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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

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FORM 20-F

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Commission file number 1-14878

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Securities registered pursuant to Section 12(g) of the Act: None

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Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act: None

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The total number of issued shares of each class of stock of GERDAU S.A. as of December 31, 2024 was:

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Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.

☒ Yes ◻ No

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If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.

☐ Yes ☒ No

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Note — Checking the box above will not relieve any registrant required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 from their obligations under those Sections.

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Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

☒ Yes ☐ No

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Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

☒ Yes ☐ No

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Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or an emerging growth company. See definition of “large accelerated filer,” “accelerated filer,” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):

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If an emerging growth company that prepares its financial statements in accordance with U.S. GAAP, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards† provided pursuant to Section 13(a) of the Exchange Act. ☐

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†The term “new or revised financial accounting standard” refers to any update issued by the Financial Accounting Standards Board to its Accounting Standards Codification after April 5, 2012.

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Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☒

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If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements. ☐

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Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐

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Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing:

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If “Other” has been checked in response to the previous question, indicate by check mark which financial statement item the registrant has elected to follow.

☐ Item 17 ☐ Item 18

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If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

☐ Yes ☒ No

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TABLE OF CONTENTS

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INTRODUCTION

Unless otherwise indicated, all references herein to:

The Company has prepared the Consolidated Financial Statements included herein in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board (“IFRS Accounting Standards”). The following investments are accounted following the equity method: Bradley Steel Processor and MRM Guide Rail, all in North America, of which Gerdau Ameristeel US Inc. holds a 50% stake, the investment in Gerdau Corsa S.A.P.I. de C.V., in Mexico, in which the Company holds a 75% stake, the investment in Dona Francisca Energética S.A, in Brazil, in which the Company holds a 53.94% stake, the investment in Newave Energia S.A., in Brazil, in which the Company holds a 40% stake, the investment in Gerdau Summit Aços Fundidos e Forjados S.A., in Brazil, in which the Company holds a 58.73% stake, the investments in Addiante S.A., in Brazil, in which the Company holds a 50% stake, the investment in Brasil ao Cubo S.A., in Brazil, in which the Company holds a 44.66% stake, the investment in Juntos Somos Mais Fidelização S.A., in Brazil, in which the Company holds a 27.47% stake and the investment in MRS Logística S.A., in Brazil, in which the Company holds a 1.32% stake.

On January 17, 2024, the Company signed an agreement for the sale of all its equity interests of 49.85% in the joint venture Diaco S.A. (and subsidiaries) and 50.00% in the joint venture Gerdau Metaldom Corp (and subsidiaries). On February 1, 2024, after compliance with the corresponding conditions precedent, the sale of the 50.00% equity interest in the joint venture Gerdau Metaldom Corp. (and subsidiaries) was concluded.

On March 14, 2024, after compliance with the corresponding conditions precedent, the sale of the 49.85% in the joint venture Diaco S.A. (and subsidiaries) was concluded.

On July 5, 2024, the Company signed a share purchase agreement increasing to 53.94% its equity interests in the joint venture Dona Francisca Energética S.A., in Brazil.

On August 8, 2024, the Company sold its shares of Ubiratã Tecnologia S.A., without recognizing any material losses in relation to the equity value recorded in the financial statements.

On February 10, 2025, the Company, after fulfilling all the conditions precedent, including approval by the antitrust authorities, concluded the transaction with Sumitomo Corporation and The Japan Steel Works Ltd., for the acquisition of 39.53% and 1.74%, respectively, of the total shares issued by Gerdau Summit Aços Fundidos e Forjados S.A. (“Gerdau Summit”). With the closing of the transaction, the Company will own 100% of Gerdau Summit’s capital. Gerdau Summit, until then a joint venture, with this transaction became a subsidiary of the Company.

Unless otherwise indicated, all information in this Annual Report is stated as of December 31, 2024.

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CAUTIONARY STATEMENT WITH RESPECT TO FORWARD-LOOKING STATEMENTS

This Annual Report contains forward-looking statements within the meaning of the Private Securities Litigation Act of 1995. These statements relate to our future prospects, developments and business strategies.

Statements that are predictive in nature, that depend upon or refer to future events or conditions or that include words such as “expects,” “anticipates,” “intends,” “plans,” “believes,” “estimates” and similar expressions are forward-looking statements. Although we believe that these forward-looking statements are based upon reasonable assumptions, these statements are subject to several risks and uncertainties and are made considering information currently available to us.

It is possible that our future performance may differ materially from our current assessments due to several factors, including the following:

Our forward-looking statements are not guarantees of future performance, and actual results or developments may differ materially from the expectations expressed in the forward-looking statements. As for the forward-looking statements that relate to future financial results and other projections, actual results will be different due to the inherent uncertainty of estimates, forecasts and projections. Because of these uncertainties, potential investors should not rely on these forward-looking statements.

We undertake no obligation to publicly update any forward-looking statement, whether as a result of new information, future events or otherwise.

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Global crises and subsequent economic slowdowns may adversely affect global steel demand. As a result, the Company’s financial condition and results of operations may be adversely affected.

Historically, the steel industry has been highly cyclical and deeply impacted by global economic conditions, including fluctuations in global production capacity, steel imports and exports, and corresponding trade policies. After a steady period of growth between 2004 and 2008, the sharp decline in demand resulting from the 2008-2009 global financial crisis once again underscored the industry’s vulnerability to macroeconomic volatility. That crisis originated from the collapse of the United States subprime mortgage market, leading to severe disruptions in financial institutions and global credit markets. Developed economies, such as North America and Europe, experienced deep recessions due to the real estate market crash and the resulting liquidity shortage. As a result, steel demand suffered a decline in 2009, reflecting contractions in industrial production and infrastructure investments. A recovery phase began in 2010, primarily driven by emerging economies, particularly China, where large-scale stimulus programs supported infrastructure and manufacturing growth. However, the subsequent decade brought new challenges to the industry, including overcapacity, especially in China, placed downward pressure on steel prices and disrupted global trade flows. By the late 2010s, trade disputes – most notably between the U.S. and China – led to the imposition of tariffs and other protectionist measures, further distorting supply and demand dynamics. Additionally, geopolitical tensions and fluctuations in raw material prices contributed to prolonged market instability, making the recovery uneven and intensifying competition in the industry.

The COVID-19 pandemic in 2020 is another example of the strong correlation between steel demand and broader economic conditions. Initially, uncertainty and economic slowdown surrounding the pandemic negatively impacted the steel market. In the subsequent years, the injection of cash into the economy from multiple Central Banks performing counter-cyclical economic policies resulted in stronger economic activity and consequently higher steel demand.

The global economy can negatively impact the consuming markets, affecting the business environment with respect to the following:

If the Company is not able to remain competitive in these shifting markets, our profitability, margins and income may be negatively affected. A decline in this trend could result in a decrease in the Company’s shipments and revenues. As a result, the Company’s financial condition and results of operations may be adversely affected.

Our results and financial condition are affected by global and local market conditions that we do not control and cannot predict.

Our results of operations and financial condition are subject to significant volatility due to global and local market dynamics beyond our control. The steel industry is inherently cyclical, and fluctuations in steel demand, pricing, and production costs can materially impact our profitability.

External factors such as economic downturns, changes in infrastructure spending, supply chain disruptions, and shifts in global trade policies, including protectionist measures and tariffs, may adversely affect our operations. Additionally, rising energy costs, raw material availability, and foreign exchange rate fluctuations can increase our operational expenses and reduce margins.

Global economic weakness may prompt banks to limit or deny lending to us or to our customers, which could have a material adverse effect on our liquidity, on our operations and on our ability to carry out our announced capital investment programs and may prompt our customers to slow down or reduce the purchase of our products.

We may experience longer sales cycles, difficulty in collecting sales proceeds and lower prices for our products. We cannot provide any assurance that any of these events will not have a material adverse effect on market conditions, the prices of our securities, our ability to obtain financing and our results of operations and financial condition.

The continuing impact of the Russian invasion of Ukraine and any widening of the conflict, the Israel-Hamas conflict in Gaza or any other global conflicts could have a materially adverse impact on our results of operations and financial condition.

The continuing Russian invasion of Ukraine and any widening of the conflict could have a material adverse effect on the overall macroeconomic environment, which might include demand for steel and iron ore and prices, as well as increasing energy costs.

Both the conflict itself and the sanctions imposed (and further sanctions that may be imposed) could have further destabilizing effects on financial markets and certain commodity markets. Any substantial escalation could cause a material adverse effect on macroeconomic conditions. In addition, sanctions may remain in place beyond the duration of any military conflict and have a long-lasting impact regionally and globally and could adversely impact the Company’s results of operations and financial condition.

Similarly, the Israel-Hamas conflict in Gaza and any other global conflicts could have a material adverse effect on the overall macroeconomic environment, impacting financial markets and certain commodity markets, with a materially adverse impact on our results of operations and financial condition.

Gerdau faces significant competition in relation to its steel products, including prices of other domestic and foreign producers, which may adversely affect its profitability and market share.

The global steel industry is highly competitive with respect to price, quality of products and customer service, as well as to technological advances that allow the reduction of production costs. Brazilian exports of steel products are influenced by several factors, including protectionist policies of other countries, foreign exchange policy and the growth rate of the world economy. Moreover, continuous advances in material sciences and the resulting technologies facilitate the improvement of products such as plastic, aluminum, ceramics, glass and timber, permitting them to serve as substitutes for steel.

Due to the high initial investment costs, the operation of a steel plant on a continuous basis may encourage mill operators to maintain high production levels, even in periods of low demand, which increases the pressure on industry profit margins. That said, competitive pressures that force the fall of steel prices can also affect the profitability of Gerdau.

The steel industry has historically suffered from excess of production capacity, which has worsened due to a substantial increase in production capacity in emerging countries, particularly China and India and other emerging markets. China is currently the largest global steel producer.

Unfavorable conditions in China and steel-exporting countries can significantly impact steel prices in other markets. China, as the world’s largest steel producer and consumer, influences global steel demand and supply dynamics. Factors like a lack of real estate investment, lower consumer confidence and rationalization of government stimulus can diminish steel demand within China, affecting global prices. Additionally, steel-exporting countries, benefiting from lower production costs, efficient supply chains, and economies of scale, can exert competitive pressures on international steel prices, particularly when coupled with government subsidies or trade agreements. These combined factors create a complex interplay of supply and demand forces that can swiftly impact steel prices worldwide.

In 2023 and 2024, steel companies in Brazil faced strong competition from imported products, mainly due to the global excess in steel production, culminating in an unhealthy market capture near the record highs, increasing the competitive imbalance, mainly driven by predatory steel imports from China. According to the Brazil Steel Institute, steel imports in Brazil reached almost 6 million tonnes in 2024, up 18% over 2023, harming fair competition in the main markets where Gerdau operates and impacting the Company’s results. Although Gerdau is a modern and highly efficient producer, the Company cannot compete with heavily subsidized imports, which may adversely affect the competitiveness of the industry, its financial condition, and results of operations in the future.

An increase in China’s steelmaking capacity or a slowdown in China’s steel consumption could have a material adverse effect on domestic and global steel pricing and could result in increased steel imports into the markets in which the Company operates.

One significant factor in the global steel market has been China’s high steel production capacity. However, very substantial consumers of steel have lost relevance in the Chinese economy, causing a deep and structural imbalance between steel supply and demand in the Chinese domestic market.

China is currently the world’s largest steel producer and has favorable conditions such as excess steel capacity, devalued currency and a job maintenance policy. In addition, the Chinese government subsidizes surplus steel production, exporting these volumes at prices below production costs in several countries in the transoceanic region that have not yet taken sufficient trade defense measures against trade practices that enable predatory steel imports, such as Brazil, and consequently pushing down international steel prices. Trade defense measures against predatory practices are legal and supported by the World Trade Organization. Some countries such as the United States, Mexico, Colombia, Turkey and the 27 countries of the European Union have adopted relevant measures to combat the entry of subsidized Chinese steel, strengthening their economies, their industries, and their jobs.

In 2024, steel imports in Brazil increased by 18% compared to 2023 and reached for the second straight year a record volume in the annual historical series, according to the Brazil Steel Institute. Over 2023 and 2024, Gerdau faced a shocking increase in the penetration of imported steel in Brazil, particularly from China. For these reasons, players in the sector have been defending the need for a review of import tariffs in Brazil to ensure fairer and more competitive conditions for the national steel market. The Brazilian government partially addressed the steel sector last year with a temporary hike of tariffs for some flat and long steel products utilizing a quota system, which proved insufficient so far. If the Brazilian government does not enhance measures against subsidized steel imports and the high level of imports continues without adequate measures that guarantee fair competition with the local market, Gerdau’s financial condition and results of operations may be negatively affected in the future. In addition to direct steel imports, the Brazilian industry also faces competition from imported finished products, which negatively affects the entire steel supply and production chain.

Higher steel scrap prices or a reduction in supply could adversely affect production costs and operating margins.

The main metal input for the Company’s mini mills is steel scrap. Although international steel scrap prices are determined essentially by scrap prices in the U.S., due to the United States being the main scrap exporter in the world, scrap prices in the Brazilian market are set by domestic suppliers and demand. The price of steel scrap in Brazil varies from region to region and reflects demand and transportation costs. Should scrap prices increase significantly without a corresponding increase in finished steel selling prices, the Company’s profits and margins could be adversely affected. An increase in steel scrap prices or a shortage in the supply of scrap to its units would affect production costs and potentially reduce operating margins and revenues. As a result, the Company’s financial condition and results of operations may be adversely affected.

Increases in iron ore and coal prices, or reductions in market supply, and price increases in other inputs, could adversely affect the Company’s operations.

When the prices of raw materials, particularly iron ore and coking coal, increase, and the Company needs to produce steel in its integrated facilities, the production costs in its integrated facilities also increase. The Company uses iron ore to produce hot pig iron at its Ouro Branco and Divinópolis mills located in the state of Minas Gerais.

The Ouro Branco mill is the Company’s largest mill in Brazil, and its main metal input to produce steel is iron ore. This unit represented 58.1% of the total crude steel output (in volume) of the Brazil Business Segment in 2024. A shortage of iron ore in the domestic market may adversely affect the steel producing capacity of the Brazilian units, and an increase in iron ore prices could reduce profit margins.

The Company has iron ore mines in the Brazilian state of Minas Gerais. To mitigate its exposure to the volatility in iron ore prices, the Company invested in expanding the production capacity of these mines.

All the Company’s coking coal requirements for its Brazilian unit at Ouro Branco are sourced domestically or imported. Coking coal is the main energy input at the Ouro Branco mill and is used at the coking facility and blast furnaces. Although this mill is not dependent on coke supplies, a contraction in the supply of coking coal could adversely affect the integrated operations at this site. The coking coal used in this mill is imported from Colombia, the United States, Australia and Russia. A shortage of coking coal in the international market would adversely affect the steel producing capacity of the Ouro Branco mill. To minimize the risks of shortages the Company has secured volumes under long-term contracts with negotiable indexed or fixed prices. In addition, an increase in prices could reduce profit margins. Another related risk is the currency depreciation to which the Ouro Branco Mill is exposed, since all coking coal consumed by the operation is imported.

Volatility in the supply and prices of these and other raw materials, energy and transportation, could adversely affect the Company’s results of operations. We are vulnerable to inflationary cost pressures, especially in relation to the prices of electricity, natural gas and CO2.

Such events could adversely affect the Company’s financial condition and results of operations.

Risks Relating to our Operations

The Company’s projects are subject to risks that may result in increased costs or delay or prevent their successful implementation.

The Company invested to further increase productivity of its operations. These projects are subject to several risks that may adversely affect the Company’s growth prospects and profitability, including the following:

Any one or a combination of the factors described above may materially and adversely affect the Company’s financial condition and results of operations.

Unexpected equipment failures may lead to production curtailments or shutdowns.

