We are working at full speed, and we will deliver whatever we produce. And in 2021, we see a significant improvement in mining through these minor investments, which will allow for a gain of 6 million tonnes from 38 million to 40 million immediately and in steel, 5.2 million. And of the cash cost for mining, $16 is already a given. And we are now setting towards $16 for next year. Before I hand it over to Marcelo to continue with the presentation, I'd like to say that the company feels fully prepared for the challenges ahead. We worked really hard, and I thank all our directors, all our employees, who were very understanding and really took -- were very understanding of these very harsh measures that we had to take in 2020. But the results are there. If not for these harsh measures, we would be in a different condition now. Of course, there was also an improvement in the market, and we're surfing that wave. But we have to do what we have to do, right? We have to do whatever we have in our hands. And the market, well, it can help sometimes and not -- and hinder our plans sometimes. But this high -- this increase in the price of commodities, which really favors us in mining and also the strong improvement of the domestic market, which really favors us for cements, for flat and long iron products, this all combined is a perfect combination so that we can face the challenge and present much better numbers next year. So I thank you all for your attention, and now I hand it over to Marcelo for his presentation. Thank you.

Thank you, Benjamin. I would like to say that the material fact that we published today and that was read by Benjamin, to me it really means a turning point. And it was only possible because we did all the homework we had to do in recent years, which allowed us to be able to deliver very strong growth, a total of 27% in the past 6 years. And together with this growth and, of course, the improvement in the markets, we also saw very stringent financial discipline on the part of the company. We saw assets. We saw Metalic -- we sold assets. We sold Metalic. We sold our company in the U.S. We did a stringent control of costs, expenses and investments, which resulted in this much faster deleverage than expected and allowed us to reach 2.5x already in 2020 with very good expectations of the other 2 for 2021. And we also have that as a target and as a ceiling in the midterm for the company. And that was the major reason for the valuation of the company's equity, because since the overleverage that we had in 2015, now with the perfect storm of the commodities prices and the crisis in Brazil, our share price increased by 582% since 2015. And the highlight is the last few months of 2020 when it became clear that we would be able to deleverage the company at this level. This confirms our future trajectory of commitment to this level of financial discipline. We will continue to pursue the reduction of our debt and the increase in the value created to our shareholders. And how do we plan to do this? And how do we plan to tap the opportunities for growth and investment that we have in our business? The strategy is to provide our businesses with more autonomy and independence in each subsidiary. And this has started with the mining business, which will shortly seek to open its capital to bring better liquidity and more resources for accelerated growth. We will also do that with cement to tap this very good moment of the market and in the future with other segments. And it's not just for the capital structure. It's also about the people structure, autonomy and focus. And this is how we are confident that we will be able to maximize and unlock value in the future. Now I will hand it over to our executives. And at the end, we'll have a question-and-answer session. Now Helena Guerra is going to talk about ESG.

