May 16, 2024
VIA EDGAR TRANSMISSION
Mr. John Coleman
Mr. Craig Arakawa
Ms. Melissa Gilmore
Mr. Kevin Woody
Division of Corporation Finance
Office of Manufacturing
U.S. Securities and Exchange Commission
100 F Street, N.E.
Washington, D.C. 20549-4631
| Re: | National Steel Company (Companhia Siderúrgica Nacional – CSN) Form 20-F for the fiscal year ended December 31, 2022 |
File No. 001-14732
Response to Staff Comment Letter Dated May 2, 2024
Dear Mr. Coleman, Mr. Arakawa, Ms. Gilmore and Mr. Woody:
Reference is made to the comment letter from the staff (the “Staff”) of the U.S. Securities and Exchange Commission (the “SEC”) received by National Steel Company (Companhia Siderúrgica Nacional – CSN) (the “Company” or “CSN”) on May 2, 2024, regarding the Company’s annual report on Form 20-F for the fiscal year ended December 31, 2022, filed on April 27, 2023 and amended on April 25, 2024. For your convenience, we have reproduced the Staff’s comments in italics and have provided responses immediately below.
SEC Comment No. 1
Item 4. Information on the Company, page 1
Please provide an updated reconciliation with depletion due to mining activities for your resources/reserves as reported in the most recent year compared to the prior year, as required by Item 1304(e) of Regulation S-K and confirm that you will include this reconciliation in subsequent annual filings. Note that this is only required for material properties.
Response to Comment No. 1
The following table sets forth a reconciliation with the depletion of mineral resources (exclusive of reserves) for Casa de Pedra mine and Engenho mine in each of 2022 and 2023, considering our ownership interest of 78.2% as of December 31, 2021 and 79.8% as of December 31, 2022 and 2023:
|
As of |
2022 Depletion |
2022 Net Difference |
As of December 31, 2022 |
2023 Depletion |
2023 Net Difference |
As
of | |
| Mineral Resources (million tons) | 2,895 | (22) | 1.17% | 2,929 | (28) | (0.96)% | 2,901 |
_________________
Note: Figures included in this table have been subject to rounding adjustments. Accordingly, figures shown as totals may not represent an arithmetic sum of the figures that precede them.
The following table sets forth a reconciliation with the depletion of mineral reserves for Casa de Pedra mine and Engenho mine in each of 2022 and 2023, considering our ownership interest of 78.2% as of December 31, 2021 and 79.8% as of December 31, 2022 and 2023:
|
As of |
2022 Depletion |
2022 Net Difference |
As of December 31, 2022 |
2023 Depletion |
2023 Net Difference |
As
of | |
| Mineral Reserves (million tons) | 1,626 | (24) | 0.48% | 1,634 | (28) | (1.71)% | 1,606 |
_____________
Note: Figures included in this table have been subject to rounding adjustments. Accordingly, figures shown as totals may not represent an arithmetic sum of the figures that precede them.
We will include updated annual reconciliation with depletion due to mining activities for our mineral resources and reserves in material mining properties in future filings.
SEC Comment No. 2
Item 4. Information on the Company, page 1
Please provide proposed disclosure of non-material resource and reserve tables which includes the following, as required by Item 1303(b)(3) of Regulation S-K:
| • | the point of reference in which reserves and resources are calculated, such as in-situ, mill feed, saleable product, etc; and |
| • | the currency with respect to the pit optimization parameters on page 26. |
Response to Comment No. 2
The point of reference in which our reserves and resources are calculated for our non-material properties is in-situ.
We will disclose the point of reference in which our reserves and resources are calculated in future filings.
Form 20-F for the year ended December 31, 2022:
The following table sets forth the pit optimization parameters for our non-material properties in millions of Brazilian reais.