Unexpected interruptions in the production capabilities at Gerdau’s principal sites and installations would increase production costs, reducing shipments and earnings for the affected period. These interruptions result from: (i) unpredictable/periodic equipment failures, which are essential to the development of the production processes of Gerdau, such as steelmaking equipment, its electric arc furnaces, continuous casters, gas-fired reheat furnaces, rolling mills and electrical equipment, including high-output transformers; and/or (ii) unanticipated events such as fires, explosions or severe weather conditions. As a result, Gerdau has experienced, and may in the future experience, material plant shutdowns or periods of reduced production. Unexpected interruptions in production capabilities would adversely affect Gerdau’s productivity and results of operations. Moreover, any interruption in production capability may require Gerdau to make additions to fixed assets to remedy the problem, which would reduce the amount of cash available for operations. Gerdau’s insurance may not cover the losses. In addition, long-term business disruption could harm the Company’s reputation and result in a loss of customers, which could adversely affect the business, results of operations, cash flows and financial condition.

Failure to obtain the necessary permits and licenses could adversely affect our operations.

We depend on the issuance of permits and licenses from governmental agencies to undertake some of our activities that are considered polluting or potentially polluting. For obtaining said licenses, certain investments in conservation are required to offset any such impact. The operational licenses require, among other things, that we periodically report our compliance with emissions standards set by environmental agencies. Failure to obtain, renew or comply with our operating licenses may cause delays in our deployment of new activities, increased costs, monetary fines or even suspension of the affected activity, which may materially adversely affect us.

Climate change may negatively affect our business, financial condition, results of operations and cash flows.

A significant number of scientists, environmentalists, international organizations, regulators and other commentators sustain that global climate change has contributed, and will continue to contribute, to the increasing unpredictability, frequency and severity of natural disasters (including, but not limited to, hurricanes, droughts, tornadoes, freezes, other storms and fires) in certain parts of the world. As a result, several legal and regulatory measures as well as social initiatives have been introduced in numerous countries in an effort to reduce carbon dioxide and other greenhouse gas (GHG) emissions and combat global climate change. Such reductions in GHG emissions could result in increased energy, transportation and raw material costs and may require us to make additional investments in facilities and equipment. Although we cannot predict the impact of changing global climate conditions without certain assumptions, or of legal, regulatory and social responses to concerns about global climate change, any such occurrences may negatively affect our business, financial condition, results of operations and cash flows.

Laws and regulations seeking to reduce GHG emissions can be enacted in the future, which could have a significant adverse impact on the operating results, cash flows, and the financial condition of the Company.

One of the possible effects of the increasing requirements related to the reduction of GHG emissions is the increase in costs, mainly due to the demand to reduce the consumption of fossil fuels and the implementation of new technologies in the production chain.

The Company believes that the operations in the countries where it operates may be affected in the future by federal, state and municipal initiatives related to climate change, intended to deal with the issue of GHG.

On December 11, 2024, the carbon market in Brazil was regulated by law, establishing the Brazilian Emissions Trading System (SBCE). Penalties can be applied for non-compliance. The implementation will occur in five phases, starting with the regulation, and the last one being the full implementation, which is expected to take at least four years. Penalties can be applied for non-compliance once it is in force. At state levels, there are demands for accounting for the inventory of greenhouse gases and reporting to regulatory bodies as well as discussions about decarbonization strategies.

In the U.S., future federal and/or state carbon regulation potentially involves impacts on our operations. To date, the U.S. Congress has not legislated carbon constraints. Currently, a domestic federal carbon tax is unlikely to be imposed in the near-term. Congress is, however, evaluating proposals to impose a tax on imports of some GHG-intensive materials. In the absence of comprehensive federal carbon legislation, numerous state, regional and federal regulatory initiatives are under development or are becoming effective, thereby creating a disjointed approach to GHG control and potential carbon pricing impacts. Also, additional state regulations, such as those adopted in California may impact Gerdau from 2026, imposing additional reporting obligations when the Company transacts business in these states.

The Inflation Reduction Act (“IRA”), passed by the U.S. Congress in August 2022, contains significant energy security and climate related measures, such as investments in renewable energy production and tax credits aimed at reducing carbon emissions. Agencies are finalizing guidance on labor standards and domestic content requirements. The expansion and extension of solar tax credits is expected to have a meaningful impact on the solar energy sector, a significant and growing market for our North America Segment. These measures have contributed to significant investments in the domestic renewable energy supply chain, and an increase in the rollout of renewable energy projects. The renewable energy sector represents a significant and growing market for Gerdau’s products. There is speculation that Congress could look to eliminate some IRA provisions in order to fund other tax priorities, though that is yet to be determined.

Mexico has advanced in consolidating its carbon market, through an Emissions Trading System (ETS) and it could affect our operations in the future.

On March 6, 2024, the SEC approved new rules that, if implemented, will require significant climate-related disclosures by public companies, including evaluation and disclosure of material climate-related risks and opportunities, GHG emissions inventory, climate-related targets and goals, and financial impacts of physical and transition risks (the “SEC Climate Rules”). There is still an uncertainty regarding the implementation of this regulation. In 2023, the Brazilian Securities and Exchange Commission (CVM) published Resolution 193 referring to the adoption of IFRS S1 and S2 standards, which are part of the International Financial Reporting Standards (IFRS) issued by the International Sustainability Standards Board (ISSB). The standards are focused on the disclosure of information related to, respectively, sustainability and climate risks and opportunities, when it is financially material. The voluntary adoption of these standards began in January 2024, and mandatory adoption is scheduled for January 2026.

As a result of these rules, our legal, accounting, and other compliance expenses may increase significantly, and compliance efforts may divert management time and attention. We may also be exposed to legal or regulatory action or claims as a result of these new regulations. Although the Company is in the process of evaluating the new rules, some of these risks could have a material adverse effect on our business, financial condition, results of operations and the prices of our securities.

The Company’s operations are energy-intensive, and energy shortages or higher energy prices could have an adverse effect on the Company’s financial condition and results of operations.

Crude steel production is an energy-intensive process, especially in melt shops with electric arc furnaces. Electricity represents an important production component at these units, as does natural gas, although to a lesser extent. Electricity cannot be replaced at Gerdau’s mills and power rationing, or shortages, could adversely affect production at those units. As a result, the Company’s financial condition and results of operations may be adversely affected.

Layoffs in the Company’s labor force could generate costs or negatively affect the Company’s operations.

A substantial number of our employees are represented by labor unions and are covered by collective bargaining or other labor agreements, which are subject to periodic negotiation. Strikes or work stoppages have occurred in the past and could reoccur in connection with negotiations of new labor agreements or during other periods for other reasons, including the risk of layoffs during a down cycle that could generate severance costs. Moreover, the Company could be adversely affected by labor disruptions involving unrelated parties that may provide goods or services to the Company. Strikes and other labor disruptions at any of the Company operations could adversely affect the operation of facilities and the timing of completion and the cost of capital of our projects.

In the course of 2024, certain Gerdau units in Brazil experienced workforce labor contract suspensions lasting up to five months. Besides this, three industrial plants were shut down and approximately 600 employees were laid off from the Company. This occurrence was attributable to the substantial increase in predatory steel imports to the Brazilian market, resulting in a negative impact on production levels.

If the Brazilian government does not implement measures against subsidized steel and the high level of imports persist without measures that guarantee fair competition with the local market, Gerdau may consider restructuring its operations in Brazil. This could involve shutdown of some other production capacities and, consequently, a recalibration of the workforce size, materially adversely affecting the financial condition and results of operations of the Company.

We could be harmed by a failure or interruption of our information technology systems or automated machinery.

We rely on our information technology systems and automated machinery to effectively manage our production processes and operate our business. Advanced technology systems and machinery are nonetheless subject to defects, interruptions and breakdowns. Any failure of our information technology systems and automated machinery to perform as we anticipate could disrupt our business and result in production errors, processing inefficiencies and the loss of sales and customers, which in turn could result in decreased revenue, increased overhead costs and excess or out-of-stock inventory levels resulting in a material adverse effect on our business results. Although we have procedures in place to prevent and minimize the impact of a potential failure, including a data back-up system for our management systems, 24/7 monitoring of our servers, and a cybersecurity program that maintains a Corporate Information Security Policy and a Data Privacy Policy in place, there is no assurance that these will work properly or that there will not be an impact on our results of operations or financial condition.

In addition, our information technology systems and automated machinery may be vulnerable to damage or interruption from circumstances beyond our control, including fire, natural disasters, systems failures, viruses, cyber-attacks and other security breaches, including breaches of our production processing systems that could result in damage to our automated machinery, production interruptions or access to our confidential financial, operational or customer data. Any such damage or interruption could have a material adverse effect on our business results, including as a result of our facing significant fines, customer notice obligations or costly litigation, harming our reputation with our customers or requiring us to expend significant time and expense developing, repairing or upgrading our information technology systems and automated machinery.

Further, while we have some backup data-processing systems that could be used in the event of a failure of our primary systems, we do not yet have a disaster recovery plan or a backup data center that covers all of our units. While we endeavor to prepare for failures of our network by providing backup systems and procedures, we cannot guarantee that our current backup systems and procedures will operate satisfactorily in the event of a regional emergency. Any substantial failure of our backup systems to respond effectively or on a timely basis could have a material adverse effect on our business and results of operations.

We are subject to information technology risks related to breaches of security pertaining to sensitive company, customer, employee and vendor information as well as breaches in the technology used to manage operations and other business processes.

Cybersecurity is a significant concern due to the importance of information technology to the successful conduct of our business operations.We have an executive dedicated to leading the Information Security and Data Protection effort as well as an internal team with qualified specialists and analysts to conduct and evaluate the adequacy of the security and data protection controls. Additionally, we also have an incident response service provider to support our team to prevent and respond to cyber incidents.

We rely upon secure information technology systems for data capture, processing, storage and reporting. Despite careful security and controls design, implementation, updating and independent third-party verification, that also includes specific policies, procedures, and specialized software tools for cybersecurity and data protection, our information technology systems, and those of our third-party providers, could become subject to employee error or malfeasance, natural disasters or be susceptible to cyberattacks. Network, system, application, and data breaches could result in operational disruptions or information misappropriation. Access to internal applications required to plan our operations, source materials, manufacture and goods and account for orders could be denied or misused. Theft of intellectual property or trade secrets, and inappropriate disclosure of confidential company, employee, customer or vendor information, could stem from such incidents. Any of these operational disruptions and/or misappropriation of information could result in lost sales, business delays, negative publicity and could have a material effect on our business. We also could be required to spend significant financial and other resources to remedy the damage caused by a security breach, including to repair or replace networks and information technology systems, liability for stolen information, increased cybersecurity protection costs, litigation expense and increased insurance premiums.

Outbreaks of disease and health epidemics could have a negative impact on our business revenues and results of operations.

The Company monitors the outbreaks of disease and health epidemics and the impacts these may have on the routines of employees, contractors, suppliers, customers and other business partners who may be prevented from conducting certain business activities for an indefinite period. These effects include shutdowns that may be requested or mandated by governmental authorities or otherwise elected by companies as a preventive measure. In addition, mandated government authority measures or other measures elected by companies as preventative measures may lead to our customers being unable to complete purchases or other activities. For example, the COVID-19 pandemic impacted the Company production and delivery of steel, resulting in interruption of production in some steel mills as of the second half of March 2020.

Demand for our steel products is directly linked to overall economic activity within those international markets in which we sell our products. A decline in the level of activity in either the domestic or the international markets within which we operate as a result of future outbreaks of disease and health epidemics and related measures to contain them could adversely affect and impact both the demand and the price of our products and have a material adverse effect on us. Furthermore, the nature of our business is complex and, to keep operating, most of our work cannot be performed remotely. Our focus is on protecting the health of our employees and, therefore, we encourage them to take care of their health, since operational continuity is key to people’s jobs, to local communities and to the economies of the countries and regions where we operate.

Risks Relating to our Mining Operations

Estimates of Gerdau’s mineral resources are based on interpretations and assumptions, involving a level of uncertainty, and may differ substantially from the quantities that can be extracted.

Gerdau’s mineral resources refer to estimated quantities of iron ore and minerals. In 2023, Gerdau received the certification report for the iron ore reserves at the mine located in Miguel Burnier District, municipality of Ouro Preto (MG - Brazil). The report was prepared by the independent certifier SRK Consulting, and according to the report, the Company had certified reserves of 476 million dry metric tons of iron ore, comprised of 138 million tonnes of proven reserves and 338 million tonnes of probable reserves. These mining operations are an integral part of the Brazil Business Segment, with the focus on supplying iron ore for it.

Notwithstanding the report, there are several uncertainties that are inherent to such estimates of resources, including many factors that are beyond our control, such as geological and technological factors. All estimates of Gerdau’s mineral resources and reserves are based on interpretations and assumptions that involve a level of uncertainty. If the amount of mineral resources that actually can be extracted differs materially from our estimates, our business, results of operations and financial condition could be materially adversely impacted.

The Company has one mining dam for the disposal of tailings, and any accident or defect that affects the structural integrity could affect its image, operating results, cash flows and financial condition.

Gerdau has one mining dam, downstream, for the disposal of tailings in the state of Minas Gerais, the Alemães Dam, which has been in operation since 2011 and is regularly monitored. In 2023, this structure had its construction methodology changed to downstream heightening from originally upstream heightening, and therefore fully complying with the Brazilian regulations. Furthermore, following Gerdau’s decision. the tailings disposal at the Dam was ceased by February 2023, and therefore the Company will dispose of its tailings 100% through dry stacking.

The Alemães Dam is classified as Class B (low risk) in accordance with the National Mining Dam Registry available on the website of the National Mining Agency (ANM). Gerdau adopts rigorous standards for engineering control and environmental supervision and conducts a half-yearly Geotechnical Stability Audit to ensure the stability of the dam. Gerdau maintains Mining Dam Emergency Action Plans that are filed at the regulatory agencies, as required by applicable regulations.

The Company also has other structures that are treated as Mining Dams by the ANM: UTM 2 Bays, North Dike of Waste Pile 01, and North and South Bays of Waste Pile A. These are structures that receive stormwater runoff and/or effluents from drainage at the Ore Treatment Units to enable the sedimentation of solid waste before the water is returned to the environment.

All the structures also undergo external audits that attest to their geotechnical stability, as well as regular inspections and monitoring.

An accident involving any of these dams could have serious adverse consequences, including:

Any of these consequences could have a material adverse impact on the Company’s operating results, cash flow and financial condition.

Financial Risks

Any downgrade in the Company’s credit ratings could adversely affect the availability of new financing and increase its cost of capital.

In 2007, the international rating agencies, Fitch Ratings and Standard & Poor’s, classified the Company’s credit risk as “investment grade”, enabling the Company to access more attractive borrowing rates. During reviews in 2024, despite a lower local sovereign credit rating, the Company maintained its investment grade with S&P and Fitch, respectively, with stable outlook and was upgraded to Baa2 from Baa3 rating with Moody’s with stable outlook, reflecting the Company’s history of conservative capital allocation, combined with the expectation of robust operating performance throughout the year.

The loss of any one or more of Gerdau’s investment grade ratings could increase its cost of capital, impair its ability to obtain capital and adversely affect its financial condition and results of operations.

The Company’s level of indebtedness could adversely affect its ability to raise additional capital to fund operations, limit the ability to react to changes in the economy or the industry and prevent it from meeting its obligations under its debt agreements.

The Company’s degree of leverage, together with a resulting change in rating by the credit rating agencies, could have important consequences, including the following:

As a result, the Company’s financial condition and results of operations may be adversely affected.

Variations in the foreign exchange rates between the U.S. dollar and the currencies of countries in which the Company operates may increase the cost of servicing its debt denominated in foreign currency and adversely affect its overall financial performance.

The Company’s results of operations are affected by fluctuations in the foreign exchange rates between the Brazilian real, the currency in which the Company prepares its financial statements, and the currencies of the countries in which it operates.

For example, the North America Business Segment reports its results in U.S. dollars. Therefore, fluctuations in the exchange rate between the U.S. dollar and the Brazilian real could affect its results of operations. The same occurs with all other businesses located outside Brazil with respect to the exchange rate between the local currency of the respective subsidiary and the Brazilian real.