Good morning, everyone. Now we're going to talk about ESG, these 3 small letters that actually consolidate very important aspects for all of us. This is a great opportunity to provide you with a little bit more information about what we do, our commitments and our targets. Because here at CSN, we do the opposite of greenwashing much differently from other players. We actually walk much more than we talk. And we understand that it's not enough for a company only to convey an image of awareness and consciousness. But it has to have a real attitude of transformation and environmental, social and economic responsibility and also communicate this efficiently to the market. So this is a great challenge for us. We always want to improve our communication so that not only the market but the society as a whole can know better what we do, our initiatives, our challenges and how we are preparing for a future which is already here, particularly considering the pandemic this year, which actually challenged the way we relate with each other and with the planet and turn this agenda into something even more relevant for everyone. So along those lines of improving our communication and transparency, this week we published our Integrated Report for 2018 and '19, the GRI methodology, also an exclusive ESG website with constant updates. Our report will now be an annual report starting next year. And with the website, we'll have a more interactive and dynamic channel to publish our ESG-related information. Also to strengthen this commitment and reinforce our integration in terms of our strategies, targets and results for the global compact SDG, we are now signatories of the global compact. And by the end of this year, we will have our ESG Committee fully implemented, reporting to the company's Board with participation from top executives. We're going to discuss the participation of external members and the major challenges of this agenda. We're going to set targets and monitor our indicators and results. Through several measures that we're going to explain later, we were able to minimize the impact of the pandemic on our operations, always very attentive to protecting the health and the lives of our employees. We believe in an inclusive and diverse company, and we establish programs and targets related with this topic. We also have a close and transparent relationship with the CSN -- through the CSN Foundation for more than 60 years now investing in social programs. Safety is a nonnegotiable value for us. And we have the best -- in 2020, we had the best safety indicators of the past 6 years. We invested BRL 759 million in environmental projects in the last 2 years. We have a robust environmental management system. We are certified in the main certifications. We already have a schedule established for the remaining units for -- by the end of 2021. In 2019, we had 75% of our power coming from self-generated sources, 100% renewable. And we will reach 100% of the power we consume coming from renewable sources and thermal plants for reuse of gases from the steelmaking process. We also have an inventory of our emissions, and we have been reporting data since 2010. And we are constantly investing to reduce our water consumption. At CSN Mining, as you already know, we were pioneers in the tailings, filtering and dry stacking technique. And we are 100% free of them since the start of 2020. After the Mariana and Brumadinho accidents, we knew that the future of mining would necessarily go through a totally dam-less operation, and we anticipated this trend. And in 2015, we started to develop our tailings, filtering and dry stacking technology. We were told this was impossible. And now 5 years later, we are the only major mining company totally independent of dams. And we have an accelerated schedule for the de-characterizations of our dams. B5 is already de-characterized. B4, we already have the waste channel completed, and the works will start in March 2021. In Casa de Pedra, even if we don't have a legal obligation to de-characterize it, because it is constructed with the downstream method, we have a de-characterization project that will be ready in January 2021. And the final work will start in the end of 2022 with the time frame of 10 years. The Vigia auxiliary dam is already being de-characterized. And the main dam we already started its de-characterization, and it will be completed by 2022. The B2A dam, we started the project in of 2017, and it should be completed in 2023, and it's going to be fully removed. And the B2, we already started with the waste channel works, and the works will be completed in 2026. So all dams of the Casa de Pedra complex have a stability certification, which was recently renewed last September, and they are at level 0 in terms of dam emergency. And even though we're independent of dams, we have a very robust management and governance system for the existing dams. We have a technical committee. We have internal and external audits being conducted twice a year. We have a monitoring program with daily visits in all dams and stacks, and the data is reviewed by our committee according to the best international practices. We are not yet adherent to the principles of the ICMM, which we intend to do in 2021. But we are already following all the principles that they developed. In Congonhas, where the Casa de Pedra complex is located, we are part of the municipal dam safety plan where we invested more than BRL 6 million to build a head office to equip the Civil Defense Department of the city, to train firemen and to set an integrated communication plan with the participation of the city hall and other mining companies to reassure the population. In terms of water consumption, we know that efficiently and responsibly managing water consumption is essential. The Presidente Vargas site is our main consumer of water, and we are strongly working to increase the recirculation and reuse rate in our plants. Currently, all the process used at the plant, only 6% is drawn from the Paraíba do Sul River. And of the 1% -- and of this water, only 1% is consumed in the process, and the rest, we give back to the river at higher quality levels. In the past 20 years, our water drawing went from 8.8 cubic meters to 2.5 cubic meters per second even with the significant increase in production. Our consumption is 0.88 cubic meters per tonne of steel. And the average, the world average is 3.3. So our consumption is 74% lower than the world average. In order to reach these numbers and improve our water management, we were the first steel company in the world and the only one in the country to perform a water consumption footprint, mapping out the use of water in our processes and associating this with impacts on the water basin, water scarcity. And these are valuable information that allow us to continuously improve our water management. The same project will be implemented in CSN Mining next year where we invested more than BRL 300 million in technologies to optimize the use of water and with new investments projected for a central plant next year, where we're going to reach 95% recirculation by 2023 with an expressive reduction in consumption. We are very active and have a leading role in different committees and forums about water consumption. And we use the best tools available in the world for water management. CSN as an integrated industrial company already has the concept of circular economy in its DNA. 97% of the waste is reused, co-processed, recycled. And we are continuously investing in the development of new technologies. At every tonne of steel that we produce, 600 kilograms of by-products are reused in other processes. Our blast furnace slag is reused, 100% reused in the production of cement. We will also be a great co-processor of hazardous waste in our Arcos cement plant. And we plan to replace 20% of the pet coke used currently with hazardous waste. In flat iron products, we have -- we use 100% scrap in CSN Mining. Nothing that we generate in terms of waste goes to landfills. Everything is reused, co-processed. Through our magnetic separation plants, we are now turning reject into products. Also supported by CSN Inova, we are seeking new disruptive technology and partnerships to reuse our tailings as actives in the short future. Regarding biodiversity, all the CSN conservation units are sustainable-use units where they are areas of ecological interest, ecological preservation, legal reserves. And we have the equivalent to 68,000 soccer fields in protected areas, where we have a detailed mapping of threatened species, fauna and flora. It's 3x larger than the total area used by our operations. And in CSN Mining and in Arcos, for more than 15 years now, we monitor the fauna and the flora, testing the very peaceful combination of our operations and the environment. In the last 2 years, we were the main partner of the Volta Redonda City Hall in the Volta Verde project. And we donated more than 100,000 seeds and plants for planting of approximately 88,000 trees, native trees of the Atlantic Forest. We have partnerships with ICMBio for the management of protected areas, monitoring of species. In respect to our emissions, for atmospheric emissions, we are publishing our data through the CDP in the GHG. We've been doing that for more than 10 years now. In 2019, we had an important decrease in our total CO2 emissions in Scopes 1 and 2. Then that was partly due to the scheduled stops of our blast furnace but also the investment in controls and operational efficiency that we made throughout this period. We had one of the lowest Scope 2 emissions in the industry, considering our majorly renewable energy mix, which should reach 100% renewable in 2020. But we still have a challenge in decreasing our Scope 1 emissions, a challenge which we will face by establishing targets. In CSN Mining, we have one of the lowest emissions per tonne ore for Scopes 1 and 2 in the world when compared with the 2 -- with 2 of the largest players in Brazil and the world. We have a 100% renewable energy matrix that we plan to maintain in 2021, and we compensate 22% of our emissions through protection and planting of native species. Cement, our cement operations regarding CO2 emissions. We also have the lowest CO2 emission per tonne in Brazil and perhaps one of the lowest in the world. So we are much better than the Brazilian average. We're 20% more energy-efficient than the national average. And we are already adherent to most of the targets established for the industry by 2030. In 2021, the only target is the use of alternative fuels. This is the only indicator that we have not yet achieved. But with the start of our waste co-processing process, we are expecting to reach very close to the 2030 target in 2021. In our company, the theme diversity is critical. We believe that diversity is what a company needs to be more efficient, more sustainable. And there's no real sustainability if we don't integrate this plurality of voices and demand in our strategies. We believe that diversity brings innovation, integration and a better ability to understand others. So we want to accelerate this agenda internally. We created diversity committees considering 5 priority groups. And we have different meetings with hundreds of participants to define strategies and targets. In 2019, we were one of the companies in the industry with the highest percentage of women in their payroll. And in 2020, I think we will have the highest. But we still have a long way ahead, and that's why we're establishing ambitions and targets to significantly increase this percentage in the next years. For safety, we know that safety is a nonnegotiable value for CSN. There's no result or EBITDA or operational success if not with safety. We closed the year 2019 with no fatality, and our indicators show a continuous decrease in our frequency rate. And 2020 so far is the best year of the past 6 years. And this is a result of different preventive programs that we implemented. We have the Despertar Program, which identifies fatigue levels in heavy equipment operators. We have intelligent sensors that recognize signs of fatigue. And this reduced by 96% the accident of heavy -- involving heavy equipment. We also have a smart system that combines science and technology with an online tool that can predict risks in the work environment, tracking physical conditions, mental, social conditions that can affect the readiness of our employees. We also have a very successful alcohol and drug use prevention program with significant results and a high level of success. All our companies have an automated PPE delivery system, which promotes better control of distribution, periodicity, replacement of this equipment and decreases the exposure of the company to labor law-related issues. And I couldn't make a presentation about ESG without mentioning how we cope with the pandemic. We took several measures to protect the health and the lives of our employees, who are not our -- just our employees but also the communities where we operate. So we had health leaves, remote work, travel restrictions, shift changes, testing protocols, according to the best practices. So we had countless actions that do not fit into one slide, but they were critical for us to avoid any impacts on our operation and, at the same time, for us to protect the life and health of everyone. There are also many challenges in terms of strengthening our relation with the communities, particularly related with mining activities after the Brumadinho/Mariana accidents happened. But that also created a great opportunity for us to bring the community inside our business so that they could see with their own eyes what we do differently from the other companies. So we created some visitation programs, the [ Nossa Mina ] project for Casa de Pedra. We also set up a support house in the city of Congonhas to answer questions and concerns. We created a community committee with participation of representatives of the civil society, the communities, the city hall to discuss with the population and resolve concerns. But this relationship did not start just because of the accidents. We have been working with social projects through the CSN Foundation for more than 60 years now. In the last 2 years, the CSN Foundation invested more than BRL 56 million in education, culture and technical training programs. These are significant numbers. And we have programs such as the Garoto Cidadão program, which is now celebrating 20 years and, in the last 2 years, helped 5,000 youths in vulnerable situations. We also have a women's empowerment program, among many others, involving environmental education, which were funded by the foundation during its 60 years of history. Our governance agenda is also evolving. We have a Managing Board with ethnical diversity and representation from our employees. We have an independent Audit Committee and a Fiscal Board with a representation of minor shareholders. We will create our ESG Committee directly reporting to the Board, and we are now drafting its internal regiment. We have as a target to be listed in the B3 Sustainability Index by 2022. We have already met and are working strongly to improve our governance indices. This is one of our targets for the future. We also have an awarded compliance program. And in this year, the training were given virtually due to the pandemic. Our compliance area assessed and performed due diligence of more than 900 suppliers regarding anticorruption, practices for antifraud, environmental crimes and slavery, child labor. We also have a hotline for reports, totally anonymous. And all cases are targeted and investigated with a very well-defined flow. So I presented part of our indicators and how we're positioned. And now I'm going to present our ambitions for the future, for the CSN Group and also specific targets for each business unit. For the CSN Group, we have targets related with diversity because as I said, even if we already have the highest percentage of women in our payroll, we are still far from what we -- from where we want to be. And that's why we're establishing targets, and we are planning to double the share of women in our payroll by 2025. We will further improve our safety indicators. Our target is always 0 with a tolerance at least 10% lower than the frequency rates that we had in the previous year. We also want to reduce by 10% our carbon equivalent emissions in the CSN Group considering Scopes 1 and 2. We also want to continuously improve year-after-year our compliance with CVM's directives with the best corporate governance practices. We mapped out more than 80 points of improvement regarding ESG issues, which are now being converted into action plans and being implemented by different areas and coordinated by the recently created ESG Committee, directly reporting to the Board and made up with representatives from the top management of CSN. And as I said, we also established as a target for 2022 to be listed in the -- in B3's Corporate Sustainability Index. And now in mining, we want to double the women's share in our payroll until 2025 based on the 2019 numbers. We will reduce our water consumption by 10% by 2030. We will ensure that CSN Mining in 2021 continues to have 100% renewable energy sources. And in 2020 already, we are expecting to achieve this target and extend that throughout 2021 and also in the coming years. We will also certify the Tecar port in ISO 14.001 by 2021. In steelmaking, we had established as a target in 2017 when we had 7.5% women in our workforce, we wanted to double this number. When we reached 13% in 2020, so we achieved this target, and now this target is being renewed. And by 2025, we want to have 20% of women in our workforce. For steel, we also have a specific target to reduce carbon emissions by 10% per tonne of steel produced in UPV. Also regarding air quality, we want to reduce by 40% our emission of particulate material at Presidente Vargas plant, investing -- by investing in filters and precipitators. In cement, well, even if we already -- if we have already met the targets established for 2030, we have a target to reduce by 10% our carbon emissions by 2030. And we will also get the ISO 14.001 certification for all our cement plants by 2021. So I stop here, and I invite you to visit the ESG website of the company to read our report and visit the foundation's page to get more details about our social programs. And now I hand it over to Felipe Steinbruch, the Head of CSN Inova.