|
Alhandra |
Arcos |
Barroso |
Caaporã |
Cantagalo |
Montes Claros |
Pedro Leopoldo | |
| Diesel/Gasoline | 3.783 | 11.692 | 5.276 | 2.841 | 2.084 | 1.842 | 1.968 |
| Electrical Energy Variable | 0.453 | 2.920 | 1.930 | 0.679 | 0.332 | 0.416 | 1.008 |
| Wear Parts | - | - | 344 | 0.004 | 0.073 | 0.098 | 0.226 |
| Production and Distribution Material | 2.450 | 3.546 | 2.036 | 1.743 | 0.788 | 0.999 | 1.536 |
| Outsourced Activities | - | - | 3.910 | 2.574 | 0.515 | 2.509 | 1.090 |
| Mining Concessions and Royalties | - | - | 1.218 | 0.773 | 0.461 | 0.452 | 0.420 |
| Variable Cash Cost | 6.687 | 18.158 | 14.714 | 8.614 | 4.253 | 6.316 | 6.249 |
| Electrical Energy Fixed | - | - | 429 | 0.221 | 0.093 | 0.099 | 0.361 |
| Labor Expenses Own | 4.049 | 14.747 | 7.080 | 4.781 | 3.372 | 3.521 | 3.221 |
| Third Party Services | 1.247 | 22.365 | 4.206 | 1.076 | 0.297 | 0.507 | 1.822 |
| Maintenance Material | 1.541 | 2.503 | 2.748 | 0.837 | 0.372 | 0.321 | 1.813 |
| Other Cost | 0.165 | 5.055 | 2.827 | 0.331 | 0.053 | 0.101 | 0.213 |
| Fixed Cash Cost | 7.002 | 44.668 | 12.971 | 4.541 | 3.292 | 3.197 | 6.161 |
| Cash Cost | 13.689 | 62.826 | 27.684 | 13.155 | 7.544 | 9.514 | 12.410 |
| Depreciation and Amortization | 0.387 | 30.452 | 22.383 | 6.710 | 4.243 | 1.257 | 2.590 |
| Cost of Goods Sold | 14.076 | 93.278 | 50.068 | 19.934 | 11.787 | 10.770 | 15.049 |
| Price* | ~10% | ~10% | ~10% | ~10% | ~10% | ~10% | ~10% |
_____________
| * | With respect to price parameters, we assume a margin of 10% over total cost of goods sold, since we do not conduct direct sales. With respect to commodity price, pricing dynamics for cement are a function of local supply and demand and are not, like other commodities such as steel and iron ore, pegged to an index or to global commodity prices. In addition, cement prices take into account the costs of cement plants, which may vary by plant and by company. |
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Form 20-F for the year ended December 31, 2023:
The following table sets forth the pit optimization parameters for our non-material properties in millions of Brazilian reais:
|
Alhandra |
Arcos |
Barroso |
Caaporã |
Cantagalo |
Montes Claros |
Pedro Leopoldo | |
| Plant | |||||||
| Fuel | 2.542 | 11.302 | 5.781 | 2.555 | 2.148 | 2.132 | 2.585 |
| Electric Energy | 0.406 | 2.201 | 1.678 | 0.340 | 0.187 | 0.283 | 0.845 |
| Other Variable Costs |
2.498 |
3.177 |
2.968 |
2.444 |
0.927 |
1.905 |
3.257 |
| Variable Cost | 5.445 | 16.680 | 10.426 | 5.339 | 3.261 | 4.320 | 6.687 |
| Labor Expenses | 6.081 | 17.574 | 3.421 | 2.044 | 2.920 | 1.713 | 1.980 |
| Third Party Services | 2.054 | 12.868 | 4.415 | 1.516 | 0.187 | 1.653 | 0.131 |
| Maintenance (Material and Services) | 2.990 | 16.598 | 3.923 | 0.852 | 0.284 | 0.354 | 2.236 |
| Other Fixed Costs |
(0.296) |
4.549 |
(2.805) |
0.217 |
0.132 |
0.169 |
0.068 |
| Fixed Cost |
10.829 |
51.590 |
11.756 |
4.630 |
3.522 |
3.889 |
4.415 |
| Cash Cost |
16.274 |
68.270 |
22.183 |
9.968 |
6.783 |
8.209 |
11.103 |
| Price* | ~10% | ~10% | ~10% | ~10% | ~10% | ~10% | ~10% |
_________________
| * | With respect to price parameters, we assume a margin of 10% over total cost of goods sold, since we do not conduct direct sales. With respect to commodity price, pricing dynamics for cement are a function of local supply and demand and are not, like other commodities such as steel and iron ore, pegged to an index or to global commodity prices. In addition, cement prices take into account the costs of cement plants, which may vary by plant and by company. |
We will specify the currency with respect to the pit optimization parameters in future filings.
*******
If you have any questions or require any additional information with respect to the above, please do not hesitate to contact Tobias Stirnberg, CSN’s counsel, at +55 (11) 3927-7702.
Sincerely,
/s/ Antonio Marco Campos Rabello
___________________________________
Companhia Siderúrgica Nacional
By: Antonio Marco Campos Rabello
Title: Chief Financial and Investor Relations Officer
cc: Tobias Stirnberg
Milbank LLP
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