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Usinas Siderúrgicas de Minas Gerais S.A.

Usinas Siderúrgicas de Minas Gerais S.A.

Rua Prof. Vieira de Mendonça 3011
Belo Horizonte, Minas Gerais 31310-260
Telephone: (55) (31) 3499-8000
Fax: (55) (31) 3499-8899
Web site:

Public Company
Employees: 8,363
Sales: BRL 6.68 billion ($2.28 billion) (2004)
Stock Exchanges: São Paulo OTC (for ADRs)
Ticker Symbol: USNZY
NAIC: 331111 Iron and Steel Mills; 331112 Electrometallurgical Ferroalloy Products Manufacturing; 331221 Cold-Rolled Steel Shape Manufacturing

Usinas Siderúrgicas de Minas Gerais S.A., universally known as Usiminas, has long been one of the leading steel producers in Brazil. With the completion in 2005 of the restructuring of Companhia Siderúrgica Paulista (Cosipa) into its subsidiary, Usiminas became Brazil's largest steelmaker and one of the largest in the world. Like other Brazilian steelmakers, Usiminas is attractive to buyers abroad because of the low cost of its basic product: flat, or slab, steel. Steel products yield higher profit margins, and so the company seeks to raise its sales of such products as a variety of specialized plates, including hot-rolled high-carbon ones, and cold-rolled plates, among them enameled plates, plates for stamping, and galvanized plates, including ones coated with zinc and nickel-zinc.


Usiminas was the creation of business interests in Minas Gerais who wanted an integrated steel complex in their state. The company was founded in 1956. The following year a Japanese consortium, Horikoshi, agreed to build the mill in exchange for a 40 percent stake in the operation taken by a holding company, Nippon Usiminas Cia. Ltda., which was led by Nippon Steel Corp. Brazil's development bank, BNDES, provided capital in exchange for a 25 percent share, the state of Minas Gerais took another 24 percent for their contribution, and Companhia Vale do Rio Doce (CVRD), the nation's publicly owned chief source of iron ore, assumed a 9 percent stake. A metallurgy professor, Amaro Lanari, Jr., negotiated the agreement with the Japanese and became the first president of Usiminas, serving until 1977. A new town, Ipatinga, was built from scratch to house the mill, which was located not far from CVRD's ore deposits. CVRD's rail line would transport the ore from the mines to the mill, then haul the finished steel to the port of Vitória. Rail cars would return from the port to the mill with the imported coal needed to produce coke for the blast furnaces. Headquarters were in Belo Horizonte, the capital of Minas Gerais.

Because of cost overruns, the federal holding company for the steel industry, Siderbrás, had to provide more funds and consequently became the majority stockholder of Usiminas, with Nippon Usiminas's share of the enterprise falling first by half, later by even more. However, some 400 Japanese technicians were brought over to bear a lasting influence on Usiminas, from an emphasis on long-range planning to the oriental gardens in the corridors of the mill. This influence was particularly strong in human resources. A massive effort was made to involve all personnel in decision making, with weekly assessments in each department. Almost all the employees had a brother, son, or spouse working in the company, and this was considered an asset. Larani's investment in personnel and research and development was credited for the 140 Brazilian patents that Usiminas held in 1991 and the significant income it thereby earned from the sale of technology.

This rosy view of labor relations at Usiminas, expressed in the Brazilian business magazine Exame, ignored the 1963 strike during which policemen opened fire against demonstrating strikers at the mill, killing, according to a company spokesperson, seven workers and hospitalizing 49. Twenty years of ensuing military rule in Brazil blocked further investigation, but a 1986 article claimed that the strikers were unarmed, that the death toll was perhaps more than 100, including uninvolved passersby, and that over 3,000 people were wounded.

Small-scale operations began in 1962. The company was employing 8,867 workers in 1965. The following year production reached 500,000 metric tons of ingot steel and nearly 390,000 tons of flat-rolled products, making it second in Brazil in steel production, with about 15 percent of the national total. By 1979, thanks to $5 billion in total investment by its owners, Usiminas had raised its annual capacity to 3.6 million metric tons. In that year its income came to 30.33 billion cruzeiros (about $1.05 billion), but it lost money.