Good morning, everyone. Thank you, Helena. It's a pleasure to be here today. We created CSN Inova in the end of 2018 with the purpose of positioning the group strategically and actively in this ecosystem and also to be able to potentiate all the already existing initiatives for innovation within the group. So as you can see on this slide, our essence is doing good, doing more and doing perennially. So we created 3 fronts of work: Inova Open, Inova Ventures and Inova Bridge. Inova Open works together with different areas of the group and also start-ups, the academia and innovation institutes to constantly bring new technologies and new ways of thinking, new solutions to different operational challenges and corporate challenges that we face in the everyday work of the group. In the past 2 years, we are working on 3 themes: operational sustainability, and under this theme, we have reduction of fossil fuel consumption, environmental recovery and potentiation of the management that we already do in different areas, increase in productivity and availability of equipment and optimization of logistic expenses, among other fronts, that are part of this theme. The other 2 themes that we're working on in the past 2 years are commercial innovation and corporate efficiency. So now in doing more, we created our first [ CDC ] and structured it throughout 2020, the CSN Inova Ventures. It has 30 million already committed that are going to be distributed in different pillars: 4.0 industry, renewable energy, circular economy and operational sustainability and healthtechs. And we started to discuss the world of tomorrow, the society of tomorrow and how this group can take part. And finally, last but not least, we have Inova Bridge, which is doing perennially under Inova's model that works with the sustainability area and also other key areas of the group to allow us to lead the execution of a cross-sectional ESG agenda throughout 2021 based on 4 essential pillars: sustainable finance, social impact, operational sustainability and governance. So here, once again, according to the creation of CSN Inova, the purpose here is to potentiate what's already been done for a long time in CSN. Thank you very much. And now I hand it over to Enéas, our Executive Director of the Mining Division.