Export revenue and margins are also affected by fluctuations in the exchange rate of the U.S. dollar and other local currencies of the countries where the Company produces in relation to the Brazilian real. The Company’s production costs are denominated in local currency, but its export sales are generally denominated in U.S. dollars. Revenues generated by exports denominated in U.S. dollars are reduced when they are translated into Brazilian real in periods during which the Brazilian currency appreciates in relation to the U.S. dollar.

The Brazilian real appreciated against the U.S. dollar by 5.3% in 2022 and by 8.0% in 2023. In 2024, the Brazilian real depreciated against the U.S. dollar by 21.8%. To date in 2025, the Brazilian real has appreciated against the U.S. dollar by 5.5% by the end of February 2025.

The Company held debt denominated in foreign currency, mainly U.S. dollars, in an aggregate amount of R$ 9.4 billion on December 31, 2024, representing 69% of its consolidated gross debt (loans, financings, and debentures). Significant further depreciation in the Brazilian real in relation to the U.S. dollar or other currencies could reduce the Company’s ability to service its obligations denominated in foreign currencies, particularly since a significant part of its net sales revenue is denominated in Brazilian reais. As a result, the Company’s financial condition and results of operations may be adversely affected. See Note 15 - Short-Term Debt and long-term Debt in its Consolidated Financial Statements included herein for further details.

Exchange rate instability also may adversely affect the amount of dividends we can distribute to our shareholders, including the holders of our ADSs and the market price of our shares and ADSs.

We are involved in several tax, environmental, civil and labor disputes involving significant monetary claims. Unfavorable outcomes in judicial, administrative and regulatory litigation may negatively affect our results of operations, cash flows and financial condition.

In the ordinary course of our business dealings, we are, and may become, party to numerous tax, environmental, civil and labor disputes involving, among other remedies, significant monetary claims. An unfavorable outcome against us may result in our being required to pay substantial amounts of money, including penalties and interest, which could materially adversely affect our reputation, results of operations, cash flows and financial condition. For certain of these legal proceedings and claims, we have not established a provision on our balance sheet or have only established provisions for part of the amounts in question, based on our external or internal counsels’ judgment as to the likelihood of an outcome unfavorable to us. Additionally, the amounts provisioned for legal proceedings may increase and existing provisions may become insufficient due to unfavorable outcomes in disputes against us. Although we are contesting existing proceedings and claims, the outcome of each specific proceeding and claim is uncertain and may result in obligations that could materially and adversely affect us. For further information concerning the principal pending matters, see Item 5.E - “Provisions for tax, civil and labor claims”, Item 8.A - “Legal Proceedings” and Note 19 – “Tax, Civil and Labor Claims and Contingent Assets” to the Consolidated Financial Statements appearing elsewhere in this Annual Report.

Default by our clients or not receiving amounts invested with financial institutions could adversely affect the Company’s financial condition.

Gerdau may suffer losses from the default of our clients. Gerdau has a broad base of active clients and, in the case of default of a group of clients, Gerdau may suffer an adverse effect on its business, financial condition, results of operations and cash flows.

This risk arises from the possibility of the Company not receiving amounts arising from sales to customers or investments made with financial institutions, which could also have an adverse effect on the business, financial condition, results of operations and cash flows of Gerdau.

Regulatory Risks

Restrictive measures on trade in steel products may affect the Company’s business by increasing the price of its products or reducing its ability to export. This could adversely affect its business operations, financial condition and results of operations.

Gerdau is a steel producer that supplies both the domestic market where it operates and several other international markets. The Company’s exports face competition from other steel producers, as well as restrictions imposed by importing countries in the form of quotas, ad valorem taxes, tariffs or increases in import duties, any of which could increase the costs of products and make them less competitive or prevent Gerdau from selling in these markets. There are no assurances that importing countries will not impose quotas, ad valorem taxes, tariffs or increase import duties, which could adversely affect the Company’s financial condition and results of operations. Conversely, restrictive measures on trade might positively impact the domestic steel demand in markets where Gerdau operates.

An example of that scenario is the recent steel import tariffs reinstated by the new Trump administration. It has been announced that effective March 12, 2025, all steel imports from several countries, including Canada, Mexico, the European Union, Japan, South Korea, the United Kingdom, Argentina, Australia, and Brazil will be subject to a 25% tariff. This new measure represents a significant shift in U.S. trade policy, moving away from negotiated agreements towards universal tariffs on steel imports. The decision aims to curb surging imports, address circumvention concerns, and strengthen domestic steel production.

Gerdau believes that the new trade defense measures aimed at strengthening the U.S. industry may influence greater capacity utilization and improve the competitiveness of the Company’s operations in the U.S. The 25% import tariffs will address the exceptions resulting from Section 232, where a quota system covered only 18% of steel shipments imported to the United States. The current shift in U.S. trade policy is still developing, and therefore there are no assurances that the reimposed 25% tariffs expected to favor the domestic steel production will not be lifted, altered, or significantly weakened – whether by legal challenges, new legislation, additional executive actions, or other means – it is likely that foreign steel imports will rise, leading to a decrease in U.S. steel prices. This change could have a significant negative impact on our revenues, financial performance, and cash flow. On the other hand, with the new tax on steel exports, Brazil could face a challenging period, especially as it is a major exporter of semi-finished products to the United States. Besides that, Brazil could be impacted by a new increase in imports due to higher tariffs in other markets and the ineffectiveness of the current quota-tariff system.

We continue to monitor how these new measures will impact the dynamics of the global market.

Costs related to compliance with environmental regulations could increase if requirements become stricter, which could have a negative effect on the Company’s results of operations.

The Company’s industrial units and other activities must comply with a series of federal, state and municipal laws and regulations regarding the environment and the operation of plants in the countries in which they operate. These regulations include procedures relating to control of air emissions, disposal of liquid effluents and the handling, processing, storage, disposal and reuse of solid waste, hazardous or not, as well as other controls necessary for a steel company and with mining activities.

Non-compliance with environmental and regulatory laws and regulations could result in administrative, civil or criminal sanctions and closure orders, in addition to the obligation of repairing damage caused to third parties and the environment, such as clean-up of contamination. If current and future laws become stricter, spending on fixed assets and costs to comply with legislation could increase and negatively affect the Company’s financial condition. Moreover, future acquisitions could subject the Company to additional spending and costs to comply with environmental and regulatory legislation. As a result, the Company’s financial condition and results of operations may be adversely affected.

Laws and regulations to reduce greenhouse gases and other atmospheric emissions could be enacted in the near future, with significant, adverse effects on the results of the Company’s operations, cash flows and financial condition.

One of the possible effects of the expansion of greenhouse gas reduction requirements is an increase in costs, mainly resulting from the demand for renewable energy and the implementation of new technologies in the productive chain. On the other hand, demand is expected to grow constantly for recyclable materials such as steel, which, being a product that could be recycled numerous times without losing its properties, results in lower emissions during the lifecycle of the product.

The Company expects operations overseas to be affected by future federal, state and municipal laws related to climate change, seeking to deal with the question of greenhouse gas (GHG) and other atmospheric emissions. Thus, one of the possible effects of this increase in legal requirements could be an increase in energy costs. As a result, the Company’s financial condition and results of operations may be adversely affected.

The European Union (EU) Carbon Border Adjustment Mechanism (CBAM) aims to avoid “carbon leakage”, ensuring that its climate policies are not undermined by production relocating to countries with less ambitious green standards or by the replacement of EU products by more carbon-intensive imports. EU has the EU Emissions Trading System (ETS) in place. EU importers of some goods, including steel will have to report on the volume of their imports and GHG emissions embedded during their production, but without paying any financial adjustment at this stage. The transitional phase, which started in October 2023, will last until 2026, when the definitive period starts. As of that date, importers will need to buy and surrender the number of “CBAM certificates” corresponding to the GHG emissions embedded in imported CBAM goods. This new mechanism will not only impact our operations, which may lead to increased costs for our customers who are importers, but it can also shift the flow of steel products. Any products that do not meet the criteria set forth by the CBAM or any other future mechanism will be less competitive in these markets. However,

they may still be accepted in countries or regions without a carbon border adjustment mechanism in place, resulting in an increase in the volume of steel with less ambitious green standards in the market. This will lead to competition with steel that is differentiated based on GHG emissions.

In 2024, new legislation related to air quality and atmospheric emissions advanced in Brazil, to become effective in 2025 with an impact on management, monitoring and reporting practices. Non-compliance with these regulations may result in penalties.

Our operations expose us to risks and challenges associated with conducting business in compliance with applicable anti-bribery, anti-corruption and antitrust laws and regulations.

We have operations in Brazil and other countries in South America and North America. We face several risks and challenges inherent in conducting business internationally, where we are subject to a wide range of laws and regulations such as the Brazilian Anti-Corruption Law (Law 12,846/2013), Antitrust Law (Law 12,529/2011), the U.S. Foreign Corrupt Practices Act, or FCPA, and similar anti-bribery, anti-corruption and antitrust laws in other jurisdictions. In recent years, there has been an increased focus on corruption in Brazil and also the investigation and enforcement activities of the United States under the FCPA and by other governments under similar laws and regulations. These laws generally prohibit corrupt payments to governmental officials and certain payments, gifts or remunerations to or from clients and suppliers.

Violations of these laws and regulations could result in fines, criminal penalties and/or other sanctions against the Company, our officers or our employees, requirements to impose more stringent compliance programs, and prohibitions on the conduct of the Company’s business and our ability to participate in public biddings. The Company may incur expenses and must recognize provisions and other charges in respect of such matters. In addition, the increased attention focused upon liability issues because of investigations, lawsuits and regulatory and environmental proceedings could harm our brand or otherwise impact the growth of our business. The retention and renewal of many of our contracts depend on creating a sense of trust with our customers and any violation of these laws and regulations may irreparably undermine that trust and may lead to termination of such relationships, as well as have a material adverse effect on our financial condition and results of operations. If any of these risks materialize, our reputation, strategy, international expansion efforts and our ability to attract and retain employees could be negatively impacted, and, consequently our business, financial condition and results of operations could be adversely affected.

Our governance and compliance processes may fail to prevent regulatory penalties and reputational harm.

The Company operates in a global environment and our activities extend over multiple jurisdictions and complex regulatory frameworks, with increased enforcement activities worldwide. Our governance and compliance processes, which include the review of internal controls over financial reporting, may not be able to prevent future breaches of legal, accounting or governance standards. We may be subject to breaches of our Code of Ethics and Conduct, anti-corruption policies and business conduct protocols, as well as to cases of fraudulent behavior, corrupt practices and dishonesty by our employees, contractors and other agents. The Company’s failure to comply with applicable laws and other standards could subject it to fines, loss of operating licenses and reputational harm.

Risks Relating to Brazil

Any further downgrading of Brazil’s credit rating could adversely affect the price of our shares.

We can be adversely affected by investors’ perceptions of risks related to Brazil’s sovereign debt credit rating. Rating agencies regularly evaluate Brazil and its sovereign ratings, which are based on several factors including macroeconomic and industry trends, fiscal and budgetary conditions, indebtedness metrics and the perspective of changes in any of these factors.

On July 26, 2023, Fitch Ratings upgraded Brazil’s country ceiling rating to “BB+” from “BB” following better-than-expected macroeconomic and fiscal performance, supported by proactive policies and reforms and reaffirmed this rating in 2024.

On December 19, 2023, S&P Global Ratings upgraded Brazil’s sovereign credit rating to “BB” from “BB-” following tax reform approval and reflecting the expectation the country will make progress addressing fiscal imbalances balanced by a strong external position and monetary policy but still weak economic prospects.

On October 1, 2024, Moody’s Ratings upgraded Brazil’s long-term issuer and senior unsecured bond ratings to “Ba1” from “Ba2” following material credit improvements, including a more robust growth performance than previously assessed by growing track record of economic and fiscal reforms.

Therefore, Brazil is still rated below investment grade by the three main credit rating agencies. Over the next years, a potential fiscal deterioration and a higher-than-expected debt level could lead to ratings downgrades. Benefits from structural and microeconomic reforms, in addition to some progress at addressing fiscal imbalances and stabilizing debt levels could lead to an upgrade.

Brazil continues to experience political instability, which may adversely affect the Company.

Brazil’s political environment has historically influenced, and continues to influence, the performance of the country’s economy. Political crises have affected and continue to affect the confidence of investors and the public, which have historically resulted in economic deceleration and heightened volatility in the securities issued by Brazilian companies.

In addition, the Brazilian economy remains subject to government policies, which may affect our operations and financial performance. Governmental policies and actions, if unsuccessful or poorly implemented, may affect our operations and financial performance. Uncertainty regarding the implementation by the administration of promised transformational changes in monetary and fiscal policy, as well as the enactment of the corresponding legislation, could contribute to economic instability.

Inflation and government actions to combat inflation may contribute significantly to economic uncertainty in Brazil and could adversely affect the Company’s business.

If Brazil experiences high levels of inflation once again, the Brazilian Central Bank will need to implement higher interest rate and the country’s rate of economic growth could slow, which would lead to lower demand for the Company’s products in Brazil. Inflation is also likely to increase some costs and expenses which the Company may not be able to pass on to its customers and, as a result, may reduce its profit margins and net income. In addition, higher domestic interest rates, could lead the cost of servicing the Company’s debt denominated in Brazilian reais to increase. Inflation may also hinder its access to capital markets, which could adversely affect its ability to refinance debt. Inflationary pressures may also lead to the imposition of additional government policies to combat inflation that could adversely affect our business. As a result, the Company’s financial condition and results of operations may be adversely affected.

Developments and the perception of risks in other countries, especially in the United States and emerging market countries, may adversely affect the market prices of our shares.

The market for securities issued by Brazilian companies is influenced, in some degree, by economic and market conditions in the United States and emerging market countries, especially other Latin American countries. The reaction of investors to economic developments in one country may cause the capital markets in other countries to fluctuate. Developments or adverse economic conditions in other emerging market countries have at times resulted in significant reductions of the investments from investment funds and declines in the amount of foreign currency invested in Brazil.

The Brazilian economy is also affected by international economic and market conditions, especially economic and market conditions in the United States. Share prices on the B3, for example, have historically been sensitive to fluctuations in United States interest rates as well as movements of the major United States stocks indexes.

Economic developments in other countries and securities markets could adversely affect the market prices of our shares, which could make it more difficult for us to access the capital markets and finance our operations in the future on acceptable terms, besides having a material adverse effect on our financial condition and results of operations.

Risks Related to our Corporate Structure

The interests of the controlling shareholder may conflict with the interests of the non-controlling shareholders.

Subject to the provisions of the Company’s Bylaws, the controlling shareholder has powers to:

By having such power, the controlling shareholder can make decisions that may conflict with the interest of the Company and other shareholders, which could adversely affect the financial condition and the results of operations of the Company.

The loss of members of the senior management and executives of the Company can have an adverse impact on the business.

Gerdau has various programs to attract, incentivize and retain its senior management and executives, backed up by an inclusive and diverse culture. The Company also carries out evaluations of performance, potential and readiness for advancement to senior management and executives. Gerdau’s ability to remain competitive depends to a large degree on the continuity of efforts and services rendered by its senior management and executives. The loss of members of the senior management and executives can impact the Company’s business, since it can negatively affect our capacity to develop and implement our strategy, adversely impacting our operations and our financial and operating condition, possibly impacting investors’ investment decisions. Some senior management and executives have left Gerdau in the past and others may do so in the future, such that we cannot predict the impact of the departure of senior management or executives or the consequences on the achievement of our business objectives.

As a foreign issuer, we have different disclosure and other requirements than U.S. domestic registrants.

As a foreign issuer, we may be subject to different disclosure and other requirements than domestic U.S. registrants. For example, as a foreign issuer, in the United States, we are not subject to the same disclosure requirements as a domestic U.S. registrant under the United States Securities Exchange Act of 1934, as amended (the “Exchange Act”), including the requirements to prepare and issue quarterly reports on Form 10-Q or to file current reports on Form 8-K upon the occurrence of specified significant events, the proxy rules applicable to domestic U.S. registrants under Section 14 of the Exchange Act or the insider reporting and short-swing profit rules applicable to domestic U.S. registrants under Section 16 of the Exchange Act. In addition, we intend to rely on exemptions from certain U.S. rules that will permit us to follow Brazilian legal requirements rather than certain requirements that are applicable to U.S. domestic registrants.