The 1980s were mostly a lost decade for Usiminas. It operated in the red in most years, and its debt climbed as high as $900 million. By 1989, however, the company's fortunes were definitely on the mend. It earned $239 million on record sales of $2.03 billion, and its debt fell to a manageable $218 million. Steel production reached a record 3.8 million metric tons, of which 40 percent was exported. Its average productivity per employee/hour was twice as high as Brazil's other steelmakers and compared favorably with similar enterprises in Japan and Germany. Moreover, Usiminas had not suffered a strike since 1963 and was said always to pay the maximum salary permitted by the government. Nevertheless, the company was selected to be the first of a series of state-owned enterprises to be privatized by the incoming president of Brazil, Fernando Collor de Mello. A longtime Usiminas functionary, Rinaldo Campos Soares, was appointed president of the company with the mandate of preparing it for sale. "The greatest difficulty," he later recalled to Ricardo Galuppo of Exame, "was to convince the employees that privatization wouldn't lead to mass layoffs."


The auction was twice delayed before being held in October 1991 and was marked by violent demonstrations outside the Rio de Janeiro stock exchange. The Brazilian government sold 75 percent of the company's voting shares for about $1.1 billion, with a controlling group taking 51 percent of these shares. This consortium was led by the investment bank Banco Bozano Simonsen S.A. and included at least three other banks and four steel distributors. It also had the support of Nippon Usiminas, which still held almost 14 percent, and Usiminas's own workers and executives, who had been allotted 10 percent. Two government-controlled entities: CVRD and Previ, the pension fund run by Brazil's biggest bank, state-owned Banco do Brasil S.A., took another 10 percent each.

Because Usiminas was an efficiently run operation, the number of workers fell only 14 percent over two years, through retirement and buyouts rather than outright dismissals. Soares retained his job. Managers found they had more freedom to make decisions in matters such as purchasing and finance.


To continually search for excellence in flat steel production and commercialization, achieving world-class performance indexes and practices without disregarding the social dimension.

Freed from state control, Usiminas began to compete for the first time in the production and sale of high-quality, high-value steel products. Some $200 million was invested, for example, to begin manufacturing galvanized steel products. In 1995 Usiminas was making 65 percent of the thick plates used by the Brazilian naval industry, 63 percent of the needs of the machinery and electrical equipment sectors, 58 percent of the steel used by automakers, and 56 percent of the steel used by manufacturers of home appliances. One important customer, Rockwell-Fumagalli, a major manufacturer of automobile wheels, was receiving steel shipments from Usiminas 10 days after the order, compared to 90 days before privatization.

Working for private investors, Usiminas became an investor itself. It purchased, in 1993, a half-share in another privatized steelmaker, Companhia Siderúrgica Paulista (Cosipa), a company founded in 1953 to serve business interests in the state of São Paulo. It also acquired a share of the Argentine steelmaker Siderar S.A. I.C. Another purchase was a half-share of Companhia Paulista de Ferro Ligas, Brazil's main producer of ferroalloys, which was on the verge of bankruptcy. Together with CVRD, which took the other half, Usiminas issued preferred shares to the creditors of Ferro Ligas and obtained a 12-year grace period for $50 million in debts. (It sold its share of the company to CVRD in 1999.)

Between 1991 and 1995 Usiminas purchased shares in 11 companies with total annual revenue of $5 billion and employment of 35,000. It also joined with the Italian automaker Fiat S.p.A. in 1993 to build Usistamp, a $40 million plant next to the Usiminas steel mill. This plant pressed the company's steel into small shapes, mostly suspension parts.

Usiminas was chosen by the Brazilian business magazine Exame in 1995 as its enterprise of the year. The company recorded a net profit of $422.8 million in 1994 on sales of about $2 billion, a profit margin exceeded by only five Brazilian companies. About a third of the year's profits were passed on to shareholders in the form of dividends.

Usiminas and Fiat in 1998 opened Usicort, a service center for turning steel coils into Fiat blanks for stamping. A year later, it opened Usicentro, a $45 million complex in São Paulo state that included Rio Negro, a new auto-service center; a plant, Usilight, to electro weld structural shapes; and a logistics center. Rio Negro, like Usicort, was intended to supply blanks for stamping, this time chiefly to the Brazil subsidiaries of automakers General Motors Corp. and Volkswagen AG. The Usilight plant for electrowelding hot-rolled coil I and H beams was intended for the civil construction industry. The logistics center transferred Usiminas products arriving from the mill by railroad to trucks for delivery to distributors and end-users in São Paulo and nearby states.