Thank you, Felipe. Good morning, everyone. It's a pleasure to be here with you on the CSN Day. We are at 100 years of production. We still have reserves for another 100 year. Mining at Casa de Pedra started its operations in 1910. And since then, with very high-quality production, we have about 8 billion tonnes between reserves, resources and the mineral inventory, which is more than enough to meet our needs in terms of expansion for another 100 years, which is a great differentiator in our industry. We have a dedicated and totally integrated logistic infrastructure with world-class operation, competitive costs and which can be easily expanded. Since January 2020, we have become totally independent of dams with an assertive decision to implement the largest tailings filtering system in the world and mastering the dry stacking technique. With the maturing of the itabirite projects and a highly qualified and experienced team, we feel extremely confident to implement a singular growth plan, maximizing the potential of Casa de Pedra. And the -- well, the start of the year 2020 was very challenging. The first quarter was impacted by above-the-average rainfall affecting all other producers. Also, we had delays in environmental permits for [ 4-I ] and Mascate, which impacted our development plan until the middle of the year. It's worth highlighting that these permits are now confirmed, and our level of production achieved in the past few months confirm the sustained improvement in our volumes. With very hard work and a lot of discipline, we were able to expressively reduce our costs throughout the year. And we are acting with agility and making the most of this very timely price moment. Looking into 2021, we will have the start-up of the recrushing, spirals and CMAI III projects, which will allow for productivity and quality gains in our central plant. And this is the first package of deliverables of our expansion plan. Regarding the market, our optimistic view was reinforced by the guidance indication of our competitors, which was below expectations, and a resilient demand in China and the resumption of Europe and Japan. Regarding the supply-and-demand balance, we have a balanced market in sight not just for 2021 but for the next years as well. On the demand side, we expect steel production and consumption to keep strong in China with a positive effect on imports due to exhaustion of domestic production and quality requirements. In markets, developed markets such as Europe and Japan, we expect a progressive normalization of steel production after 2020, which was very impacted by the pandemic. Other significant markets are the Middle East with an increasing production in electric furnaces and Southeast Asia with highlights to Vietnam and Indonesia. From the supply side, here in Brazil, we are seeing the resumption of production by Vale and the return of Samarco, which is not limited to 1/3 of its capacity in Australia. The expansion plans of the great miners aim to replenish exhausted mines. For many years, we had been expecting that backwardation of steelmaking in China. However, the market is being surprised with expressive growth. Also in past years, we had some supply-restricting events. The main one was the Brumadinho accident, which relevantly affected the production and continuity of iron ore projects in the country. For this reason, the projections of analysts in past years and the future curves have been conservative and below our potential. So in this context, the expectation of CSN Mining for 2021 is that our index will be about $125 per tonne. Despite a very challenging first half of the year from the production standpoint, with the rainfall, the delay in permits and the pandemic, we are having a very strong second half, allowing us to project historical records in terms of revenue and EBITDA of BRL 7.7 billion for 2020 for the mining division. In our costs, we also had very significant result, which was the reflection of a lot of hard work and discipline to improve our efficiency and productivity, which culminated in a cost level of $17 per tonne of shipped ore in our port, which is very competitive in the seaborne market. The productive conditions achieved in the past months and the delivery of the first package of deliverables of our expansion plan, recrushing spirals and CMAI III, will allow us for -- will allow for a stronger entry into the year 2021 in terms of production volume and product quality. That's why our production guidance and procurement guidance for next year is 38 million to 40 million tonnes. CASA de Pedra, as you already know, is a singular asset. And now with the mastering of the dam-less production, we developed a very robust growth plan, moving from the current levels of 33 million tonnes to reach 108 million tonnes by 2032. It's a simple plan, and most of the projects are brownfield with existing and master technology with no major risks regarding permits, with very competitive costs and continuous improvement of product quality, reaching up to 67% iron content. The logistic structure, including railway and the port, is also a very important point for our expansion. MRS, one of the best operated railways in the world, already have the infrastructure required for higher volumes. We just have to add the equipment, locomotives and cars. The total CapEx is about BRL 30 billion, and the return rate is estimated at 31% in real terms. Now going into more details about our expansion plans. We have 4 main pillars: first, expansion of the central plant; second, recovery of tailings associated with the decommissioning of dams; third, itabirite plants; and four, expansion of the Tecar port. The expansion of our central plant is an opportunity to add 6 million tonnes of capacity to generate high-quality products with low CapEx by using the already existing structure. The tailings recovery projects conciliate the need for decommissioning and de-characterization of our dams with the opportunity to recover 180 million tonnes of rejects with average content of iron of approximately 40%, generating an additional production of about 8 million tonnes per year and also freeing an important area for the later dry stacking of tailings. And this is all using concentration technologies that are widely known. The third pillar is the processing plans for our very large reserve of itabirite. With additional production capacity of 75 million tonnes per year, we're going to produce high-quality, low-cost iron ore due to the lower index of the ROM, the reduction of the sterile ore ratio, reduction of the transport distances and dilution of the cost by production scale. The first grade project is P15. We already have the environmental permit and the detailed engineering. And the start-up is forecast for the -- for late 2023. The fourth pillar is the expansion of our sea terminal, the Tecar, which will have an incremental capacity of up to 85 million tonnes in the long term. Currently, its capacity is 45 million tonnes, but we expect that within 4 years, we will expand to 60 million tonnes using the existing structure. And this is already -- the permit is already issued, and we already have the detailed engineering for execution. For the next 5 years, the CapEx required for expansion is BRL 14 billion. And although we have plans to seek very competitive sources of funding, it's important to highlight that the cash generation over time is more than enough to fulfill these targets. And we plan to maintain the dividend payout to shareholders of 80% to 100% of the net income. Our expectation is to have a debt index of less than 1x the net debt-to-EBITDA ratio. I would like to thank for this opportunity to share with you these very good results that we achieved in this very challenging year and to convey to you our very positive outlook for the coming years. We stress that Casa de Pedra is a singular asset, and we are prepared to achieve the results as the projects of our expansion plans are implemented, maintaining our cost competitiveness, our leading role in tailings management without any dependence on dams, exploring the state-of-the-art technology in mining, using our logistic structure and with a very motivated and qualified team to overcome all these challenges. Our drive is sustainable challenge -- sustainable success, and we want to do good, to do more and to do perennially. And I take this chance to wish you happy holidays.