Furthermore, foreign issuers are required to file their annual report on Form 20-F within 120 days after the end of each fiscal year, while U.S. domestic issuers that are accelerated filers are required to file their annual report on Form 10-K within 75 days after the end of each fiscal year. As a result of the above, even though the Company must file reports on Form 6-K disclosing the information that it has made or is required to make public pursuant to Brazilian law, or is required to distribute to shareholders generally, and that is material to the Company, the investors may not receive information of the same type or amount that is required to be disclosed to shareholders of a U.S. company.

As a foreign issuer, we are permitted to, and we do, rely on exemptions from certain NYSE corporate governance standards, including the requirement that a majority of our board of directors consist of independent directors. This may afford less protection to our shareholders.

The NYSE’s rules require listed companies to have, among other things, a majority of their board members be independent and to have independent director oversight of executive compensation, nomination of directors and corporate governance matters. As a foreign issuer and a subsidiary, we are permitted to, and we do, follow home country practice in lieu of the above requirements. Brazilian law, the law of our home country, does not require that a majority of our board consist of independent directors or the implementation of a compensation committee or nominating a corporate governance committee, and our board includes fewer independent directors than would be required if we were subject to the NYSE rules applicable to most U.S. companies. As long as we rely on the foreign issuer exemptions to the NYSE rules, a majority of our board of directors is not required to consist of independent directors, our compensation committee is not required to be comprised entirely of independent directors, and we are not required to have a nominating and corporate governance committee. Therefore, our board’s approach may be different from that of a board with a majority of independent directors, and, as a result, the management team’s oversight of the Company may be more limited than if we were subject to the NYSE rules applicable to most U.S. companies.

Risks Relating to Our Preferred Shares and ADSs

If we do not maintain a registration statement and no exemption from the Securities Act registration is available, U.S. Holders of ADSs may be unable to exercise preemptive rights with respect to our Preferred Shares.

We may not be able to offer our Preferred Shares to U.S. holders of ADSs residing in the U.S. pursuant to preemptive rights granted to holders of our Preferred Shares in connection with any future issuance of our Preferred Shares unless a registration

statement under the Securities Act is effective with respect to such Preferred Shares and preemptive rights, or an exemption from the registration requirements of the Securities Act is available. We are not obligated to file or maintain a registration statement relating to any preemptive rights offerings with respect to our Preferred Shares, and we cannot assure you that we will file or maintain any such registration statement. If such a registration statement is not filed and maintained and an exemption from registration does not exist, our depositary will attempt to sell the preemptive rights, and you will be entitled to receive the proceeds of such sale. However, these preemptive rights will expire if the depositary does not sell them, and U.S. holders of ADSs will not realize any value from the granting of such preemptive rights.

Judgments of Brazilian courts with respect to our Preferred Shares will be payable only in reais.

If proceedings are brought in the courts of Brazil seeking to enforce our obligations in respect of the Preferred Shares, we will not be required to discharge our obligations in a currency other than reais. Under Brazilian exchange control limitations, an obligation in Brazil to pay amounts denominated in a currency other than reais may only be satisfied in Brazilian currency at the exchange rate, as determined by the Central Bank, in effect on the date the judgment is obtained, and such amounts are then adjusted to reflect exchange rate variations through the effective payment date. The then prevailing exchange rate may not afford non-Brazilian investors with full compensation for any claim arising out of, or related to, our obligations under the Preferred Shares or the ADSs.

If an ADS holder surrenders its ADSs and withdraws Preferred Shares, it risks losing the ability to remit foreign currency abroad and certain Brazilian tax advantages.

An ADS holder benefits from the electronic certificate of foreign capital registration obtained by the custodian for our Preferred Shares underlying the ADSs in Brazil, which permits the custodian to convert dividends and other distributions with respect to the Preferred Shares into non-Brazilian currency and remit the proceeds abroad. If an ADS holder surrenders its ADSs and withdraws Preferred Shares, it will be entitled to continue to rely on the custodian’s electronic certificate of foreign capital registration for only five business days from the date of withdrawal. Thereafter, upon the disposition of or distributions relating to, the Preferred Shares unless it obtains its own electronic certificate of foreign capital registration or qualifies under Brazilian foreign investment regulations that entitle some foreign investors to buy and sell shares on Brazilian stock exchanges without obtaining separate electronic certificates of foreign capital registration, such former holder of ADSs would not be able to remit abroad non-Brazilian currency. In addition, if an ADS holder does not qualify under the foreign investment regulations, it will generally be subject to less favorable tax treatment of dividends and distributions on, and the proceeds from any sale of, our Preferred Shares.

If an ADS holder attempts to obtain its own electronic certificate of foreign capital registration, it may incur expenses or suffer delays in the application process, which could delay its ability to receive dividends or distributions relating to our Preferred Shares or the return of its capital in a timely manner. The depositary’s electronic certificate of foreign capital registration may also be adversely affected by future legislative changes.

Gerdau is the largest Brazilian producer of steel, a leading producer of long steel in the Americas and one of the world’s leading suppliers of special steel. In Brazil, it also produces flat steel and iron ore for its own consumption.

Gerdau is the largest recycling company in Latin America and uses scrap as a key input, with around 70% of its steel production derived from this material. Every year, Gerdau transforms about 10 million tonnes of scrap into a variety of steel products.

Steel Industry

The world steel industry is composed of hundreds of steel producing facilities and is divided into two major categories based on the production method utilized: integrated steel mills and non-integrated steel mills, sometimes referred to as “mini mills”. Integrated steel mills normally produce steel from iron oxide, which is extracted from iron ore melted in blast furnaces, and refine the iron into steel, mainly using basic oxygen furnaces or, more rarely, electric arc furnaces. Non-integrated steel mills produce steel by melting in electric arc furnaces scrap steel, which occasionally is complemented by other metals such as direct-reduced iron or hot-compressed iron. According to World Steel, in 2023 (the most recent year for which information is available), 28.4% of the total crude steel production in the world was through electric furnaces (non-integrated process), 71.2% was through basic oxygen furnaces (integrated process) and the remaining 0.5% in other processes.

Source: World Steel / Steel Statistical Yearbook 2024

*Most recent year for which information is available.

Over the past 10 years, according to World Steel, total annual crude steel production has grown from 1,654 million tonnes in 2013 to 1,904 million tonnes in 2023, an increase of 15.1%.

The main factor responsible for the increase in the demand for steel products has been China. Since 1993, China has become the world’s largest steel market and currently consumes more than half as much as the rest of the world.

Crude Steel Production (in million tonnes)*

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Source: World Steel / Steel Statistical Yearbook 2024

*Most recent year for which information is available

China is rebalancing its economy to move more towards a consumer-driven economy. GDP growth was aligned with the government expectation and despite the injection of credit into the construction and infrastructure sectors, the country showed a reduction in steel consumption for the third year in a row. In 2023, China’s share of world steel production was 54% of world total crude steel.

Crude Steel Production by Country in 2023 (million tonnes) *

Source: World Steel / Steel Statistical Yearbook 2024

*Most recent year for which information is available

The Brazilian Steel Industry

According to World Steel Association, in 2023 Brazil was the world’s 9th largest producer of crude steel, with a production of 32.0 million tonnes, a 1.7% share of the world market. In South America, Brazil represented approximately 76.9% of the total steel production in 2023.

According to Instituto Aço Brasil, in 2024 the total of Brazilian steel products sales was 30.7 million tonnes. The breakdown of total sales was 67.1% or 20.6 million tonnes of flat steel products, formed by domestic sales of 12.4 million tonnes and exports of 8.2 million tonnes. The remaining 32.9% or 10.1 million tonnes represented sales of long steel products, which consisted of domestic sales of 8.7 million tonnes and exports of 1.4 million tonnes.

Breakdown of Total Sales of Brazilian Steel Products (million tonnes)

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Source: Instituto Aço Brasil

Domestic demand — Historically, the Brazilian steel industry has been affected by significant variations in domestic steel demand. Although domestic consumption varies in accordance with Gross Domestic Product (GDP), variations in steel consumption tend to be more accentuated than changes in the level of economic growth. In 2024, the Brazilian GDP increased by 3.4%, while steel consumption grew by 8.8%.

Exports and imports — Over the past 20 years, the Brazilian steel industry has been characterized by a structural need for exports. The Brazilian steel market has undergone periods of excess capacity, cyclical demand and intense competition in recent years. Demand for finished steel products has lagged the total supply (total production plus imports).

In 2024, Brazilian steel exports totaled 9.6 million tonnes, representing 31% of total sales (domestic sales plus exports). Brazil has performed an important role in the world export market, principally as an exporter of semi-finished products (slabs, blooms and billets) for industrial use or for re-rolling into finished products. Brazilian exports of semi-finished products totaled 7.3 million tonnes in 2024, 8.9 million tonnes in 2023 and 8.0 million tonnes in 2022, representing 75.6, 76.4% and 67.3% of Brazil’s total exports of steel products, respectively. Brazil was the second largest exporter of steel to the United States in 2024. With the trade measures reinstated by the Trump administration in early 2025 regarding steel imports, Brazil’s semi-finished products could be affected, mainly due to the reduction in exports of these products to the U.S.

Brazilian Production and Apparent Demand for Steel Products (million tonnes)

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Source: Instituto Aço Brasil

Raw materials — One of Brazil’s major competitive advantages is the low cost of its raw materials. Brazil has an abundance of high-quality iron ore. Various integrated producers are in the state of Minas Gerais, where some of the world’s biggest iron ore mines are located. The cost of iron ore from small miners in Brazil is very competitive if compared to the cost of iron ore in China, for example.

In Brazil, most of the scrap metal consumed by steel mills comes from Brazil’s southeast and south regions. Mill suppliers deliver scrap metal obtained from obsolete products and industrial scrap directly to the steel mills.

Brazil is a major producer of pig iron. Most of the pig iron used in the steel industry comes from the state of Minas Gerais and the Carajás region, where it is produced by various small and midsized producers. The price of pig iron follows domestic and international markets, with charcoal and iron ore the main components of its cost formation.

North American Steel Industry

The World Steel Association’s 2023 crude steel production statistics list the U.S. as the 4th largest global steel producer, with 81.4 million metric tons. Mexico holds the 15th position, contributing 16 million metric tons. Canada has the 16th spot, manufacturing 12 million metric tons.

Crude Steel Production by North American Countries (million tonnes)*

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Source: World Steel / Steel Statistical Yearbook 2024

*Most recent year for which information is available

The North American steel market is mature and well established, demand fluctuates within a stable band, and its level of activity is directly influenced by general economic conditions, steel import levels, and the strength of the U.S. dollar. Traditionally, the North American market has been a target for steel imports with global origins. The imported steel material was often priced at low levels, sometimes even below production and shipping costs.

In response to these import practices, the U.S. government took action to support the domestic steel industry. Section 232 tariffs on steel imports were implemented in March 2018 under the Trade Expansion Act of 1962. Section 232 grants the President authority to impose tariffs or quotas for national security reasons. Focusing on supporting the U.S. steel industry, the enacted tariffs amounted to 25% on steel imports. Section 232 has since been amended several times through bilateral agreements, allowing most steel imports to enter the U.S. market duty-free. Australia was exempted, while South Korea, Brazil, and Argentina negotiated hard-cap quotas that limited import volume to historical levels. In May 2019, Section 232 tariffs and retaliatory tariffs were removed between the U.S., Canada, and Mexico. The countries agreed to trade monitoring and to limit volumes to historical levels. In 2018, the Trump Administration used its authority under Section 301 of the Trade Act of 1974 to impose tariffs on most imported goods from China, including steel products. These tariffs have largely been maintained by the Biden Administration, however in 2022, agreements were reached with the European Union, United Kingdom and Japan to replace the tariffs with quotas.

On February 18, 2025, a proclamation was issued announcing the termination of existing 232 exception agreements with several countries, including Canada, Mexico, the European Union, Japan, South Korea, the United Kingdom, Argentina, Australia, and Brazil. The document underscores national security concerns regarding the surge in steel imports, even from countries with such alternative agreements, which have adversely affected U.S. domestic production. Within the United States, the domestic steel industry’s capacity utilization remains below the critical 80% level, necessary for sustaining production capabilities for national security. Additionally, evidence indicates transshipment and further processing of steel from restricted countries, such as China, through Mexico and other exempted nations. Effective March 12, 2025, all steel imports from these countries will be subject to the original 25% tariff. Imports from Ukraine, previously exempted, will also now be subject to tariffs, as the exemption was found to primarily benefit EU producers rather than Ukraine. Furthermore, certain derivative steel products not originally covered by the 2018 tariffs will now be subject to the 25% duty. The previous system allowing U.S. importers to request exemptions for specific steel products has been immediately terminated, with no further exclusions permitted to prevent loopholes that could undermine the tariffs’ intended objectives.

Finally, the current shift in U.S. trade policy is still developing, and therefore there are no assurances that the reimposed 25% tariffs expected to favor the domestic steel production will not be lifted, altered, or significantly weakened – whether by legal challenges, new legislation, additional executive actions, or other means – it is likely that foreign steel imports will rise, leading to a decrease in U.S. steel prices. This change could have a significant negative impact on our revenues, financial performance, and cash flow.

Company Profile

Gerdau S.A. is mainly dedicated to the production and commercialization of steel products in general, through its mills located in Brazil, Canada, the United States, Argentina, Peru, Uruguay and Mexico (joint venture).

Gerdau is the leading manufacturer of long steel in North and South America. Gerdau believes it is one of the major global suppliers of special steel for the automotive industry. In Brazil, Gerdau also produces flat steel and iron ore for internal consumption, activities that are expanding Gerdau’s product mix and the competitiveness of its operations. In addition, Gerdau believes it is one of Latin America’s biggest recyclers and, worldwide, transforms millions of tonnes of scrap metal into steel every year, reinforcing its commitment to sustainable development in the regions where it operates. Gerdau’s shares are listed on the New York and São Paulo stock exchanges.

Gerdau holds significant market share in the steel industries of almost all countries where it operates and was classified by World Steel Association as the world’s 33^rd largest steel producer based on its consolidated crude steel production in 2023, the most recent year for which information is available.

Gerdau operates steel mills that produce steel in blast furnaces and in electric arc furnaces (EAF). In Brazil it operates three integrated steel mills, including its largest mill, Ouro Branco, located in the state of Minas Gerais. Gerdau currently has a total of 29 steel producing facilities globally.

As of December 31, 2024, Gerdau’s total consolidated installed annual capacity, excluding investments in joint ventures and associate companies, was approximately 15.6 million tonnes of crude steel and 15.0 million tonnes of rolled steel products. The Company had total consolidated assets of R$ 86.8 billion, shareholders’ equity (including non-controlling interests) of R$ 58.2 billion, consolidated net sales of R$ 67.0 billion and total consolidated net income (including non-controlling interests) of R$ 4.6 billion for the year ended December 31, 2024.

Its product mix includes crude steel (slabs, blooms and billets), which is sold to rolling plants; finished products for the construction industry, such as rebar, wire-rods, structural shapes, hot-rolled coils and heavy plates; finished industrial products, such as commercial rolled-steel bars, light profiles and wires; and agricultural products, such as stakes, smooth wire and barbed-wire. Gerdau also produces special steel items using cutting-edge technology.

The Company currently operates 10 steel production units (including special steels units) in the United States and 3 steel production units in Canada and believes it is one of the leading companies in North America in the production of certain long steel products, such as rebar, merchant bars and beams.

The Company’s operating strategy is based on the acquisition and construction of steel mills located near its clients and the sources of the raw materials needed to make steel, such as scrap steel, pig iron and iron ore. Therefore, historically, most of production has been directed to supply the local markets of the regions where the Company operates. However, the Company also exports an excess portion of its production to other countries.

