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December 2007

Investor Presentation. December 2007. Highlights. Among the most competitive steel companies in the world Strong low cost structure as a result of diversified production processes and multiple raw material sourcing An international company Large export revenues from Brazil

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December 2007

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  1. Investor Presentation December 2007

  2. Highlights • Among the most competitive steel companies in the world • Strong low cost structure as a result of diversified production processes and multiple raw material sourcing • An international company • Large export revenues from Brazil • Operations in 13 countries • Ranked 14th globally by steel output for year 2006 with an output of 15.6 million tonnes (source: International Iron and Steel Institute - IISI) • Largest long steel producer in the Americas • 2nd largest long steel producer in North America • 41 steel units with state of the art technology • 2nd largest SBQ producer in the world • Relevant market share and diversified product range through downstream and service centers • Strong balance sheet and strong cash generation • Gerdau S.A. shares are listed on the São Paulo, New York and Madrid Stock Exchanges

  3. Agenda Industry Overview Group Overview Operating and Financial Highlights All data presented in US Dollar and in metric tons, except when indicated

  4. Crude Steel Production In million tonnes • Growth rate in the last 10 years: + 65% • China: + 347% World Growth 2000 to 2007 = 6.5% p.a. China Accelerated Growth 2000 to 2007 = 21.2% p.a. World Growth 1993 to 1999 = 1.4% p.a. China Growth 1993 to 1999 = 5.5% p.a. * Annualized Production 9M07 Source: IISI / World Steel Figures 2007

  5. Demand FINISHED STEEL APPARENT DEMAND In million tonnes 6.1% 1,251 5.9% 1,179 1,113 The world steel demand should increase 4.2% p.a. from 2010 up to 2015. FINISHED STEEL APPARENT PER CAPITA DEMAND (kg) STEEL USE PER CAPITA GROWTH (2002 – 2007) NAFTA: +5.7% China: +104.1% Brazil: +12.8% World: +54.5% India: +50.0% e: estimated Source: IISI

  6. Ranking Italy Brazil Japan Russia China India USA Crude Steel Production – 2006 In million tonnes • Global Production: 1,230 MMt • China: 34% of global production • Brazil: 2.5% of global production 10th Largest Producer Others Turkey Taiwan Germany South Korea Ukraine Source: IISI

  7. Consolidation Global Steel Market TOP 5: 12.3% (1990) 16.9% (2005) TOP 5: 13.4% (1990) 24.4% (2005) Production in 2005 1.139 billion tonnes Production in 1990 770 million tonnes WORLD EX-CHINA Source: Prof. Germano de Paula

  8. Agenda Industry Overview Group Overview Operating and Financial Highlights All data presented in US Dollar and in metric tons, except when indicated

  9. 100+ Years in Business New Acquisitions: Piratini (Rio Grande do Sul, Brazil) – specialty steel Second mill in Minas Gerais and rolling mill in São Paulo (Brazil) Stake in Açominas International expansion ( Chile, Canada, Argentina and USA) Acquisition of a new steel mill (Paraná, Brazil) Construction of a new mill (Rio de Janeiro, Brazil) Entering in the Reforestation business Expansion of Riograndense Mill (Construction of 2nd steel mill) New Acquisitions: USA Downstream mills and fab shops in North America Entering European and Asian market Expansion in Latam market Construction of steel mill in São Paulo (Brazil) Distribution channel arrangements (today: more than 70 sales points) Market Share increase by: Diversification / Verticalization Distribution channel New acquisition (Pernambuco, Brazil) Acquisition of 3 mills (Rio de Janeiro, Minas Gerais and Bahia, Brazil) Construction of 2 mills (Paraná and Ceará, Brazil) International expansion (Uruguay and Canada) 1948 - 1st Steel Mill Acquisition (Riograndense) 1901 - First Operation: Nail Factory 1900 1940´s 1950´s 1960´s 1970´s 1980´s 1990´s 2000

  10. Solid Track Record In thousand tonnes (IFRS) 23,175 Sidertul(Mexico) INCA (Dom. Rep.)Sizuca(Venezuela) SJK (India) Chaparral (USA) TOTAL INVESTED(1997 – Sep. 2007): Brazil = US$ 4.2 billion + Debt North America = US$ 6.1 billion + Debt Latin America = US$ 1.3 billion + Debt Europe = US$ 687 million + Debt Asia = US$ 71 million + Debt 27,580 19,870 Installed Capacity Expansion MacSteel (USA) São Paulo (Brazil) Sidenor (Spain) Sheffield (USA) Siderperú (Peru) GSB(Spain) 16,372 Brazil – Crude Steel Installed Capacity North Star(USA) Abroad – Crude Steel Installed Capacity 16,475 Diaco(Colombia) 11,076 4,556 7,696 Control ofAçominas(Brazil) Co-Steel (USA) 1980 – Laisa (Uruguay) 1988 – Barão de Cocais(Brazil) 1989 – Usiba (Brazil) Cambridge (Canada)1992 – Piratini (Brazil) AZA (Chile) 1994 – Pains (Brazil) Manitoba (Canada) Stake in Açominas (Brazil) Ameristeel (USA) AZANew mill(Chile) Additional stake in Açominas(Brazil) CAGR 1997-2007: 18% a.a. e: estimated In addition to the mills acquired, as related above, Gerdau acquired many fab shops in order to add value to its products and offer services and products to its clients according to their needs.