Good morning, everyone. Thank you, Enéas. I would like to start by saying that we would never have imagined that we would be finishing the year 2020 like this. We started the year with a lot of uncertainty with the pandemic. We went through very strong recovery throughout the year, and we are finishing the year with a very strong recovery in volume, operational excellence and profitability. Also, 2020 in steel was marked by a great variation in raw materials. We had a very strong increase in iron ore, which went from $90 in the beginning of the year to $158 today. And this roller coaster of the economy ended up challenging the supply and demand curves in different industries. But on the part of CSN, we were able to show and recover our highlight position in terms of productivity. So this was a very important year because by working on the pillar that Benjamin and Marcelo mentioned to you, we resumed our operational excellence very strongly. We had the renovation of our equipment. We had cost reductions. And on the sales side, we went back to the strategy, as I always say, to work with product diversification, a higher value-added mix, selling less to more and not putting all your eggs in the same basket. And this strategy is what brought us to this much better level of profitability in 2020. Our outlook is -- and actually from now on, I will talk more about the future and our projections than the past. But it's -- our outlook is always very positive. We are seeing very good incentives, not just in Brazil but also in other regions of the world, which allow us to say that we are starting a very virtuous cycle in commodities economy both in Brazil and around the world. Just to give you an idea of what's happening in the world, who would have imagined that in the end of that -- well, in the start of the pandemic, in March, April, if you look at the price of BQ in China, it was below $489, much below that. And today, we're reaching $610, $620 per tonne in China. Today, in China, China is working with a full capacity. The utilization rate is 92%. They have incentives from the government. They have infrastructure works. They have growth in their auto industry. So China, particularly in our view, China is going through a period that tends to last at least -- and I'm being conservative, but it tends to last at least 6 months because you can't really start some projects like that and just stop, right? The U.S.A. is also -- it's unbelievable. If you look at the U.S.A., we see the hot coils volume of $800 and the market is very heated right now. The auto industry is making a comeback. And in Europe, it's not different. Today, in Europe, the prices of BQ are over $680, and due to the situation in China -- because China is now an importer of steel, so Europe, also, there was an imbalance, and the supply demand curve is also being challenged in Europe. So going back to Brazil, just to tell you what happened this year and what we are expecting for next year. For flat iron production, the market is forecasting 8.4% growth in 2021. CSN's goal is 12%. And for long products, which we are -- for which we are now at full capacity at 270,000 tons, I project a growth of 6%, much more limited by our capacity than demand of the market, right? So -- and now -- and here, we're working with public domain data and data that we collect in our everyday work. So for car production, and when I say vehicles here, this is in general terms. When we look at car mix, for example, the CEOs of the car makers today are talking about 20% growth and a 2.3% to 2.4% growth in the volume. And I say 16% because we have other industries that are not growing at the same pace. The bus industry is growing at a fast pace, but we have others that are suffering the crisis. Agricultural machinery, railway, highway, all of them are pointing towards an increasing trend, a very positive trend for these markets. For white line, home appliances, there were 2 or 3 companies that beat their record in terms of production of refrigerators now in August, September this year. And it is already back to the levels before the pandemic. It's actually back to the levels of 2014, which is very positive, home appliances. Civil construction, I'm going to talk more about civil construction later, but I'm sure that we're going to go through a very long real estate development cycle in Brazil and infrastructure also is very important, and we have to consider that. And the distribution sector, which actually made a huge comeback in this market because it is now servicing the value chain, the second, the third, the fourth year, providing services, delivery and funding and credit. Now regarding CSN, and here, I always like to stress, this is to give you an idea of what happened with us this year. In the second quarter 2020, we sold about 600,000 tons in the market. Then in quarter 3, we went up to 924,000. So it's a 54% growth amidst a very atypical year. And CSN's portfolio, I always say this, it's a very balanced portfolio. We don't have a very high dependence on other sectors, such as the auto industry has. We have a portfolio that is very based on value-added and pre-painted. So our focus is much more on distribution, civil construction and home appliances. Of course, the industrial factors in the auto sector are also very important because we know that our plants and our assets provide the output for this sector, right? And the other chart on the right side, which is also very interesting. Just to give you an idea of where it was in January this year. So the basis was 100 in January. And in June, in our order book, we were at 57%, 57% regarding the start of the year. And today, precisely today, our order book, we have an order book for 4 months of orders. So CSN right now has about 1.2 million tons in its order book, which would be enough for us to work at full capacity until April with a full focus on the domestic market. Now regarding the year results. And here, I reinforce that despite the decrease in the flat iron market, a drop of about 2%, CSN grew 4% in 2020 and we are projecting a 12% growth in domestic sales in 2021. So we're going back to levels which are very traditional for CSN and that we saw for a few years, and now we're going back to about 3.6 million tons for the domestic market. Now when we look at the net revenue, we are reaching BRL 15 billion per year, which is also very expressive. And operational efficiency, we also have this cost, which is going back to an interesting level. Perhaps we're going back to occupying the first quartile with $375, perhaps a little less than that looking forward. And the EBITDA is also a result of all this. It's a mix of operational efficiency and a winning commercial strategy leading us to a historical record of 21%. Now a little bit about our investment plan and the recovery of our operational excellence. We have several projects in our pipeline, many of them are already ongoing. Here are the main projects. When we talk about operational excellence and operational continuity and keeping a lean operation with a very high-safety coefficient with capabilities, we have a huge challenge. We need to work with more on coke. We need to renovate our coke facilities. We also have the stripping lines. We have the blast furnaces. The blast furnace #3, we already completed, but we're working on blast furnace 2 now. We have the center plan, the center plan, for which we need to decrease the iron ore input in sinterization. And finally, the hot strip line, and we also have the option to do some revamps and increase the capacity of our best or largest asset, perhaps the best as well. And on the other side, when I talk about growth, we have projects that are -- we have been discussing for a while now, which are part of CSN's location, which is to grow in high value-added products, galvanized, prepainted. So we have very interesting projects that we are evaluating now, and we should prevent in the short -- present in the short future to the company's managing Board. They are linked with the new galvanization line, which could be a swing line, which will service different markets, also a prepainted line because today, we have an important prepainted line in Brazil, and we want to replace that line. And the Galvalume, today, everything that we have in terms of the Galvalume expansion, everything will -- is Galvalume or for painting. Now in respect to our CapEx, the plan is to inject BRL 6.1 billion between '21 and '25. We should accelerate the pace between '22 and '25, going up to BRL 1.250 billion. And all these projects are focused on coke battery revamp, less furnace modernization, sintering plant overhaul, the new coke battery which is critical. The plant becomes much more competitive when it doesn't depend on third-party coke. And last but not least, and here, we are much closer to an industry 4.0, which is automation and efficiency and also the operational excellence pillar. And finally, this is what we have been promising over the years to all of you who are watching us today. We have been talking about the recovery of our margins. This year, we should reach a margin of about 120 tons -- $120 per ton based on the operational efficiency pillars and the commercial strategy of the company. So this is virtually the overview of our situation in steel production. And now I hand it over to myself. No, I'm just joking. I'm going to talk about cement. Well, cement has become something very valuable for CSN. We never thought we would have such good results, of course, with a lot of hard work, but very relevant results for the company. I'm very proud of having started in this project from the beginning because it is a difficult segment to work in. You have the developers, you have the -- well, it's a very different sector in terms of competition, but we really dived into it. And when we entered this industry, we wanted to have the best class product. And our cement is the one that's growing the most in Brazil today. Our cement company is the fastest-growing in Brazil, and it will continue to be so in the future. What happened in 2020? In 2020, we saw a very strong resilience of the construction sector. Civil construction was elected an essential sector, so it didn't stop doing the pandemic. It's still working at full pace in Brazil. And CSN was very lucky to be present in this market. The income transfer program of the government helped boost this segment because it boosted small home improvements. So consumers -- the individual consumers started buying cement to renovate their homes, to make their work environment more comfortable. And during this year -- and CSN also sees an opportunity in this. During this year, we saw that when we see this level of growth, there is a mismatch between supply and demand, which was what have happened this year. So our prospect for this industry, and this is also valid for the steel industry because it is linked with civil construction. I think we're just starting in this real estate development cycle in Brazil. The prices of cement, which suffered a lot, particularly when we had the downturn in the economy from '15 to '18. But lastly, I'm going to show you a clear opportunity that we have, which is just waiting to be tapped and that we will work on in the coming months. So a little bit about the dynamics of this market. Everything conspired in favor of the civil construction sector. We had record sales in real estate. We had record numbers of launches. We had record numbers of permits. So we have new developments being started in Brazil, an absolute record. No more contract terminations, no more default in the sector, and we have a survey of the builders and developers association in Brazil. 98% of the executives in these companies are saying that they are planning to launch the highest number of projects of many years, and so this is a very favorable scenario. And in addition to construction -- to home construction, we -- in addition to civil construction, we also have logistic warehouses that are being built due to the huge growth in e-commerce because with e-commerce, your time to market needs to be much faster. So you need to have larger storage facilities. And the other side of the chart shows where the money is coming from. So we have real estate funding through the SBPE and part of the funding is coming from IPOs, follow-ons and the funds -- real estate funds, which are growing fast in Brazil. In the left bottom corner, we have a piece of data, which is very important which is the housing shortage in Brazil of about 8 million houses. And this is an important point because of this housing shortage, virtually 14% is in the Northeast and the Brazilian average is 9%. So here, we also have a very clear opportunity for growth in this industry in different regions. And finally, regarding incentives for this sector, Minha Casa, Minha Vida is now called Casa Verde e Amarela and the program should inject about BRL 57 billion in the coming years. And we have another industry here, which is actually the cherry on top. Because when we calculate, we don't really rely on infrastructure for our calculations, right? But when we look at this chart, despite being the ninth largest economy in the world, when we look at infrastructure, we are number 78. So there's a lot to do in infrastructure. You can't really be the ninth largest economy in the world and number 78 in infrastructure, right? So today, we have the [ PPIs ], which are already working. We have about BRL 320 billion in the market. We have privatizations that are taking place, not at the speed that we thought, but we think this will accelerate in the future. We have infrastructure auctions. The new regulatory framework for sanitation. Just for water and sewage, we have another BRL 500 billion, which will also boost civil construction. Also, we have the 5G infrastructure and the new regulatory framework for natural gas. So infrastructure in the next few years will also play a critical role incrementing civil construction and consequently the cement market. And regarding cement consumption in Brazil, and this has everything to do with the new real estate development cycle that I mentioned in Brazil, in 2019, we consumed 54 million tons in 2019. And further in the past, there was a drop. In 2014, it was close to 71, then we saw a decrease, and then we went back to 54 million. So now this year, the annualized quarter 3 data show a market of an order of 70 million, which already challenges the supply. Because in theory, you have a capacity of 100 million and this is just a theoretical capacity because there are some reductions due to closings that are not coming back. So on the bottom of the chart, we see the per capita consumption in Brazil. And here, again, we have an opportunity because if we go back to the levels of 2014, we can go back to a level of 70 million. And it is possible that we can reach that very fast. And from the standpoint of price, we have a very good possibility of recovery. To date, cement price in Brazil is still much lower than in other regions in the world. The average around the world is $110, $126, a little higher in some countries. And our average is $42, $45. And then when you look at the individual regions, despite the very positive trend, we see a price upside of about 20%. In the southeast, the average price is BRL 285 per ton. But if you go to the Northeast, the average is BRL 400 per ton. And this is just to illustrate and to give more color to what I just said about the market. We started 2019, thinking of a level of 54. So in 2019, it was 54.5. We were expecting a 2.5% growth, reaching 57 this year, but this was extremely boosted by the transfer -- the income trust transferred during the pandemic, and we closed the year at 70 million. Well, but what if the transfer -- the income transfer stops? Will the market stop? No, it won't stop. Here on the right, I'm eliminating the effect of the income transfer program of the government, and I am putting the specific growth for each of the sectors. So we have 60% coming from home, 25% from infrastructure and 15% from nonhome. This more then underpins this belief that we have that the market will keep growing at least 6% this year. In addition to the historical elasticity of the GDP, which is usually 1.5% to 2%, which is the GDP for civil construction. And there on the bottom, from 2000 to 2009, we had a consolidation of the industry. Then we had that boom driven by the industry, and we had the economic downturn. And now we have this new cycle that I am confident is starting right now. Now about CSN's performance, and these are very important results. Our market share in the Southeast is 14%. And in [ bagged ], it's 16% to 18%. Here on the bottom, we see how important this operational excellence is. So despite the drop in the market from 2003 to 2020, we saw an annual -- constant annual growth, and this shows CSN's resilience when you have competitive costs and an award-winning sales strategy, selling less and more polarizing, increasing your customer base and reaching the market directly. We want to go to the end consumer. And finally, at the worst-case scenario, CSN still had positive results differently from our competitors, which had losses. And today, we -- CSN practically has an EBITDA margin of 40%, considering the quarter 4 results for 2020. So now I invite you all to take a look at the opportunities that I am presenting to you now, the opportunity to grow in this industry. Today, CSN has a capacity of 4.7 million. We have some fantastic projects that we are studying right now. We have 1 in the North region, more specifically, where we practically have just one competitor with 80% market share. In Sergipe, where I can service the region of Bahia. And further down, our expansion at Arcos and the time frame is relatively fast here. And also a site in the south of the country where we also have a very low competition level. So CSN also wants to experiment this market, which has better profitability and better capillarity. If we combine all these projects and for a good part of them, we already bought the equipment needed, CSN will increase its capacity to 13.3 million tons. So we will be between #2 and #3 in the ranking for cement. So this is what I wanted to share with you today, and now I hand it back over to Marcelo.