Through its subsidiaries and associate companies, the Company also engages in other activities related to the production and sale of steel products, including reforestation projects; electric power generation projects; production of iron ore and pig iron; as well as fab shops and downstream operations.

Operations

The Company sells its products to a diversified list of customers for use in the construction, manufacturing and agricultural industries. Shipments by the Company’s Brazilian operations include both domestic and export sales. Most of the shipments by the Company’s business segments in North and Latin America (except Brazil) are aimed at their respective local markets.

The Company manages its Business Segments as follows:

*In January 2024, Gerdau announced the sale of its stake in joint ventures Diaco S.A. and Gerdau Metaldom Corp. and their subsidiaries, which were part of the South America Business Segment.

**On February 10, 2025, the Company, after fulfilling all the conditions precedent, including approval by the antitrust authorities, concluded the transaction with Sumitomo Corporation and The Japan Steel Works Ltd., for the acquisition of 39.53% and 1.74%, respectively, of the total shares issued by Gerdau Summit Aços Fundidos e Forjados S.A. (“Gerdau Summit”). With the closing of the transaction, the Company will own 100% of Gerdau Summit’s capital. Gerdau Summit, until then a joint venture, with this transaction became a subsidiary of the Company.

The following tables present the Company’s consolidated shipments in tonnage, net sales, and production by Business Segment for the periods indicated:

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(1) The information does not include data from associate and joint ventures.

(1) The information does not include data from associate and joint ventures.

(1) The information does not include data from associate and joint ventures.

Brazil Business Segment

The Brazil Business Segment has annual production capacity of approximately 6.8 million tonnes of crude steel and 6.6 million tonnes of finished steel products. This Business Segment minimizes delays by delivering its products directly to customers through outsourced companies under Gerdau’s supervision. Sales trends in both the domestic and export markets are forecasted monthly. The Brazil Business Segment uses a proprietary information system to stay up to date on market developments so that it can respond swiftly to fluctuations in demand. Gerdau considers its flexibility in shifting between markets (Brazilian and export markets) and its ability to monitor and optimize inventory levels for most of its products in accordance with changing demand as key factors to its success.

In 2024, crude steel production increased 3.7% compared to 2023, reflecting improved occupancy of Gerdau’s units, higher utilization rates, and the enhanced productivity, despite the hibernation of the Barão de Cocais (MG), Sete Lagoas (MG), and Cearense (CE) units announced in the second half of 2024, with focus on optimizing costs and increasing competitiveness.

The Company directed 80.8% of its shipments in the Brazil Business Segment to the domestic market in 2024, which remained stable compared to 2023. However, its domestic market volumes remained impacted by the excessive importation of steel into the country in 2024, creating a predatory competition dynamic with the local industry. On the positive side, Brazil Business Segment exports benefited from the depreciation of the Real and contributed to the dilution of fixed costs and operational leverage for the period, representing 19.2% of Gerdau’s shipments. Despite the resilience of the construction sector, in both the retail segment and direct sales to contractors, industries like manufacturing showed mixed results with declines in important sectors as agricultural and industrial machinery.

Gerdau’s mineral assets were incorporated to its business through the acquisition of lands and mining rights of Grupo Votorantim, in 2004, encompassing the Miguel Burnier, Várzea do Lopes, and Gongo Soco compounds, located in the iron producing region in the state of Minas Gerais, Brazil. From 2004 to 2019, several geological surveys (drilling and superficial geological mapping) were conducted to obtain further information on the acquired resources. As part of that undertaking, in 2023 Gerdau received a report prepared by SRK Consulting, certifying the reserves of Miguel Burnier mine. According to the conclusions of the report, the Company now holds certified reserves of 476 million metric tonnes (Dry metric tonnes) of iron ore.

North America Business Segment

The North America Business Segment has annual production capacity of approximately 5.7 million tonnes of crude steel and 4.8 million tonnes of finished steel products. It has a vertically integrated network of 10 steel units, scrap recycling facilities and downstream operations. The North America Business Segment’s products are generally sold to steel service centers, steel fabricators or directly to original equipment manufacturers for use in a variety of industries, including construction, automotive, mining, energy, cellular and electrical transmission, metal construction fabrication, and equipment fabrication. Most of the raw material feed stock for the mini mill operations is recycled steel scrap.

The mills of this business operation manufacture and commercialize a wide range of steel products, including steel reinforcement bars (rebar), merchant bars, structural shapes, beams, piling, and special sections. Some of these products are used by the downstream units to make products with a higher value-added, which consists of railroad spikes, super light beam processing, elevator guide rails and grinding balls.

Sales of finished products to U.S. and Canadian customers are centrally managed by the sales office in Tampa, Florida. There is also a sales office in Selkirk, Manitoba for managing sales of special sections and one in Midlothian, Texas for managing sales of structural and merchant bar products. Metallurgical service representatives at the mills provide technical support to the sales group. Sales of the super light beam products are managed by sales representatives located at their respective facilities. Elevator guide rails are generally sold through a bidding process in which employees at Gerdau’s facilities work closely with customers to tailor product requirements, shipping schedules and prices.

In 2024, crude steel production reached 4.2 million tonnes, remaining stable compared to 2023. On the other hand, the shipments were 1.9% lower in 2024, impacted by economic volatility due to the US presidential elections and increased imports. Even with demand volatility, volumes remained at healthy levels, mainly due to the Company’s ability to adjust its assets depending on market dynamics (higher share of rebar in the sales mix). Additionally, demand from industrial investments related to reshoring and the IIJA (Infrastructure Investment and Jobs Act) remained resilient.

South America Business Segment

The South America Business Segment comprises 3 steel facilities, retail facilities, fab shops and scrap processing facilities. The entire operation is focused on the respective domestic markets of each country, operating mini mills facilities with annual manufacturing capacity of approximately 900 thousand tonnes of crude steel and 800 thousand tonnes of finished steel products. The countries in the South America Business Segment are Argentina, Peru, and Uruguay.

Steel production and shipments in 2024 decreased by 18.5% and 10.2%, respectively, compared to 2023. This decline was mainly driven by a downturn in Argentina throughout the year, as the challenging economic scenario negatively impacted steel demand in the region. Conversely, the strong performance of shipments in Peru, fueled by investments in public works, partially offset the decline in Argentina.

Special Steel Business Segment

The Special Steel Business Segment consists of the operations in Brazil and the United States. The segment produces special steels for engineering steel, tool steel and forged bars. To meet the needs of more demanding markets, this segment is constantly developing new products, such as high-resistance steels, clean steel, high temper steel, good machinability steel, among others. The special products and services are used in a wide range of applications and 100% of the Special Steel Segment’s shipments are make to order, consolidating Gerdau as a leader in SBQ (special bar quality).

In Brazil, Gerdau special steel units are in the states of Rio Grande do Sul (Charqueadas) and São Paulo (Pindamonhangaba and Mogi das Cruzes). The special steel units in Brazil have aggregate annual production capacity of 960 thousand tonnes of crude steel and 1.6 million tonnes of rolled steel and has over 300 clients that are located primarily in Brazil. However, it also exports products, primarily to South America, North America and Europe.

In North America, the Special Steel Segment is present in the United States, with 3 steel facilities, 2 of them located in Michigan (Monroe and Jackson), and 1 in Arkansas (Fort Smith). The segment has annual production capacity of 1.2 million tonnes of crude steel and 1.2 million tonnes of rolled steel products, with a portfolio of clients located mainly in the United States, Canada and Mexico. The plants of this business segment have commercial and operational synergies.

The Special Steel Business Segment mainly serves the automotive sector, which represented around 80% of SBQ shipments. In 2024, crude steel production increased 7.6% compared to 2023, favored by the recovery of the automotive sector in Brazil, which more than compensated for the lower demand in the USA. In Brazil, Gerdau special steel shipments grew by approximately 14.0% in 2024, driven by sales of heavy and light vehicles in the Brazilian market. In the United States, shipments decreased by approximately 15.3%, impacted by lower demand in the automotive sector and other sectors, such as oil and gas, which declined by about 9.0% in 2024 compared to the previous year.

Exports

According to China’s National Bureau of Statistics (NBS), the country’s total crude steel output was 1.005 billion tonnes in 2024, representing a 1.4% contraction compared to 2023’s 1.019 billion. The primary driver of steel demand, floor space for new construction starts, decreased 23% year-on-year and by 62.9% since 2021, when China’s property sector peaked. To balance this, infrastructure investment increased by 4.4% year-on-year. Overall steel demand in China ended 2024 at approximately 897 million tonnes, a 3.9% decrease year-on-year, according to Mysteel.

Similar to 2023, one of the greatest challenges faced by the international market was the rise of Chinese steel exports. With stable production and weaker demand from the real estate sector, total exports rose 22.7% to 110.7 million tonnes, the second-highest level in history. However, mill margins remained negative throughout the year, even with lower raw materials costs. Elsewhere, steel production declined 4.2% in the United States (105.9Mt) and Commonwealth of Independent States (84.8Mt), while Europe saw a year-on-year recovery in both the EU bloc (2.6%) and other countries on the continent (3.4%). Despite Brazil’s 5.3% increase, South America remained stable at 0.6%. Overall, global steel production was stable at 1,882.6 million tonnes, a slight decrease of 0.8%.

As expected, Gerdau’s Brazilian exports in 2024 remained focused on South and Central America, representing 42.0% and 37.0%, respectively. The following table presents Gerdau’s Brazilian exports by destination for select periods:

Gerdau remains focused on serving strategic markets that contribute to the general results of its operation, analyzing the impacts and opportunities arising from the continued volatile international political-economic scenario and consolidating the presence of its entire product portfolio in these markets in 2025.

Products

The Company supplies its customers with a wide range of products, including steel products:

Semi-finished products (Billets, Blooms and Slabs)

The semi-finished products (billets, blooms and slabs) have relatively low added value compared to other steel products. Billets are bars from square sections of long steel that serve as inputs to produce wire rod, rebars and merchant bars. They represent an important part of the products from the Ouro Branco mill. Blooms are used to manufacture products such as springs, forged parts, heavy structural shapes and seamless tubes. Slabs are used in the steel industry for the rolling of a broad range of flat rolled products and mainly used to produce hot and cold rolled coils, heavy slabs, profiles and heavy plates.

The semi-finished products are produced using continuous casting and, in the case of blooms and billets there is subsequent rolling process.

Common Long Rolled Products

Common long rolled products represent a major portion of the Company’s production. The Company’s main long rolled products include rebars, wire rods, merchant bars, light shapes and profiles, which are used mainly by the construction and manufacturing industries.

Drawn Products

Drawn products include barbed and barbless fence wire, galvanized wire, fences, concrete reinforcing wire mesh, nails and clamps. These products are not exported and are usually sold to the manufacturing, construction and agricultural industries.

Special Steel Products

Special steel requires advanced manufacturing processes because they have specific physical and metallurgical characteristics for applications with high mechanical demands. This steel is a key product for the automotive industry, as it is used in auto parts, light and heavy vehicles and agricultural machinery. Special steels also serve other significant markets, such as oil and gas, wind energy, machinery and equipment, mining and rail, among others.

Flat Products

The Ouro Branco unit produces cast slabs, which are rolled into flat products, such as hot-rolled coils, which are sold in the domestic market, and heavy plates, which are sold in the domestic and export markets. The Company, through its distribution channel and direct sales, distributes these hot-rolled coils and heavy plates and resells flat steel products manufactured by other Brazilian steel products, which adds more value through additional processing at flat steel service centers.

Iron Ore

Gerdau has two mines producing iron ore, all located in the Brazilian state of Minas Gerais (Várzea do Lopes and Miguel Burnier). The mines produce the following: sinter feed (featuring low content of contaminants and good metallurgical properties, enabling its use as a base material); pellet feed/concentrated (superior quality enabling its use as a chemical balancer in the synthetizing process, while also adequate for pelletizing, blast furnace quality - low loss by calcination — PPC); hematite fines (small scale production, used as input in Gerdau’s furnaces); and granulated (high quality, used chiefly for own consumption at the Ouro Branco Mill).

The following table presents the main products and the contributions to net revenue and net income by Business Segment for the periods shown (consolidated):

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Production Process

In Brazil, the Company has a decentralized production process, using both mini mills and integrated facilities. In general, the Company has used the mini mill model to produce steel products outside of Brazil.

Semi-integrated Process (Mini mills)

The Company operates 27 mini mills worldwide. Mini mills recycle steel scrap and are equipped primarily with electric arc furnaces that can melt steel scrap and produce steel products at the required specifications requested by customers. After loading the furnace with a preset mixture of raw material (i.e., steel scrap), electric power is applied in accordance with a computer-controlled melting profile. The Company’s mini mill production process generally consists of the following steps: obtaining raw material (steel scrap), melting, casting, rolling, and drawing. The basic difference between this process and the integrated mill production process described below is in the first processing phase, i.e., the steelmaking process. Mini mills are smaller plants than integrated facilities and the Company believes they provide certain advantages over integrated mills, including:

Integrated Process

Integrated mills produce steel from iron ore and are equipped primarily with blast furnaces that can transform iron ore into metallic iron.

Gerdau operates three integrated mills located in Brazil. The Ouro Branco Mill is the largest integrated facility operated by the Company. It produces steel from pig iron from the blast furnace and has some of the advantages of a mini mill, since it is located near Gerdau’s iron ore source and linked by railways to Gerdau’s ports from which Gerdau exports part of its production. The Divinópolis Mill is the other integrated facility operated by the Company and produces steel using charcoal instead of mineral coal to transform iron ore into metallic iron. This route is considered low greenhouse emission since charcoal is sustainably produced at Gerdau’s farms. The third mill, Barão de Cocais, suspended production in 2024 due to the tougher domestic market in Brazil.

Gerdau’s steel manufacturing process at integrated units consists of four basic stages: preparation of raw materials, production of pig iron, production of steel, and production of semi-finished steel products (billets, blooms, and slabs). In the first stage, sinter (a mixture of iron ore and limestone), coke, and other raw materials are consumed in the Ouro Branco unit blast furnace to produce pig iron, while charcoal and other raw materials are consumed at the Divinópolis unit. Coke and charcoal act as both fuel and a reducing agent, transforming the oxide called iron ore into metallic iron.

Gerdau’s blast furnaces have an aggregate installed capacity of approximately 4.1 million tonnes of molten pig iron per year. The pig iron produced is transported by rail to the desulphurization unit to reduce the steel’s sulfur content. After the desulphurization process, the low-sulfur pig iron is transformed into steel using LD-type oxygen converters. The LD steelmaking process utilizes molten pig iron and scrap to produce steel by blowing oxygen over the metallic charge inside the converters. The process does not require any external source of energy, which is fully supplied by the chemical reactions occurring between oxygen and the impurities in the molten pig iron. The LD steelmaking process is currently the most widely used in the world. There is also secondary refining after the LD converters’ output with ladle furnaces and degassing processes. Liquid steel is then sent to the continuous casting equipment, where it is solidified into billets, blooms, or slabs.

These products may be sold to clients directly, transferred to other Gerdau units for transformation, or used in the production of finished rolled steel products at the integrated units. Gerdau’s integrated units in Brazil have rolling mills for rebars, bars and profiles, wire rod, structural shapes, hot-rolled coils, and heavy plates.

Logistics

Gerdau sells its products through a combination of independent distributors, direct sales from the mills and its retail network.

Logistics costs are an important component in the steel businesses and are a significant factor in maintaining competitive prices in both domestic and export markets. Gerdau’s mills are strategically located in different geographic regions, allowing the Company to gain a competitive advantage. The proximity of these mills to raw material sources and important consumer markets helps reduce costs in obtaining raw material and enhances customer service. This logical efficiency is a significant advantage for both inbound and outbound operations.

To monitor and reduce logistic costs, Gerdau employs tailored solutions for various transportation modes, including road, rail, sea and cabotage, as well for terminals, technology and equipment. The Company is committed to continuously improving its performance in receiving raw materials, and delivering products to its customers of designated ports. As part of this effort, Gerdau develops and maintains long-term relationships with logistic suppliers specializing in delivering raw materials and steel products.