  11. Location ABROAD 13.3 million tonnes of crude steel 13.9 million tonnes of rolled steel products 30 Steel Units 45 Fabrication Shops 20 Downstream operations and special sections 02 Associated Companies (Spain and Dominican Republic) 02 Joint ventures (USA and India) BRAZIL 9.9 million tonnes of crude steel 6.6 million tonnes of rolled steel products 11 Steel Units 12 Fabrication Shops - Armafer 04 Downstream operations and special sections 68 Sales point (Comercial Gerdau) 04 Flat steel service centers Canada Spain United States India Mexico Dominican Republic Venezuela Colombia Peru Brazil Chile Uruguay Steel Units Argentina Associated Companies Joint Ventures

  12. Growth with ProfitabilityATKearney study Growth portfolio (CAGR 2001-2005)benchmarked against industry average Revenue Growth 70% Eregli Demir Celik 60% Mittal Severstal Baoshan Bluescope 03 05 Angang 50% Maanshan Iron Steel Ipsco Steel Dynamics Gerdau Nucor Novolipetsk1) 40% Acerinox Tata Steel 30% Usinas Voestalpine Industry Average Onesteel Tokyo Steel Cap Boehler-Uddeholm 20% US Steel SSAB Salzgitter SAIL Oregon Steel Mills Hylsamex 10% HyundaiSteel JFE 03 05 Rautaruukki Corus Neomax Imsa Worthington 0% Arcelor02 05 Nisshin Steel Sumitomo AK Steel Thyssenkrupp1) Nippon Steel Carpenter Technology -10% -40% 10% 60% 110% Equity Value Growth Industry Average Notes: 1) EBIT-growth Notes: USINAS = USIMINAS; ARCELOR Takeover MITTAL/ SEVERSTAL: The market capitalization of Severstal is 6.8 bn USD (same as revenue, hence valued above the industry multiple of 0.79) Source: Thyssenkrupp: steel segment

  13. Growth Opportunities LONG STEEL PRODUCTS (Brazil) • Maintenance of market share • Improvement of current installed capacity SPECIALTY STEEL • Active role in the steel sector consolidation process • Search for new opportunities AÇOMINAS • New 1.5 MM tonnes blast furnace • Growth platform for slabs, blooms and billets • Iron Ore Reserves LATIN AMERICA • Maintenance of leadership in the long steel sector • New markets NORTH AMERICA • Efficiency and productivity gains (Gaps) • Enhancement of leadership in the long steel sector through acquisitions

  14. Outlook BRAZIL • Strong demand for the 4th quarter 2007 and throughout 2008 • Scrap prices stable; iron ore and coal prices aligned to international market • Maritime freight should continue to be high, squeezing export margins NORTH AMERICA • Government should continue investing in infrastructure • Prices relatively stable • Lower volumes during the next quarter due to impending winter period • Chaparral consolidated since September 14th • Good prospects for early 2008 LATIN AMERICA • Demand should continue strong impacted by economic growth in the region • Government investments should continue • Costs may increase EUROPE • Demand should continue strong • Increase in production due to investment plan in progress • Higher costs, mostly energy

  15. Agenda Industry Overview Group Overview Operating and Financial Highlights All data presented in US Dollar and in metric tons, except when indicated

  16. Shipments In thousand tonnes (IFRS) 9M07 = 12,544 9M06 = 11,162 Europe (4% in 3Q07) +12.4% Latin America (15% in 3Q07) 4,212 4,164 4,168 3,770 3,727 3,703 3,689 North America (39% in 3Q07) Brazil – Exports (11% in 3Q07) Brazil – Domestic Market (31% in 3Q07) Billets, blooms& slabs Heavystructural shapes Wires Wire-rod Rebars Merchant bars Nails Fabricated steel

  17. Net Sales Breakdown Net Sales Breakdown by Region - 9M07 Exports from Brazil (t) Net sales from the overseas units plus exports from Brazil, represented 66% of consolidated net sales Africa 12% Europe11% Central America16% Brazil -Domestic Market 34% Latin America11% Europe 12% North America13% 13% in tonnes Asia 24% North America36% South America 23% Brazil – Exports 8% Historical Net Sales Geographical Distribution In US$ millions (IFRS) 3,915 4,168 3,038 3,030 3,577