It is truly rewarding when the financial session is the shortest because it shows that we are entering a new phase, and it's the business that is determining the numbers and not the opposite. So here, we see a very good reflection of the strength of our business. We already talked about how we plan to finish 2020. It's actually very surprising, substantial growth. And we have good news in each of our business divisions. Some of them with record numbers like mining and cement, and others showing very strong recovery like steel production, for example, which doubled in 2020. And also in logistics, with very good performance of MRS, also the port activities. So what we see is that 2020, we were able to raise the bar in a sustainable way. So we will -- the good news will keep coming in 2021. We're very confident that 2021, even if we still don't have the EBITDA guidance, we think the year -- next year will be substantially better than 2020, considering the levers that we saw of prices and volumes in our main business lines. But we will continue with our financial discipline strategy. And the cash conversion that is shown here can give you a measure of the cash that we're generating in this moment where profitability came with volumes and also, on the other hand, where we are holding back investments. So there was a substantial cash conversion, which was not just from the CapEx, but also working capital because it was a year of destocking and stringent controller suppliers and customers. So with this generated cash, this definitively solves the liquidity situation of CSN. CSN ended the quarter 3 with BRL 6 billion in cash. These numbers are outdated. We also did new raisings in the market. So the current cash level is close to BRL 8.5 billion. And this will be key for a sustainable refinancing of amortization in the coming years. We are having advanced conversations about raising BRL 5.8 billion of a total of BRL 10 billion that mature in the next 2 years and expanding this structurally. And with this prolonging -- the structural prolonging, we'll have an average duration which is very adequate, and we will decrease -- we will relieve the pressure in the short-term with liquidity higher than short-term maturations. This is what we needed to take a leap in our credit ratings. We see this advancing gradually. We went from very low levels, CCC in the beginning of the crisis to B+ now. But the greatest change comes when we get to the BB levels, which we expect to happen in early 2021. And this will have a significant effect on our numbers. Considering that the reductions can reach up to 200 basis points or 2%, which for a company with a balance like CSN, could mean more than BRL 500 million in savings per year and a direct gain to our shareholders. Here, it's also worth mentioning that we have our currency risk management policy, which has been working very robustly. We have a natural hedge, where the split between cash generation and foreign currency is equivalent to our balance in terms of debt in foreign currency at about 70% for each of them. And in a year when the exchange rate went from 4 to 6 and then back to 5, this, together with our hedge accounting, this results in low volatility in our results and a relative leverage level which is very robust. So in quarter 1, our leverage went up to 5.2x, and we're ending the year with 2.5x due to the natural hedge and the growing EBITDA, which is growing in a comparable way in view of our balance. So we will accelerate this target to reach 2.5x in 2020 and 2021, and we will set bolder target for 2021. We want to be below 2x next year. And we also want to set a cap for the total debt of the company at BRL 20 billion, and this is important to protect the company's balance even at other parts of the cycle. And we believe that, that would be the ideal level considering that the company will also resume growing. So some points here in order to reach the level of BRL 20 billion. We still have some financial initiatives that we have to put in place. Many of them are being discussed now. Sales of shares in non-key subsidiaries, IPOs of other subsidiaries, and that should take place throughout 2021. And until this deleverage project is completed, the dividend payout policy will continue to be conservative. We will pay the minimum mandatory dividend of 25%, but we need to recognize that it is about time to have a more in-depth discussion about capital allocation. We're not -- no longer just generating cash to pay debt. We need to generate cash to tap investment in growth opportunities. And that is why the investment level is changing. It is moving from the average level of BRL 1.5 billion per year, going to BRL 2.8 billion next year. First, to tap the opportunities in mining. So these are more mature growth projects, as we heard, including P15, which we're going to accelerate magnetic concentration plans, tailings recovery. And also in steel, we have important projects to increase competitiveness, particularly our coke batteries and the sintering and blast furnace projects. And in cement, the main project is coke processing. The coke processing plant, which is a project that will help reduce our costs with pet coke, increase our productivity and increase the use of recyclables. So that's what we have planned. That's why we have a CapEx of 2.8 billion planned for 2021. But as we saw, we have much greater opportunities ahead. The opportunities are reaching the magnitude of billions, not just for mining, but where we will probably use the IPO, but also cement where we have opportunities for acquisitions, organic growth. And this takes us back to the discussion in the start of this presentation, about how we will pursue these opportunities. We want to give increasing autonomy to the business lines, so that they can pursue the capital for their own growth. And also along the way, we want to give them more focus and more autonomy independence in their management. So this was our presentation for today. These were the takeaways for today, and we still have a few minutes for questions. Thank you.