In 1996, Gerdau acquired an interest in MRS Logística, one of the most important rail companies in Brazil, which operates connecting the states of São Paulo, Rio de Janeiro and Minas Gerais, which are Brazil’s main economic centers, and also reaches the main ports of the country in this region. This interest assures the availability of this mode to transport raw materials (scrap and pig iron) as well as final products.

Gerdau uses a variety of ports to deliver products from the entire Brazilian coastline. Most exports are shipped from the Praia Mole Private Steel Terminal in Vitoria, Espírito Santo.

Overseas, Gerdau owns a private port terminal in Chimbote (Peru), where the Company has a steel mill, used to deliver inputs, raw material and products for the operation.

Competition

The steel market is divided into manufacturers of long steel products, flat steel products and special steel.

The Company operates in the long steel market, which is the most important market for Gerdau, by supplying to the following customer segments: (i) construction, to which it supplies rebars, merchant bars, sections, beams, nails and meshes; (ii) manufacturing, to which it supplies products for machinery, agricultural equipment, tools and other industrial products; and (iii) other markets, to which it supplies wires and posts for agricultural installations and reforestation projects. In North America, the Company also supplies customers with special sections, including elevator guide rails and super light beams. The Company also provides its customers with higher value - added products at rebar and wire rod fabrication facilities.

The Company operates in the flat steel market only in Brazil through the Ouro Branco mill that produces slabs, which are used to roll flat products such as hot-rolled coils and heavy plates. The Company distributes these hot-rolled coils and resells flat steel products manufactured by other Brazilian steel producers to which it adds further value through additional processing at its flat steel service centers.

The Company produces special and stainless steel used in tools and machinery, chains, fasteners, railroad spikes, special coil steel, grader blades, smelter bars, light rails, super light I-beams, elevator guide rails and other products that are made on demand for the Company’s customers at its special steel units in Brazil and United States.

Competitive Position — Brazil

The Brazilian steel market is very competitive. In the year ended December 31, 2023 (most recent information), ArcelorMittal Brasil and the Company were the two largest Brazilian crude steel producers, according to the Brazilian Steel Institute (IABr - Instituto Aço Brasil).

World common long rolled steel demand is met principally by steel mini mills and, to a much lesser extent, by integrated steel producers. In the Brazilian market, no single company competes against the Company across its entire product range.

The Company believes that the diversification of its products, the solution developed by its fab shops units and the decentralization of its business provide a competitive edge over its major local competitors. The main Gerdau competitors in long steel segment are ArcelorMittal, Simec, Sinobrás, Aço Verde do Brasil (AVB) and Companhia Siderúrgica Nacional (CSN). Regarding the flat steel market, Gerdau’s competitors are ArcelorMittal, Usiminas and CSN.

Besides the local competitors, the Company has been facing substantial competition from long and flat steel products imports, mainly coming from China. According to the Brazil Steel Institute, the steel import penetration rate in Brazil reached 18% in 2024, 50% above the average of the last ten years, while the import volume in 2024 was 18% higher than in 2023, increasing the local competitive imbalance, chiefly due to steel imports under predatory competition conditions. Although the Company is a modern and highly efficient producer, it cannot compete with heavily subsidized imports, which directly affect the competitiveness of its industry.

Competitive Position — Outside Brazil

Gerdau’s geographic market in North America encompasses primarily the United States and Canada. The Company faces substantial competition in the sale of each of its products from numerous competitors in its markets. Rebar, merchant bars and structural shapes are commodity steel products for which pricing is the primary competitive factor. Due to the high cost of freight relative to the value of steel products, competition from non-regional producers is somewhat limited. Proximity of product inventories to customers, combined with competitive freight costs and low-cost manufacturing processes, are key to maintaining margins on rebar and merchant bar products. Rebar deliveries are generally concentrated within a 350-mile radius of the mini mills and merchant bar deliveries are generally concentrated within a 500-mile radius. Some products produced by the Midlothian, Jackson, Cartersville and Petersburg mini mills are shipped greater distances, including overseas.

The Company’s principal competitors include Commercial Metals Company (CMC), Nucor Corporation, and Steel Dynamics Inc.

In South America, each country has a specific competitive position that depends on conditions in their respective markets. Most compete domestically and face significant competition from imports. More than 90% of shipments from Gerdau’s South American Operation originate from Argentina and Peru. In this market, the main barriers faced by Gerdau sales are freight and transportation costs and the availability of imports. The main products sold in the South American market are for the construction, agriculture and mining markets.

Despite the large-scale characteristic of rebars, bars and profiles, Gerdau believes that it stands out from many of its competitors for its wide range of products, quality, consistent delivery performance and the ability to fulfill large orders. Gerdau believes that it produces one of the most complete lines of bars and profiles. The variety of products offered by Gerdau is an important competitive advantage in a market where many customers seek to meet their needs with few key suppliers.

Business Cyclicality and Seasonality

The steel industry is highly cyclical. Consequently, the Company is exposed to fluctuations in the demand for steel goods that in turn cause fluctuations in the prices of these goods. Furthermore, since the production capacity of Brazil’s steel industry exceeds its demand, it is dependent on export markets. The demand for steel goods and consequently the financial conditions and results of operations of steel producers, including the Company, are generally affected by fluctuations in the world economy and in particular the performance of the manufacturing, construction and automotive industries.

Unfavorable conditions in China and steel-exporting countries can significantly impact steel prices in other markets. China, as the world’s largest steel producer and consumer, influences global steel demand and supply dynamics. Factors like a lack of real estate investment, lower consumer confidence and rationalization of government stimulus can diminish steel demand within China, affecting global prices. Additionally, steel-exporting countries, benefiting from lower production costs, efficient supply chains, and economies of scale, can exert competitive pressures on international steel prices, particularly when coupled with government subsidies or trade agreements. These combined factors create a complex interplay of supply and demand forces that can swiftly impact steel prices worldwide. In Gerdau’s Brazilian and South American operations, shipments in the second and third quarters of the year tend to be stronger than in the first and fourth quarters, given the seasonality, and reduction of sector’s activity such as construction. In Gerdau’s North American operations, demand is influenced by winter conditions, when consumption of electricity and other energy sources (i.e., natural gas) for heating increases and may be exacerbated by adverse weather conditions, contributing to increased costs and decreased construction activity, and in turn leading to lower shipments.

Information on the Extent of the Company’s Dependence

The Company is not dependent on industrial, commercial or financial agreements (including agreements with clients and suppliers) or on new production processes that are material to its business or profitability. The Company also has a policy of diversifying its suppliers, which enables it to replace suppliers without affecting its operations in the event of failure to comply with the agreements, except in the case of its energy and natural gas supply.

In addition to the government regulations that apply to its industry in general, the Company is not subject to any specific regulations that materially or adversely affect its business.

In the case of a power outage, there are no alternative supply options available at most Gerdau mills due to the high volume and tension required for the operation of these plants. Some of Gerdau’s small plants may choose, as an alternative, to use generators to compensate for the energy shortage. Moreover, at the Ouro Branco Mill, about 90% of the thermal demand in stationary equipment such as furnaces, regenerators and boilers is met by gases resulting from the steelmaking process.

In case of a lack of natural gas, the equipment could be adjusted to use diesel and LPG.

Gerdau’s operations are spread across various geographic regions, which provides a risk diversification of any electricity or natural gas supply problems in Brazil.

The distribution of electric power and natural gas is a natural monopoly in most countries, which leads the distributor to be the only supplier in each geographic region. In some countries, regulations allow for a choice of electrical power or natural gas commodity supplier, allowing Gerdau to diversify its supply agreement portfolio.

Production Inputs

Price volatility

Gerdau’s production processes are based mainly on the mini mill concept, with mills equipped with electric arc furnaces that can melt ferrous scrap and produce steel products at the required specifications. The main raw material used at these mills is ferrous scrap, which at some plants is blended with pig iron. The component proportions of this mixture may change in accordance with prices and availability to optimize raw material costs. Iron, iron ore (used in blast furnaces) and ferroalloys are also important.

Although international ferrous scrap prices suffer high influence by the U.S. domestic market (since the United States is the largest scrap exporter), the price of ferrous scrap in Brazil varies from region to region and is influenced by demand and transportation costs.

Brazil and Special Steel Business Segments — The Company’s Brazilian mills use scrap and pig iron purchased from local suppliers. Due to the nature of the raw materials used in its processes, Gerdau has contracts with scrap generators, especially scrap from industrial sources, for its mini mills in Brazil, acquiring scrap as necessary for the mills’ needs. Scrap for the Brazilian Operation is priced in Brazilian reais; thus input prices are not directly affected by currency fluctuations.

Due to its size, the Ouro Branco mill has developed over the last few years a strategy to diversify its raw materials, which are supplied through various types of contracts and from multiple sources, which include: (i) coking coals imported from Colombia, the United States, Russia and Australia as well as petroleum coke purchased from Petrobras and charcoal chaff also acquired from other domestic suppliers; (ii) ferroalloys, of which around 90% are purchased in the domestic market; and (iii) iron ore, which is mainly produced from its own mines and partially supplied by mining companies, most of them strategically located close to the plant.

North America Business Segment — The main input used by the Company’s mills in North America is ferrous scrap, and it has consistently obtained adequate supplies of raw materials, not depending on a small number of suppliers. Due to the fact that the United States are one of the largest scrap exporters in the world, the prices of this raw material, in this country, may fluctuate according to supply and demand in the world’s scrap market. In September 2024 Gerdau acquired the assets of Dales Recycling Partnership, a company engaged in the operation, processing, and recycling of ferrous and non-ferrous scrap with an annual capacity to process approximately 160,000 tons of ferrous and non-ferrous scrap. This acquisition aims to increase Gerdau’s captive ferrous scrap in North America through proprietary channels, supplying raw materials at a competitive cost.

South America Business Segment — The main input used by the Company’s mills in South America is ferrous scrap. This operation is exposed to market fluctuations, varying its prices according to each local market.

Ferrous Scrap

There are two broad categories of ferrous scrap: (i) obsolete scrap, which is steel from various sources, ranging from cans to car bodies and white goods; and (ii) industrial scrap, which is composed of scrap from manufacturing processes, essentially steel bushings and flashings, steel turnings and even scrap generated by production processes at steel producers, such as Gerdau. In Brazil, the use of scrap in electric arc furnaces varies between scrap from obsolescence and industrial scrap. Special Steel mills mainly use industrial scrap.

Because ferrous scrap is one of its main raw materials in steel production, Gerdau is dedicated to improving its supply chain in various countries, aiming to develop and integrate micro and small suppliers into the Company’s business. In Brazil, the main part of the scrap consumed by the Company comes from small scrap collectors who sell all their material to Gerdau, which provides a direct supply at more competitive costs for the Company. In North America, although the scrap supply is more consolidated, the number of vendors is still significant, ensuring the competitiveness of the business in the region.

Brazil and Special Steel Business Segments — The price of steel scrap in Brazil varies by region and reflects local supply, demand and transportation costs. The Southeast is the country’s most industrialized region and generates the highest volume of scrap. Due to the high concentration of players in this region, competition is more intense.

In Brazil, Gerdau has five scrap shredders, including a mega-shredder at the Cosigua mill in Rio de Janeiro, with capacity to process scrap in volumes superior to 200 carcasses of vehicles per hour.

North America Business Segment — Ferrous scrap is the main raw material. The availability of this input varies according to the level of economic activity, seasonality, export levels, climatic conditions and price fluctuations. Of the ten units in the North America Business Segment, five of them have shredders on-site. Considering that not all the scrap consumed comes from their yards, the rest of the demand is guaranteed through direct acquisitions or via resellers who originate and prepare the scrap.

In North America, all production units are semi-integrated mills or mini mills, in which results of operations are closely related to the cost of ferrous scrap and its substitutes, which are the main input of mini mills. Ferrous scrap prices are relatively higher during the winter months in the north hemisphere due to the impact of climate on collection and supply. More than half of North America’s steel industry output is currently produced in electric arc furnaces with the use of ferrous scrap. Prices of ferrous scrap are subject to market forces beyond the Company’s control, including demand from the United States and international steel producers, freight costs and speculation.

South America Business Segment — The price of scrap in South America varies widely from country to country in accordance with supply, demand and transportation cost.

Pig Iron and Sponge Iron

Brazil is an exporter of pig iron. Most of Brazil’s pig iron is produced in the state of Minas Gerais by small producers. Pig iron is a drop-in substitute for scrap and in Brazil it is an important component of the metal mix used to make steel in the mills. The price of pig iron follows domestic and international demand, and its cost production is basically composed by reducers and minerals.

In North America, the availability of scrap plays an important role for our operations. Sponge iron and pig iron are used in limited quantities to produce steels with particular characteristics.

Iron Ore

Iron ore is the main input used to produce pig iron at Gerdau’s blast furnace mills located in the state of Minas Gerais, southeastern Brazil. The pig iron is used in the melt shops together with scrap, to produce steel.

Iron ore is purchased in its natural form as lump ore, pellet feed or sinter feed, or agglomerated as pellets. The lump ore and pellets are loaded directly into the blast furnace, while the sinter feed and pellet feed need to be agglomerated in the sinter plant and then loaded into the blast furnace, to produce pig iron. The production of 1.0 tonne of pig iron requires about 1.6 tonnes of iron ore.

Iron ore consumption in Gerdau mills in Brazil amounted to 6.2 million tonnes in 2024, partially supplied by mining companies adjacent to the steel plants and partially supplied by Gerdau’s mines.

Other Inputs

In addition to scrap and iron ore, Gerdau’s operations use other inputs to produce steel such as ferroalloys, electrodes, furnace refracting materials, oxygen, nitrogen, and other industrial gases and limestone, albeit in smaller amounts. Additional inputs associated with the production of pig iron are thermal reducers, such as coal coke, charcoal, or natural gas, which are used in blast furnace mills.

The Ouro Branco mill’s significant raw materials and inputs also include solid fuels, comprising metallurgical coal, used in the production of coke and for pulverized injection into the blast furnace. This process increases productivity and consequently reduces the final cost of pig iron. Besides metallurgical coal, the Company also uses anthracite, a solid fuel used in the production of sinter. The gases resulting from the production of coke and pig iron are reused to generate thermal energy, which is converted into electric energy for the mill, improving energy efficiency.

The North American operations also use additional inputs. Various domestic and foreign companies supply other important raw materials or operating supplies required for the business, including refractory materials, ferroalloys and graphite electrodes that are available in the national and international market. Gerdau North America Business Segment has obtained adequate quantities of these raw materials and supplies at competitive market prices. The Company is not dependent on any one supplier as a source for any particular material and believes there are adequate alternative suppliers available in the marketplace if the need to replace an existing one arises.

Energy Requirements

Steel production is a process that consumes large amounts of electricity, especially in electric arc mills. Electricity represents an important role in the production process, along with natural gas, which is used mainly in furnaces to re-heat billets in rolled steel production.

In Brazil, electricity is currently supplied to the Company’s industrial units under two types of contracts:

In the Ouro Branco mill approximately 25% of the electricity consumed is generated internally. As a result, this makes the plant has significantly lower exposure to the energy market than mini mills.

The Company holds the following power generation concession in Brazil:

The terms of the Dona Francisca generation concession agreements are for 39 years as of the signature of the agreement. As such: DFESA expires in 2037.

In Brazil, natural gas is currently supplied to the Company’s industrial units under two types of contracts:

The Várzea do Lopes, Miguel Burnier, São Caetano do Sul, Sete Lagoas, Cumbica, Cotia, Barão de Cocais and Divinópolis units do not have access to natural gas supplies. In the United States, there are essentially two types of electricity markets: regulated and deregulated. In the regulated market, contracts are approved by Public Utility commissions and are subject to an approved rate of return. These regulated tariffs are specific to local distributors and generally reflect the utilities transmission, generation capital and operational costs including fuel. In deregulated markets, the price of electricity has three main components: generation capital costs, transmission costs and variable costs. The variable cost is set by the marginal resource and fluctuates with demand and fuel cost. Natural gas in the United States is mostly deregulated. While in general, the U.S. energy market is benefiting from the increased exploration of shale gas, the environmental goals of decarbonization have resulted in natural gas scarcity during periods of high electricity and heating demand causing shortages and price volatility of natural gas and electricity.

