As part of its worldwide strategy as a provider of comprehensive solutions to the automobile industry, Usinor will build of a new unit based in Sao Francisco do Sul (Santa Catarina State) in Brazil. Dofasco, Canadian leader in flat carbon steels, had announced it is entering into a Letter of Intent to acquire a 20% stake in this project. The Spanish group Corporacion Gestamp, specialized in steel service centers and stamping, and also present in Brazil and Argentina, will have a 10% stake in the project. Usinor already operates a joint-venture with the automobile oriented Dofasco in Ontario (Canada) to provide fast-growing markets in North America with galvanized products for the automobile industry.

Dubbed name Vega do Sul, the project includes the building of a cold rolling mill with an initial capacity of 800 kt, with potential expansion to 1.2 Mt, and the construction of an integrated hot-dip galvanizing line based on Usinor's Extragal technology. The latter line will have an annual capacity of 400 kt and will be dedicated to serving fast-growing demand for coated steels for auto bodies. The project represents a total investment of USD400 million. Production is scheduled to begin in early 2003.

In a related move, Usinor's partnership with CST (Companhia Siderurgica de Tubarao, Brazil) and its shareholders, initiated when Usinor acquired an equity interest in Acesita and CST, is today being strengthened through a commercial agreement for the provision of hot rolled coils from CST's hot rolling mill, now under construction. CST also has an option to acquire an equity interest in the new project.

The location of the new unit was selected primarily to enhance logistics and ensure the high quality of service made possible by delivery by sea of hot rolled coils from CST in Vitoria (State of Espirito Santo). Furthermore, the facility is ideally located to ship products to key auto industry customers in the Mercosur zone.

Usinor is Europe's leading provider of steel for automobiles. This new project enables the group to serve automaker customers with global operations by establishing production facilities in South America using its own technology. This same strategy is behind the DoSolGalva joint-venture with Dofasco, established in 1999, which provides North American carmakers with steel solutions available locally.

Dofasco (www.dofasco.ca) is a leading North American steel producer. Product lines include hot rolled, cold rolled, galvanized and tinplate flat rolled steels, as well as tubular products. Dofasco's wide range of steel products is sold to customers in the automotive, construction, steel distribution, packaging, pipe and tube, manufacturing and appliance industries.