The Q&A session will be based on questions that we received in the last hour. So I'm going to read the question, and then I'm going to answer or hand them over to the right person to answer for them. First one is by Thiago Ojea from Goldman Sachs. He wants an update about the mining IPO and also the possibility of a CSN cement IPO. Regarding the mining IPO, there's a regulatory issue, which is the silence period mandated by CVM, considering that we already have a first recorded offer in October this year. So with this official offer, using the numbers of quarter 3, until mid -- we have until mid-February to implement the offer, and we chose to launch the IPO in the start of 2021, which was the right decision because the market conditions change for the better. So this is the calendar plan. We will use the month of January, but we can't really give you a date because of this regulatory silence period. Regarding the CSN cement IPO, this is an [ exhibit ] that we are maturing now. So we still don't have a cement subsidiary. CSN has its plans of the CSN SA. So the first step is a societal restructuration with the creation of the subsidiary, which should take place in the coming weeks. So the IPO, if the market allows, should take place in the first half of next year, but there is no urgency like we have in the case of mining. And actually, we have some ongoing M&A opportunities, which could interfere with this calendar -- the calendar for the cement division IPO. Regarding expansions in cement, this opportunity is materializing. Increasingly, we have the mining rights in each of these locations. We have 2 box plants. So these are very valuable growth opportunities. But the fact is that the decision for expansion will be made after the market consolidates and after the capital structure for such materializes. This hasn't yet happened, but it should happen throughout 2021. The next question is about mining, Eneas will help me with the answer.

Well, regarding the tailings, we know that CSN we are totally free of dams, and we are now using dry stacking, 100% of our operations are already using dry stacking. No liabilities, no relevant liabilities. Actually, it's the opposite. We have 180 million of tailings in our dams, and we will reprocess them generating 8 million annual tons of products with more than 67% iron content.

So just to add to what Eneas said, currently, the tailings are dry stacked, using a stacking technique, which was developed by us. Actually, we were pioneers in this technique. This technique will become the ANM standard for all other companies. So the stacks are revegetated using a hydroseeding and planting of trees in order to prevent any eolic drag or dust creation, but we do not plan to use the technology forever. We're working with the CSN Inova and with the mining hub, seeking new technologies, so that according to the company's DNA, we can reuse this -- the tailings, turning it into new product. We have some initiatives, but they are very embryonic at this stage, and we want to start them at a greater scale. But we have a pilot project. And we think that in the short future, these tailings will even have the possibility of becoming product and incremental revenue for the company.

The next question is about price increase negotiations in steel? So Luis Martinez will answer this question.

Thiago, and we have practically completed the negotiation with auto companies for 2021. And in zinced strips, which is the highest volume for car mix -- the readjustment will be 30% to 35%. For hot strips, and this is not just for the car mix, but also for the other downstream auto parts, chains, the second, third and fourth tier, this price increase will be 40% to 44%. I would just like to reinforce, just to make it clear for everyone about the price, in January, we started the year with the iron ore at $94. And today, it's at $158. And the dollar started in January at $4.06. And today, we are at $5.2 or $5.15. So in order to make 1 ton of steel, I need 1.6 tons of ore and 0.6 of coal. So when you put everything in the mix, in the mixer and then in the machine and you calculate, these increases cannot be lower than what I just mentioned. The price increase cannot be lower because it's just about recovering the cost, the additional cost that we're having both from the dollar and from the raw materials. So that's why, Thiago.

Thiago also had a question about ore hedge. Well, as a mining company we will always seek exposure to export prices, but we need to recognize that this is a special moment. And CSN has actually a disproportionate advantage to ensure the level of prices, considering the cash flow that it brings to for deleverage. We are always attentive to these opportunities, the future curve or iron ore. For the end of December 2021, it will be close to 120. So it is indeed an opportunity. Today, we do not yet have any active hedge strategies. We experimented with derivatives throughout 2020. So it is a possibility, but we're not yet using it. And we will use it if we consider it timely in the coming months. [ Yuri ] from [ XE ] would like to get an update about mining operations. So Eneas, please?

[ Yuri ], quarter 4 started with stronger rainfall. So we have an expected volume for December. But so far, we haven't really seen any impact related with the rainfall in December.

The second question for me, [ Yuri ], is about the journey towards the BRL 20 billion target. Well, considering the quarter 3 numbers, we are at BRL 30 billion. So we have BRL 10 billion to go. And part of this trajectory will take place in quarter 4 with a strong cash generation. And as I said, 2021 would be another year of strong cash generation even with increased investments. So there's a small part left. I can't really give you the precise number, which will be compensated by these financial initiatives, either the IPOs or the subsidiaries or the sales of assets, including the Usiminas shares, which is his third question, if at the current levels, the sale of Usiminas shares is a possibility. Yes, it's about understanding what will be the long-term value of this asset and find the best time to sell. The steel production industry is improving every day. We have a very good outlook. So we're not in a hurry to make a decision in this sense. Well, Benjamin just asked me about the Usiminas strategy. And the answer is that we are very happy with the way things are turning out. It's one of those shares that had the best recovery in the past months, but -- so we're not in a hurry, but it is one of the assets in our list for the investment. And the next question from Leo Correa, BTG, about our long-term strategy. Would you like to answer this one?