The ownership of Usiminas was still heterogenous as the 21st century opened. In 2001 a controlling group in which Nippon Usiminas and the employees had the largest stakes held 53 percent of its voting capital. Among other shareholders, CVRD held 23 percent of the voting capital and Previ, 15 percent. Soares was still the chief executive of the enterprise. Cosipa became more closely tied to Usiminas in 2001, when the latter converted its holdings of the former's debentures into stock, thereby raising its ownership to about 93 percent.

Usiminas continued to augment its level of production, which reached 4.74 million metric tons of raw steel in 2004. Revenue and profits continued to rise as well, and the company reduced its debt during the year.

In 2005 Usiminas completed the integration of Cosipa into its orbit by purchasing the remaining stock. Cosipa ceased to be a public corporation and became a wholly owned subsidiary of Usiminas. Its production of raw steel, 4.21 million metric tons in 2004, was almost as high as Usiminas's own output. Usiminas was now the leader company of Usiminas System, which included 13 other companies, of which Cosipa was the most important. Taken as a whole, the system's revenues of BRL 12.23 billion in 2004 (or $4.17 billion, based on the average currency rate for the year), were 83 percent higher than those of Usiminas as a stand-alone company. The system accounted for one-third of Brazil's production of flat steel. Its market share in major sectors included large-diameter tubes, 74 percent; auto parts, 55 percent; electrical-electronic equipment, 52 percent; automobile industry, 48 percent; civil construction, 36 percent; industrial equipment and machinery, 36 percent; and home appliances, 27 percent. Export revenue came to 24 percent of the total. The United States was by far the main foreign market, taking 35 percent of the system's exports.


A Japanese consortium agrees to build the Usiminas steel mill.
Usiminas is ranked Brazil's second largest steel producer.
The company raises its annual capacity to 3.6 million metric tons of raw steel.
The Brazilian government sells most of Usiminas's shares to private investors.
Usiminas buys half of another privatized steelmaker, Cosipa.
Usiminas opens Usicentro, a complex to serve automakers, distributors, and end-users.
By absorbing Cosipa, Usiminas makes itself Brazil's leading steel producer.

In August 2005 Usiminas announced that it would take a share, together with the Techint Group, in a large steel company named Ternium. Ternium intended to hold a controlling interest in three major steel producers: Siderar (Argentina), CVG Siderúrgica del Orinoco C.A., or Sidor (Venezuela), and Hylsamex S.A. de C.V. (Mexico). The Techint Group was an international group of companies focused mainly on power and steel. Usiminas was to take a 16 percent stake in Ternium's overall share capital. It would, separately, take stock interests in Siderar (5.3 percent) and Sidor (16.6 percent).


Companhia Siderúrgica Paulista-Cosipa; Rncentro Participações Ltda.; Unigal Ltda. (95 percent); Usiminas International Ltd.; Usiminas Mecánica S.A.


Companhia Siderúrgica Nacional; Gerdau S.A.


Baer, Werner, The Development of the Brazilian Steel Industry, Nashville: Vanderbilt University Press, 1969.

Barros, Guilherme, "A Usimas já está pronta," Exame, September 18, 1991, pp. 66-69.

"Brazilian Steelmaker Usiminas Inaugurates $45M Service Center," American Metal Market, March 21, 2000, p. 4.

"Dozen Firms, Banks Claim to Gain Control of Brazil's Usiminas," Wall Street Journal, October 28, 1991, p. B9C.

Galuppo, Ricardo, "A vitória da ização," Exame, August 30, 1995, pp. 93-98.

Instituto Brasileiro de Análises Sociais e Económicas, "Usiminas continua sendo sinónimo de velha república," Vozes, May 1986, pp. 307-09.

Kamm, Thomas, "Brazil Sells Off Big Steelmaker to the Public," Wall Street Journal, October 25, 1991, p. A10.

Kepp, Michael, "Usiminas Sells Ferro Ligas Stake," American Metal Market, December 17, 1999, p. 4.

Onis, Juan de, "Goulart Cancels Bid for Powers," New York Times, October 8, 1963, p. 8.

Ponce de Leon, Gustavo, "A barra ficou mais leve e melhor," Exame, May 27, 1992, pp. 52-54.

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