In Uruguay, electricity is purchased under agreements that are renewed automatically on an annual basis from the state-owned utility UTE. Natural gas is purchased from Montevideo Gas with prices set by the Argentinean export tariff agreement (fuel oil as substitute).

In Peru, the Company holds an electricity supply contract valid from January 2023 to December 2034. Additionally, it has a natural gas supply contract spanning from January 2025 to December 2034. The natural gas is supplied as LNG (Liquefied Natural Gas), transported by trucks, decompressed, and gasified for distribution through the internal network to support production processes.

In Argentina, natural gas agreements are renewed annually with private companies. In 2008, Gerdau Sipar signed a long-term agreement with a private company to supply the electrical needs of the plant.

In Mexico, electricity is purchased under agreements regulated by the state-owned utility Companía Federal de Electricidad (CFE). The natural gas agreements are annually renewed with private companies. Electricity and natural gas prices are indexed and adjusted monthly based on the NYMEX prices indexes.

Technology and Quality Management

All Gerdau mills have a Quality Management System supported by a wide range of quality control tools. Product development projects are headed by specialists who use quality tools such as, but not limited to, “Six Sigma” (a set of statistical methods for improving the assessment of process variables), DOE (Design of Experiment) and Process Analysis. In general, production, market developers, and quality teams are responsible for developing new products to meet customer and market needs.

Given this level of quality management, mills are ISO 9001 certified, and certain mills have additional certifications such as but not limited to IATF 16949 (Automotive Industry), ABS (American Bureau of Shipping), German Ü-Sign conformity mark (Ü-Zeichen) and AASHTO Product Evaluation for US highway and bridge construction.

The Gerdau Quality Management System requires robust tests on products and processes to ensure that the specifications and requirements are met. A specially trained team and modern technologies guarantee high quality standards for the products manufactured. Gerdau’s market developers do planned visits, some are randomly selected, and some are scheduled visits, to its customers to identify new product development opportunities and check on the quality of the delivered products to guarantee the final user satisfaction for products purchased.

Due to the specialized nature of its business, the Gerdau special steel mills are constantly investing in technological upgrading and in research and development. These mills are active in the automotive segment and maintain a technology department (Research and Development) responsible for new products and the optimization of existing processes.

International machinery manufacturers and steel technology companies supply most of the sophisticated production equipment that Gerdau uses. These suppliers generally sign technology transfer agreements with the purchaser and provide extensive technical support and staff training for the installation and commissioning of the equipment. Gerdau has technology transfer and benchmarking agreements with worldwide recognized performance companies.

As is common with mini mill steelmakers, Gerdau usually acquires technology in the market rather than develops new technology through intensive process research and development, since steelmaking technology is readily available for purchase.

The Company is not dependent on patents or licenses or new manufacturing processes that are material to its business. See item “Information on the Extent of the Company’s Dependence” for further details.

Sales Terms and Credit Policy

The Company’s Brazilian sales are usually made on a 21/28-day settlement CIF (Cost, Insurance and Freight) basis. Comercial Gerdau, the retail arm of Gerdau in Brazil, sells on 28-day settlement basis, mainly CIF. Brazilian customers are subject to a credit approval process. The concession of credit limits is controlled by a corporate-level system (ECC) that can be accessed by all sales channels. The credit and collection department are responsible for evaluating, determining and monitoring credit in accordance with the credit limit policy. This policy includes the active participation of staff from the various sales channels. At Comercial Gerdau, the criteria for retail sales also include practices such as the use of credit card services. Gerdau exports are guaranteed via letters of credit and/or pre-payment before the product is shipped. Exports to Gerdau’s subsidiaries may be sold on credit at market interest rates.

Gerdau North American credit terms to customers are generally based on customary market conditions and practices. The Company´s North American business is seasonal, with orders in the second and third quarters tending to be stronger than those in the first and fourth quarters, primarily due to weather-related slowdowns in the construction industry.

The Company´s Special Steel operations in the United States and Brazil have their own credit departments for customer credit analysis.

The Company’s impairment loss on financial assets has been at low levels. On December 31, 2024, provision for expected credit losses was 2.2% based on gross account receivables per Note 5 to the Consolidated Financial Statements, compared to 1.8% on December 31, 2023, and 1.8% on December 31, 2022. Gerdau has improved its credit approval controls and enhanced the reliability of its sales process using risk indicators and internal controls.

Insurance

The Company maintains insurance coverage in amounts that it believes suitable to cover the main risks of its operating activities. The Company has purchased insurance for its integrated mill Ouro Branco to insure against operating losses, which covers assets of approximately US$ 7.8 billion (R$ 48.5 billion as of December 31, 2024), including material damage to installations of US$ 7.3 billion (R$ 45.1 billion as of December 31, 2024) and losses of gross revenues of US$ 547.4 million (R$ 3.4 billion as of December 31, 2024), such as halts in production due to business interruptions caused by accidents for a period up to twelve months. The Company’s current insurance policy relating to the Ouro Branco mill remains effective until April 30, 2025. The Company’s mini mills are also covered under insurance policies which insure against certain operational losses resulting from business interruptions.

Trade Investigations and Government Protectionism

Over the past several years, exports of steel products from several companies and countries, including Brazil, have been subject to antidumping, countervailing duties and other trade-related investigations in importing countries. Most of these investigations resulted in duties and/or volume quotas limiting the investigated companies’ ability to access such import markets. Among all the commercial defense measures, in March of 2018, the United States has also imposed Section 232 (tariffs on steel imports) measures on steel imports, resulting in a combination of tariffs, quotas, and tariff-rate quotas on different jurisdictions. The Brazilian industry was exempted from the tariffs, but subject to quotas.

However, in January of 2025, the Section 232 has been modified, now imposing a 25% tariff on all imports of articles derived from steel and aluminum into the United States and cancelling exemptions and duty-free quotas for major suppliers, including Brazil. These measures are set to not only increase tariffs on steel imports, but limit import volume as well, which could significantly affect the export volumes of some companies and redirect the export flow to other regions.

Material effects of government regulation on the Company’s activities

The Company’s steel production activities are not subject to special authorizations other than the licenses and permits typical to the industry. The Company maintains a good relationship with the government agencies responsible for issuing common authorizations and does not have any history of problems in obtaining them.

Gerdau’s mining operations in Brazil are subject to the rules of the Brazilian Mining Code and its regulation (Decree-Law 227, of February 28, 1967, and Decree 9,406, of June 12, 2018) and to the applicable mining legislation, with mining exploration governed by Mining Property Rights and Concessions.

Gerdau acquired the surface of the properties located in the polygon of the respective mining rights, as well as all other Mining Property Rights and Concessions, under an Agreement for the Sale of Assets and Assignment of Rights entered into by and between Gerdau Açominas S.A. and Companhia Paraibuna de Metais, Siderúrgica Barra Mansa S.A., Votorantim Metais Ltda., and Votorantim International Holding N.V., on May 19, 2004.

The Company’s mining exploration activities are subject to the conditions and limitations imposed by the Federal Constitution of Brazil, the Brazilian Mining Code and related laws and regulations, which include requirements connected to, among other factors, how mineral deposits are used, occupational safety and health, environmental protection and restoration, pollution prevention and the health and safety of the local communities where the mines are located. The Brazilian Mining Code also establishes some requirements for the submission of notifications and information.

Companies authorized to economically explore mineral resources are required to pay royalties to the Federal Government, which distributes most of them to States and Municipalities. On July 26, 2017, Provisional Presidential Decree 789/17 was published, which was later converted into Federal Law 13,540/17, amending Federal Laws 7,990/89 and 8,001/90, which provide for the Financial Compensation for Exploration of Mineral Resources (CFEM). The structure for the charging of royalties was changed to the following:

1) TRIGGERING EVENT: the exploration of mineral resources will trigger the payment of CFEM upon:

2) CALCULATION BASE

Financial compensation (CFEM) may or may not have to be paid on sales among companies of the same business group; Federal Law 13,540/17 does not establish any criteria for such.

For mineral assets shipped to another establishment of the same owner, for subsequent sale, even if subject to processing, the calculation base is the price charged in the final sale.

For iron ore, the rate is fixed at 3.5%. In this case, upon a justified need, the regulatory entity of the mining sector could exceptionally reduce the iron compensation rate from 3.5% to as low as 2% to not adversely affect the economic feasibility of deposits with low performance and profitability due to the iron content, production scale, payment of taxes and number of employees.

On December 26, 2017, Federal Law 13,575 was sanctioned, which created the National Mining Agency (ANM), eliminated the National Department of Mineral Production (DNPM), amended federal laws 11,046 of December 27, 2004, and 10,826 of December 22, 2003, and revoked Federal Law 8,876 of May 2, 1994, and the provisions of Decree-Law 227 of February 28, 1967 (Mining code). This law derives from Provisional Presidential Decree 791/2017 issued by the Ministry of Mines and Energy (MME) and submitted to the joint commission of the Senate in mid-2017 for approval. The wording of the federal law was published in the federal register Diário Oficial da União (DOU) on December 27, 2017, Issue: 247, Section 1, Pages 1 to 4.

It eliminates the National Department of Mineral Production (DNPM) and creates the National Mining Agency (ANM), a government agency linked to the Ministry of Mines and Energy responsible for promoting mineral exploration and developing the industry.

The Rate for Inspection of Mining Activities (TFAM), which the Executive Branch intended to create along with ANM, was not approved by the National Congress.

Gerdau holds environmental licenses for commercial operation of the mines located in the cities of Miguel Burnier/Ouro Preto and Várzea do Lopes/Itabirito in the Brazilian state of Minas Gerais.

The mining rights held by Gerdau cover 8,837.19 hectares, and the concessions are valid until the mining deposits are exhausted, provided the legal requirements are fulfilled annually. The table below lists the ANM processes referring to the mining rights held by Gerdau:

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The Company’s operational structure (including its main operating subsidiaries engaged in steel production) on December 31, 2024, is below:

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The table below lists the significant consolidated subsidiaries of Gerdau on December 31, 2024, 2023 and 2022:

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(*) The voting capital is substantially equal to the total capital. The interests reported represent the ownership percentage held directly and indirectly in the subsidiary.

(1) Subsidiaries: Gerdau Ameristeel US Inc., GUSAP III LLP, GNA Financing Inc., Gerdau Macsteel Inc. and Chaparral Steel Company.

(2) Subsidiaries: Gerdau Açominas Overseas Ltd. and SPEs Barro Alto Solar Park (SPE Barro Alto V, SPE Barro Alto VI and SPE Barro Alto VII).

(3) Fixed-income investment fund managed by Santander Bank. The participation shown refers to the balances applied by the Company in relation to the total fund each year.

(4) Subsidiary: Siderco S.A.

(5) Subsidiaries: G2L Logística S.A., G2base Fundações e Contenções Ltda, G2 Adições Minerais e Químicas Ltda., Gerdau Ventures Participações Ltda, Circulabi S.A. and Cluster Industrial S.A.

The Company’s investments in Bradley Steel Processor and MRM Guide Rail in North America, in which Gerdau Ameristeel holds a 50% of the total capital; the investment in Gerdau Corsa S.A.P.I. de CV in Mexico, in which Gerdau holds a 75% stake; the investment in Dona Francisca Energética S.A, in Brazil, in which the Company holds a 53.94%; the investment on Newave Energia S.A., in Brazil, in which Gerdau holds a 40% stake; the investment in Gerdau Summit Aços Fundidos e Forjados S.A., in Brazil, in which Gerdau had a 58.73% stake; the investment in Addiante S.A., in Brazil, in which the Company holds a 50% stake; the investment in Juntos Somos Mais Fidelização S.A., in Brazil, in which Gerdau holds a 27.47% stake; the investment in Brasil ao Cubo S.A., in Brazil, in which Gerdau holds a 44.66% stake; the investiment in MRS Logística S.A., in Brazil, in which Gerdau holds a 1.32% stake, are accounted in the Company’s financial statements using the equity method (for further information, see Note 3 — Consolidated Financial Statements), the investments in Gerdau Metaldom Corp. in the Dominican Republic in which the Company owned a 50% stake, and the investment in Diaco S.A. in Colombia, which Gerdau had a stake of 49.85%. On January 17, 2024, the Company signed an agreement for the sale of all its equity interests of 49.85% in the joint venture Diaco S.A. (and subsidiaries) and 50.00% in the joint venture Gerdau Metaldom Corp (and subsidiaries). On February 1, 2024, after compliance with the corresponding conditions precedent, the sale of the 50.00% equity interest in the joint venture Gerdau Metaldom Corp. (and subsidiaries) was concluded. On March 14, 2024, after compliance with the corresponding conditions precedent, the sale of the 49.85% in the joint venture Diaco S.A. (and subsidiaries) was concluded.

On February 10, 2025, the Company, after fulfilling all the conditions precedent, including approval by the antitrust authorities, concluded the transaction with Sumitomo Corporation and The Japan Steel Works Ltd., for the acquisition of 39.53% and 1.74%, respectively, of the total shares issued by Gerdau Summit Aços Fundidos e Forjados S.A. (“Gerdau Summit”). With the closing of the transaction, the Company will own 100% of Gerdau Summit’s capital. Gerdau Summit, until then a joint venture, with this transaction became a subsidiary of the Company.

The main operating companies that are accounted according to the equity accounting method in the financial statements of Gerdau are described below:

Gerdau Metaldom Corp. — On January 17, 2024, Gerdau S.A. celebrated the Share Purchase Agreement selling its stake in Gerdau Metaldom Corp. to INICIA Group, which sale was concluded on February 1, 2024.

Gerdau Corsa S.A.P.I de C.V. — The subsidiary of this company is a long steel producer located in the metropolitan area of Mexico City with annual installed capacity of 1,500,000 tonnes of crude steel and 1,350,000 tonnes of rolled products.

Gerdau Summit Aços Fundidos e Forjados S.A. — On January 5, 2017, the Company subscribed capital stock in Gerdau Summit Aços Fundidos e Forjados S.A. through the contribution of some of its assets and liabilities, which were valued by a specialized independent evaluation firm. Gerdau Summit Aços Fundidos e Forjados S.A. is accounted for as a joint venture in the Financial Statements of Gerdau S.A., with a 58.73% interest. On February 10, 2025, the Company, after fulfilling all the conditions precedent, including approval by the antitrust authorities, concluded the transaction with Sumitomo Corporation and The Japan Steel Works Ltd., for the acquisition of 39.53% and 1.74%, respectively, of the total shares issued by Gerdau Summit Aços Fundidos e Forjados S.A. (“Gerdau Summit”). With the closing of the transaction, the Company will own 100% of the Gerdau Summit’s capital Gerdau Summit, until then a joint venture, with this transaction became a subsidiary of the Company.

Diaco S.A.— On June 30, 2017, the Company concluded the operation to create a joint venture, based on the sale of 50% interest in Diaco S.A., in Colombia, to Putney Capital Management. Due to this transaction, Diaco started to be accounted for as a joint venture in the Consolidated Financial Statements with a 49.85% interest. On January 17, 2024, Gerdau S.A. celebrated the Share Purchase Agreement to sell its stake in Diaco S.A. to INICIA Group, which sale was concluded on March 14, 2024.

The main operating companies that are fully consolidated in the financial statements of Gerdau are described below:

Gerdau Aços Longos S.A. — This company produces common long steel and has ten mills distributed throughout Brazil and an annual installed capacity of 3.2 million tonnes of crude steel. This company also sells general steel products and has steel distribution centers located throughout Brazil.

Gerdau Açominas S.A. — Gerdau Açominas S.A. owns the mill located in the state of Minas Gerais, Brazil. The Ouro Branco mill is Gerdau’s largest unit, with an annual installed capacity of 3.6 million tonnes of crude steel, accounting for 52.9% of Gerdau’s crude steel output in the Brazil Business Segment.