Yes, regarding the long-term strategy. Well, as we presented today, we have 5 businesses, cement, mining, steel, infrastructure and power. We are treating each unit differently from the managerial standpoint. And after the IPO of mining, this is the first step to seek this individualization of our business lines. And since the second step would be for cement, we will move forward in a sequence, starting with mining, and we truly believe that the some of the parts is much greater than what we have today. In all the business lines with an expansion potential, we would like to give each of them the opportunity to expand within their possibilities with strong conservative management in terms of the capital structure. Now regarding the next steps after Casa de Pedra, as Marcelo said, we have this idea of -- well, using quarter 3 numbers. We have until the first week of January to put the deal in the market using the numbers from quarter 3. We are determined to doing this. But as you heard in his presentation, quarter 3 numbers are much better -- quarter 4 numbers are much better than quarter 3 numbers. So we are looking into the future and expecting these better numbers and better perspectives, but we did decide to have the Casa de Pedra IPO as early as possible. But of course, this improvement that we see in the market, combined with the lack of knowledge that the market had about the data and the potential numbers for the mining operation in Casa de Pedra, this is what made us postpone a little bit this process and wait for the best time so that the market could better understand the project and absorb the information because it's a very particular project, increased by threefold the production capacity. And there's no other mining company that could come up with a project like that. But because we are an outsider, because we come from a newly captive or a production operation for Presidente Vargas, we have been able to structure and propose this very robust and particular growth level for mining. We believe that with the conversations that we are holding right now with the presentations and the visitation, the market is getting to a better level of understanding of Casa de Pedra and of our proposal and reaching a high level of confidence in the delivery of this project and also in the veracity of the numbers presented. So I believe that we have a real opportunity by the first week of January to put the deal in the market. The capital structure. So I want to know the ideal debt level for you. Well, considering a very capital-intensive industry like ours, we come from a very long leverage history. So in my view, the ideal EBITDA ratio would be 3x. So if we could meet this level of 3x, I think that would be a conservative and reassuring level for us to carry out our projects. But today, we understand that there was a change in the view of risk on the part of the market. And that companies that ambition to become AAA, they must observe a smaller percentage, a smaller level than 3x due to the oscillations and instability of the economic and financial market. So our proposal is to reduce to 2.2x, which, in my opinion, is very conservative. And now we went further down to 2x. Of course, that will depend on the assets and the potential growth -- and return of potential growth and return of each company. But for CSN, I believe that 2x is a very conservative and realistic number, and we are proposing to deliver this level next year besides the regular deleverage from cash generation from the operational results. So we are aiming to meet this level faster by selling one of our assets. I won't be surprised if next year, we can reach the level of 1.5x. Our competitors have a lower leverage and we believe that now with the lower interest rates and with the good market prospects, it is a good time to implement the projects that we have in sight. But for the convenience and comfort of CSN, I would say that we would have a leverage of between 1.5 and 2x the net debt-to-EBITDA ratio as a midterm to long-term goal. What else? Shouldn't you go for a more aggressive target under 1? Well, under 1 is too aggressive right now. It's actually counter producing because we wouldn't tap the best investment or production opportunities. As you saw, we are proposing to go for a more aggressive growth level, of course, provided it is well-structured in terms of the capital for that. And we have the conditions for that. Like in mining, for example, we have access to Asian capital in a very favorable price and time condition. And we also see a great opportunity for organic growth through the 2 plants that we already bought and the possibility of some sort of M&A, and this, combined with a very cheap structured capital. So I would say that CSN is getting prepared and is willing to grow and to use its strength and its aggressiveness in terms of growth in each of the market, while still being conservative in our capital structure, which means that we will mandatorily do this using long-term credit lines at the adequate cost and considering a maximum leverage between 1 and 2x.

Let me just add, Benjamin, that this separation or greater independence of the businesses illustrates that each business type has its own capital structure. In mining, we committed to the cap of 1x the net debt-to-EBITDA ratio because it has the volatility, the cash generation. But if we look at CSN as a group, considering the growth opportunities in cement, if we cannot tap these opportunities to keep these low levels of leverage, then we will end up destroying value for shareholders. That's why we have to look at each specific capital structure of each business line. This will allow us to more precise and more balanced in reaching these limits. We have one last question from Timna, Bank of America. She is also asking about steel. So would you like to answer?

Well, I heard that CSN is importing scrap and strips. Well, actually there's an interesting thing that happened with us and actually shows the greater commitment that CSN has with the domestic market. We sent to the U.S. for nomination 50,000 tons. And this was sitting there in the free trade zone. It wasn't even internalized. So we're bringing back these products to Brazil because the value generation will be much greater if we do it here and deliver to the external market. And except for this, we have no export. We're working with our blast furnace at full capacity for blast furnace 3 and the blast furnace 2 is in the end of its ramp-up profit. So we will work at full capacity in the end of the year and next year.

So just to add to what Martinez is saying, well, there are -- some people want to convey this false image of a shortage of products in the market. And this is not good because it's not true. But because the expectations were very bad for the economy, everybody felt obliged to reduce their production as of March. So due to the decrease in orders, the chains as a whole, deactivated some production lines. Now with the resumption of the orders, production is also resuming. So it's not a shortage. What happened was the demobilization of the chain as a whole. For example, for the auto industry, when they had 3 months of stocks, they felt comfortable stopping the orders. So the suppliers stopped production after the 3 months of stock, which is actually finishing right now. The time until we go back to full production is not necessarily the same as the level of stock that they chose to have, right? So I wanted to reassure and ensure to the market, not just for steel, but for everything, that with the resumption of the full production capacity, the market has -- everything needs to replenish itself, and everybody is preparing for that. So I don't think that next year, we have any reason for any shortages. Production will match the demand. And with replenished stocks and intermediate stocks already in place, things will accommodate. So I don't see any possibilities of shortages. There's no reason for this fear because there will be a smooth accommodation between the supply and demand. And starting in quarter 1 next year, we will not even hear about this topic anymore.

So this is the end of today's meeting. But before I close, I would like to pass the floor to APIMEC's representatives because this is a public meeting.

On behalf of São Paulo, I would like to thank all CSN executives for being present here today with us. And I stress once again that APIMEC is always the best channel for public meetings because that's how you can reach the entire community of analysts and investors. And I also take this chance to -- for the second consecutive year of CSN meetings being held with APIMEC. I would like to deliver you your frequent customer CEO. And I would like to thank you all on behalf of APIMEC.

I would also like to thank APIMEC for the opportunity to work together and to participate in our meetings. And I would like to close the CSN day by reinforcing our conviction and determination to meeting the goals that we propose for the future. I would also like to tell you that we're very optimistic about the future. And that despite all the difficulties that we had in 2020, we had a very fast recovery. And we expect that now with the vaccine, the COVID-19 effect can be definitively solved by the society and that we can go back to normality, and we can each play our roles towards the development that we want for our business and for the country. I believe that Brazil is in a very favorable position despite the lack of understanding between the executive and legislative power. I believe that common sense will prevail. I believe that the tax discipline will be implemented, fiscal discipline will be implemented, and this will allow us to show a good level of confidence to the external market because there is excess liquidity. And if Brazil can provide the conditions for it, a great part of this excess liquidity will be allocated to Brazil. Companies are coming out of this crisis in a good situation stronger, and we have a very good outlook for 2021 as a whole. Thank you all for attending. It has been a pleasure to be here with you today. And I hope that next year, we can have an in-person meeting, and I hope that we will have a totally different situation next time. Thank you all. And we are at your service should you have any doubts, comments, concerns. We are very confident about the future. Thank you very much. [Statements in English on this transcript were spoken by an interpreter present on the live call.]