  18. EBITDA and Margins Brazil North America Latin America Europe Latin America Brazil Consolidated North America Europe EBITDA*In US$ millions 829 823 742 734 8% 614 10% 26% 56% EBITDA MARGIN* GROSS MARGIN* * Data in IFRS

  19. Consolidated Financials In US$ millions (IFRS) LTM = Last twelve months EBITDA = Earnings before interest, taxes, depreciation and amortization

  20. Consolidated Debt Profile September 2007 (IFRS) DEBT STRUCTURE Foreign Currency 22% Companies Abroad 59% Domestic Currency 19%

  21. Consolidated Debt Amortization In US$ millions – September/07 (IFRS) Perpetual Bond: 600 Companies Abroad: 2,982 Companies abroad: 1,259 (BRIDGE) FINIMP: 69 BNDES: 48 Companies Abroad: 699 Debentures: 166BNDES: 154 FINIMP: 127 BNDES: 178 FINIMP: 214 Companies Abroad: 84 BNDES: 319 Companies Abroad: 83 Companies Abroad:232BNDES: 47 FINIMP: 51 BNDES: 46 Pre-export: 45 FINIMP: 55BNDES: 46 SHORT TERM: US$ 2,304 LONG TERM: US$ 6,602

  22. CAPEX INVESTMENT PLAN 2007–2009 ACTUAL 9M07 (IFRS) In US$ millions In US$ millions *MacSteel is not included

  23. One of the largest SBQ producer in the world and a strong presence in the North American market Possibility in increasing the presence of the Gerdau Group in the automotive and autoparts industry as a supplier of long specialty steel products (SBQ) Annual installed capacity: 1.2 million metric tons of crude steel and 1.1 million tons of rolled products Three mini-mills, located in Jackson, Michigan; Monroe, Michigan; and Fort Smith, Arkansas Six downstream operations located in the states of Michigan (two), Ohio, Indiana (two) and Wisconsin 1,600 employees Investment: US$1.458 billion – US$39.20 per share – plus the assumption of liabilities of US$215 million The acquisition will be paid through cash available Quanex will spin-off its non-steel business Quanex Corporation’s Board of Directors has unanimously approved the transaction on November 18. The shareholders still must to approve the offer. Quanex Corporation (MacSteel)

  24. Quanex Corporation (MacSteel) OPPORTUNITIES • Best entry opportunity in the high end SBQ market ( if not the one in the medium term) • Strategic fit to Gerdau SBQ strategy (be one of the global leaders in the automotive market) • Synergies with Gerdau STRENGTHS • Strong and resilient financial performance • Cost structure (lowest SBQ producer in North America) • High productivity • Good management team • Long standing customer base • Plant located close to the main SBQ markets (Midwest, Texas and Mexico) • State of the art downstream • Value added processing facilities • Strong brand recognition • Common values to Gerdau

  25. Governance – Best Practices • BOARD OF DIRECTORS - External members on the board - Support Committee (Support and Excellence; Corporate Governance; Strategy and Compensation and Succession) • EXECUTIVE COMMITTEE - Vice-presidents responsible for the Operations and Support Areas - Support Committee ( Disclosure, Financial, Risk Management and Human Resources and Orgazational Development) • FISCAL BOARD (AUDIT COMMITTEE) - Permanent and in accordance to the SOX (Gerdau S.A.) HIGHLIGHTS: • First Brazilian company to submit its Consolidated Financial Statements in conformity with international accounting standards (IFRS) • Tag Along (100% common and preferred shares) • Bovespa Level 1 • Shares are negociated in Bovespa, Nova York Stock Exchange, Toronto Stock Exchange and LATIBEX Stock Exchange • Risk Management • Gerdau Business System • Gerdau S.A. shares are included in the following São Paulo Stock Exchange indexes: • Bovespa Index - Ibovespa • Corporate Sustainability Index - ISE • Special Tag Along Stock Index - ITAG • Brazil Index 50 – IBrX 50 • Industrial Sector Index – INDX

  26. Disclaimer This document can contain statements which constitute forward-looking statements. Such forward-looking statements are dependent on estimates, data or methods that may be incorrect or imprecise and that may be incapable of being realized. These estimates also are subject to risk, uncertainties and suppositions and include, among other, overall economic, political and commercial environment, in Brazil and in the markets we are present in addition to government regulations, present and future. Prospective investors are cautioned that any such forward-looking statements are not guarantees of future performance and involve risks and uncertainties. The Company does not undertake, and specifically disclaims any obligation to update any forward-looking statements, which speak only as of the date made.

  27. www.gerdau.com.br inform@gerdau.com.br +55 51 3323 2703

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