Gerdau Ameristeel Corporation — Gerdau Ameristeel has an annual capacity of 5.7 million tonnes of crude steel and 4.8 million tonnes of rolled products. The company is one of the largest producers of long steel in North America.

Gerdau MacSteel Inc. — This company is the largest special steel producer in the U.S., has three units and a combined annual production capacity of 1.2 million tonnes of crude steel and 1.2 million tonnes of rolled products.

Gerdau Laisa S.A. — Gerdau Laisa is the one of largest long steel producers in Uruguay and has annual installed capacity of 85,000 tonnes of crude steel and 80,000 tonnes of rolled products.

Sipar Gerdau Inversiones S.A. — Sipar Gerdau Inversiones, through its operational subsidiary Sipar Aceros S.A. has annual installed capacity of 450,000 tonnes of crude steel and 240,000 tonnes of rolled products.

Empresa Siderúrgica del Perú S.A.A. — This company is a long steel producer with annual installed capacity of 377,000 tonnes of crude steel and 500,000 tonnes of rolled steel.

* Temporarily idle units.

** The capacity of the idle units is not included in the total company.

Mining Assets

Iron ore mines

Gerdau’s activities related to the iron ore mines began after acquiring the mining rights from the Votorantim Group, in the cities of Ouro Preto (district of Miguel Burnier), Itabirito and Barão de Cocais, in 2004. These areas are located in the Iron Quadrilateral region of Minas Gerais state, in Brazil, one of the country’s most prominent mineral regions, as shown in the following figure.

Focusing on guaranteeing its iron ore self-sufficiency in Minas Gerais state and seeking opportunities to add value to the business by using its own mineral resources, Gerdau conducted studies up to 2014 to assess and implement projects for expanding its mining operations in order to become a player in the global iron ore market. However, given the current price of iron ore in the international market, Gerdau decided to focus only on iron ore production for achieving self-sufficiency.

Location of Gerdau’s mining operations

The current and future iron ore production units encompass mainly open-pit mines, processing plants, waste and tailing piles, and logistics and operational support infrastructure.

The current iron ore production units are the following:

Location and Access

Miguel Burnier/Dom Bosco Complex

Miguel Burnier and Dom Bosco are located in the city of Ouro Preto, in the southwestern region of the Iron Quadrilateral region of Minas Gerais, in Brazil, around 80 km from Belo Horizonte and 5 km from Vila do Pires, on Highway BR-040. The Dom Bosco Mine is located approximately 11 km from the Miguel Burnier Mine. Vila do Pires is situated on both sides of Highway BR-040, in the northern region of the city of Congonhas. Access to the mines is via a five-kilometer road starting in the Vila do Pires next BR-040 Highway.

Várzea do Lopes Complex

Várzea do Lopes is located in the city of Itabirito, in the Iron Quadrilateral region of Minas Gerais, in Brazil, approximately 46 km from downtown Belo Horizonte. Access to the mine is from Belo Horizonte via Highway BR-040, heading towards Rio de Janeiro. Várzea do Lopes is located approximately 20 km from Miguel Burnier, in a straight line.

Gongo Soco

The mining rights, as well as the mine, were leased by the company SPE MSA Trindade Mineração Ltda. In 2024, MSA Trindade obtained the environmental license to operate the Gongo Soco mine. With this, it is expected that the production will start during the first half of 2025.

The image below represents what the Company believes to be the location of the current and eventual iron ore production units and their main access routes:

The certification is a significant milestone in Gerdau’s R$ 3.2 billion investments in the sustainable mining platform, aimed at providing high-quality and competitively priced ore for the Ouro Branco Unit, while also playing an important role in its decarbonization process. The investment will be spread between the years 2023 and 2026, with the amount allocated to 2024 already included in the investment Plan announced on February 20, 2024.

According to the conclusions of the report, the Company now holds certified reserves of 476 million metric tonnes (Dry metric tonnes) of iron ore.

The Report was prepared in accordance with subchapter 1300 of Regulation S-K issued by the U.S. Securities and Exchange Commission – SEC, adhering to the technical report standard established by said regulation.

Considering the expected annual production level of 5.5 million metric tonnes (Wet metric ton, assuming a humidity of 10%) of iron ore, we believe that the certified reserves should provide a 40-years lifespan for the investment, reinforcing Gerdau’s commitment to the socioeconomic development of the state of Minas Gerais today and in the future.

Investment Programs

On February 20, 2024, Gerdau approved its investment plan in the amount of R$ 6.0 billion for 2024. This investment plan was divided into two fronts: (i) Maintenance and (ii) Competitiveness, and it was concluded on December 31, 2024.

On February 19, 2025, Gerdau approved its investment plan in the amount of R$ 6.0 billion for 2025. This investment plan is divided into two fronts: (i) Maintenance and (ii) Competitiveness.

Maintenance projects are associated with the concept of reinvestment of depreciation over the years to ensure the good functioning of plants, while Competitiveness projects are related to the growth, technological updating and modernization of the business segments, with a focus on improving Environmental, Social and Governance (ESG) practices and sustainable development.

Of the total planned for 2025, approximately R$ 1.6 billion are investments that present environmental returns (expansion of forest assets, updating and improvement of environmental controls, reduction of greenhouse gas emissions and technological improvements) and projects aimed at the safety of Gerdau’s employees.

The Company’s expenditures in its investment plan will be directly related to market conditions and the economic scenario of the countries and the sectors in which it operates.

Environmental Issues

Gerdau is currently in compliance with environmental regulations. The Company also believes that there are no environmental issues that could affect the use of its fixed assets.

In 2024, Gerdau invested R$ 1.02 billion in the improvement of its eco-efficiency practices and in technologies for the protection of the air, water and soil.

Environmental Regulations

In all of the countries in which the Company operates, it is subject to federal, state and municipal environmental laws and regulations governing, but not limited to, the air emissions, wastewater discharges and solid and hazardous waste handling and disposal. Its manufacturing facilities have been operating under the applicable environmental rules. The respective permits and licenses require compliance with conditions and various performance standards, which are monitored by regulatory authorities. The Company employs a staff of experts to manage all phases of its environmental programs and uses outside experts where needed. The Company works to ensure that its operations maintain compliance in all material respects with the applicable environmental laws, regulations, permits and licenses currently in effect. When Gerdau acquires new plants, it conducts an assessment of potential environmental issues and prepares a work plan in compliance with the local authorities.

In most countries, both federal and state governments have the power to enact environmental protection laws and issue regulations under such laws. In addition to those rules, the Company is also subject to municipal environmental laws and regulations. Under such laws, individuals or legal entities whose conduct or activities cause harm to the environment are usually subject to criminal, civil and administrative sanctions, as well as any costs to repair the actual damages resulting from such harm.

The steel industry uses and generates substances that can cause environmental damage. The Company’s Management conducts surveys periodically to identify areas potentially impacted and recorded as its best estimate of the costs for inspecting, treating and cleaning potentially impacted areas the amounts of R$ 659,082 on December 31, 2024 (R$ 245,429 recognized as current liabilities and R$ 413,653 as non-current liabilities), R$ 517,669 on December 31, 2023 (R$ 139,395 recognized as current liabilities and R$ 378,274 as non-current liabilities) and R$ 484,652 on December 31, 2022 (R$ 262,018 recognized as current liabilities and R$ 222,634 as non-current liabilities). The Company adopted assumptions and estimates to determine the amounts involved that could vary in the future due to the conclusion of the inspection and the assessment of the actual environmental impact at the time of the ultimate settlement. In the Gerdau Corporate Environmental Guideline, there are environmental management practices the adoption of which is aimed at optimizing natural resources and minimizing environmental impacts. Among these practices, there is the management of contaminated areas, which aims to ensure controls and preventive or corrective measures to avoid soil and water body contamination. The management process includes communication, assessment, identification, and remediation. Provisioning costs must cover remediation and monitoring activities, being sufficient to meet the Company’s plans. Units or operations in the process of closing activities at Gerdau must also undergo evaluation. Closure plans are updated periodically, and information is monitored according to the governance established in the Policy, with evaluation by technical and financial areas. See Note 22 – Environmental Liabilities.

Brazilian Environmental and Regulatory Legislation

The Company’s activities are subject to wide-sweeping Brazilian environmental legislation at the federal, state and municipal levels that encompass, among other aspects, the dumping of effluents, atmospheric emissions and the handling and final disposal of dangerous waste, as well as the obligation to obtain operating licenses for the installation and operation of potentially polluting activities.

Brazilian environmental legislation provides for the imposition of criminal, civil and administrative liabilities on individuals and legal entities that commit environmental crimes or infractions, as well as for the obligation to repair the environmental damage caused. Although the Company has never suffered any environmental penalties that could have a significant impact on its business, potential environmental crimes or infractions could subject the Company to penalties that include:

The application of environmental liability in the criminal sphere depends on evidence of intent (intention) or fault (negligence and/or recklessness) and, is considered subjective. Therefore, individuals only would be prosecuted or convicted to the extent of their action, intention or fault. In the case of the administrative sphere, recent judicial precedents provide for subjective environmental liability as well, although most environmental agencies apply administrative environmental liability regardless of proof of intent or fault.

In the civil sphere, environmental damage results in joint and several liability as well as strict liability. This means that the obligation to repair the environmental damage may affect all those directly or indirectly involved, regardless of intent or fault. In this case, acknowledging the causal link between the action and the damage is enough to imputation of civil responsibility. As a result, hiring of outsourced companies to intervene in its operations to perform services such as final disposal of solid waste does not exempt the Company from liability for any environmental damage that may occur.

Environmental legislation also provides for piercing the corporate veil, affecting shareholder assets, whenever the lack of solvency of an entity represents an impediment to recovery of environmental damages.

North American Environmental Legislation

The Company is required to comply with a complex and evolving body of Environmental, Health and Safety Laws (EHS Laws) concerning, among other things, air emissions, discharges to soil, surface water and groundwater, noise control, the generation, handling, storage, transportation and disposal of toxic and hazardous substances and waste, the clean-up of contamination, indoor air quality and worker health and safety. These EHS Laws vary by location and can fall within federal, provincial, state or municipal jurisdictions.

Most EHS Laws are of general application but result in significant obligations in practice for the steel sector. For example, the Company is required to comply with a variety of EHS Laws that restrict emissions of air pollutants, such as lead, particulate matter and mercury. Because the Company’s manufacturing facilities emit significant quantities of air emissions, compliance with these laws does require the Company to make investments in pollution control equipment and to report to the significant government authority if any air emissions limits are exceeded. The government authorities typically monitor compliance with these limits and use a variety of tools to enforce them, including administrative orders to control, prevent or stop a certain activity; administrative penalties for violating certain EHS Laws; and regulatory prosecutions, which can result in significant fines and (in rare cases) imprisonment. The Company is also required to comply with a similar regime with respect to its wastewater. EHS Laws restrict the type and number of pollutants that Company facilities can discharge into receiving bodies of waters, such as rivers, lakes and oceans, and into municipal sanitary and storm sewers. Government authorities can enforce these restrictions using the same variety of tools noted above.

The Company has installed pollution control equipment at its manufacturing facilities to address these emissions and discharge limits and has an environmental management system in place designed to reduce the risk of non-compliance.

Environmental Permits

According to Brazilian environmental legislation, the proper functioning of activities considered effectively or potentially polluting or that in some way could cause environmental damage requires environmental licenses. This procedure is necessary for both the activity’s initial installation and operating phases as well as for its expansion phases, and these licenses must be renewed periodically.

The Brazilian Institute for the Environment and Renewable Resources (IBAMA) has jurisdiction to issue licenses for projects with national or regional environmental impacts. In all other cases, the state environmental agencies have jurisdiction, and, in the case of local impact, the municipal agencies have jurisdiction.

Environmental licensing of activities with significant environmental impacts is subject to a Prior Environmental Impact Study and respective Environmental Impact Report (EIA/RIMA), as well as the implementation of measures to mitigate and compensate for the environmental impact of the project.

In most cases that involve significant environmental impact, the licensing process includes the issuance of three licenses: Pre-License (LP), Installation License (LI) and Operational License (LO). These licenses are issued in accordance with each phase of project implementation, and maintaining their validity requires compliance with the requirements established by the environmental licensing agency. The failure to obtain an environmental license, regardless of whether or not the activity is actually harming the environment, is considered an environmental crime and an administrative infraction, and may subject the wrongdoer to administrative fines, at the federal level (subject to being doubled or tripled in the case of repeat violations), an Environmental legislation also provides for piercing the corporate veil, affecting shareholder assets, whenever the lack of solvency of an entity represents an impediment to recovery of environmental damages and the suspension of operations. The Operational License (LO) must be renewed periodically.

The Company’s operations currently comply with all legal requirements related to environmental licenses. However, any delay or refusal on the part of environmental licensing agencies to issue or renew these licenses, as well as any difficulty on its part to meet the requirements established by these environmental agencies during the course of the environmental licensing process, could jeopardize or even impair the installation, operation and expansion of new and current projects.

Decarbonization Strategy

In 2019, the Company engaged in a review of materiality through which it determined the most significant material issues - all of them linked to the SDGs (Sustainability Development Goals) to guide our strategy and management initiatives and guide the way in which we communicate with our stakeholders and society in general. One of the issues identified as most significant was “Mitigation and adaptation to climate change”. GHG emissions are a key issue in the debate on climate change and a sensitive point for the steel industry, given the level of emissions from its production facilities in relation to the industrial sector. In 2022, Gerdau had its material issues revised, and this topic is still considered material for the Company.

The Company defines its risk management guidelines and procedures based on business analysis, including issues related to climate change and the ESG Scorecard indicators. Industry trends that can impact business in the short-, medium- and long-term, as well as environmental, social and governance factors, image and legislation are assessed.

The identified risk factors concerning climate change are related to unexpected interruptions in the production capacity of the Company’s main units and facilities that would increase production costs, reducing sales and earnings in the affected period. The Company could be affected by risks, such as:

Such risks would increase production costs, reducing sales and earnings in the affected period as a result of unexpected events. Consequently, the Company is susceptible to periods of stoppage or reduction of production in the steel mills, which may also occur in the future. Interruptions in production capacity may adversely affect Gerdau’s productivity and operating results. In addition, any interruption in production capacity may require additional troubleshooting expenses which would impact the Company’s cash flow. As a result, long business interruptions can also damage the Company’s reputation and lead to the loss of customers, which can have a negative impact on business, results of operations and cash flows. The Company could also be affected by transition risks related to policy, legal, technology, market and reputation risks.

In 2021, the Company prepared the GHG inventory of all of its global industrial units (base year, 2020). Since then, the data has been audited by a third party, following ISO 14064 and ISAE 3410 (GHG emissions inventory), and reporting its GHG emissions management on CDP Climate Change since 2021 (2020 base year), CDP is a reference entity in the evaluation of sustainable actions. In 2024 (2023 base year), Gerdau achieved the A- score, reaching the climate leadership level, according to CDP, reinforcing the Company’s commitment to the sustainability of its operations. Also, in 2024 (base year 2023), Gerdau reported CDP Water Security and received a B score, reinforcing the Company’s commitment to transparency.

With the support of specialized consultants, we study the scenarios of productive and technological changes with the lowest effective carbon cost to define goals and guide our strategy. Consistent with this, the Company adopted the MACC “Marginal Cost Curve Abatement” and structured and published on February 1, 2022 the goal of reducing GHG emissions related to Scopes 1 and 2 by 2031, from 0.93 t of CO₂e per tonne of steel produced to 0.82 t of CO₂e per tonne of steel produced, a level that will leave us with a volume of emissions less than half the world average for the steel sector, which today is 1.92 t of CO₂ according to the World Steel Association (2023). Failure to achieve the target is a risk associated with the organization’s reputation, and it is mitigated through emissions projections monitoring in accordance with operation and investment plans, incorporating additional actions, if necessary. This target is factored in our long-term Incentive Plan (LTIP).

Gerdau’s production model and efforts for over a century have placed the Company at the vanguard on the issue of greenhouse gas emissions. Currently, we have one of the lowest emission averages in the steel industry, which is equivalent to approximately half of the global industry average.