SEC Company Response from NATIONAL STEEL (SID) — Jan 10, 2014
NATIONAL STEEL CO
Date: Jan. 10, 2014 · CIK: 0001049659 · Accession: 0001292814-14-000062
AI Filing Summary & Sentiment
Referenced dates: November 25, 2013
Letter
January 10, 2014 Via EDGAR Transmission Ms. Melissa Rocha Senior Assistant Chief Accountant Division of Corporation Finance United States Securities and Exchange Commission 100 F Street, N.E. Washington, D.C. 20549-4631
Re: National Steel Company Form 20-F for the fiscal year ended December 31, 2012 Filed April 30, 2013 File No. 1-14732 Response to Staff Comment Letter dated November 25, 2013
Dear Ms. Rocha:
Companhia Siderúgica Nacional (the “Company”) received a comment letter from the staff of the United States Securities and Exchange Commission (the “Staff”) on November 25, 2013, concerning the Company’s annual report on Form 20-F filed on April 30, 2013 (the “2012 Form 20-F”). This letter provides the Company’s responses to the Staff’s comments. For your convenience, we have reproduced below in italics the Staff’s comments numbered 1 through 9 and have provided responses immediately below such comments. All page numbers referred to herein are to the 2012 Form 20-F.
SEC Comment No. 1.
Information on the Company, page 15
Business Overview, page 17
1) In future filings, please disclose and update your resources and/or reserves tabulations annually for your iron ore (Casa de Pedra, Engenho, and Fernandinho), limestone (Bocaina), and tin (Santa Barbara) properties reflecting the depletion of your resources/reserves due to your annual production, coinciding with your fiscal year end.
Response to Comment No. 1.
We note the Staff’s comment and will include the information requested in future filings to the extent available.
We note that we currently only have resources/reserves data for our Casa de Pedra property, as shown in the table on page 37 of our 2012 Form 20-F. We are in the process of performing reserve studies for our Namisa properties (Engenho and Fernandinho) and expect it will be completed by late 2014 (also as discussed in page 37 of our 2012 Form 20-F).
Companhia Siderúrgica Nacional
Escritório Central
Av. Brigadeiro Faria Lima, 3400 – 20º andar - Edificio Financial Faria Lima Center Cep: 04538-132 - São Paulo - SP
As to our Bocaina and Santa Barbara properties, we do not have resources/reserves studies and do not currently plan to begin campaigns to complete a study in connection with these properties in light of their low materiality to our business, the fact that these properties have the sole purpose of supplying our internal needs and the abundant availability of limestone, dolomite and tin in the Brazilian market, as discussed further in our response to the Staff’s comment No. 2.
As an example, for our 2012 Form 20-F, this disclosure would have been:
Summary of Casa de Pedra Mine Iron Ore Reserves(1)
Proven - 2012
Probable - 2012
Total - 2012
Total - 2011
Ore Tonnage(2)
Ore Tonnage
Ore Tonnage
Grade(3)
Ore Tonnage
Grade
Reserves
1,471
47.49%
1,499
47.49%
(1) Reserves means the part of a mineral deposit which could be economically and legally extracted or produced at the time of the reserve determination. The reserves for the Casa de Pedra mine were audited in 2006 and we have reduced the amount of proven reserves by our annual production since then.
(2) Represents ROM material.
(3) Grade is the proportion of metal or mineral present in ore or any other host material.
SEC Comment No. 2.
2) Please add disclosure for your Bocaina and Santa Barbara properties in future filings and describe the following:
· A description of your ownership or interest in the properties and all other interests in your properties, including the terms of all underlying agreements and royalties.
· Please include certain identifying information, such as the property names, claim numbers, grant numbers, mining concession name or number, and dates of recording and expiration that is sufficient to enable the claims to be distinguished from other concessions that may exist in the area of your properties.
· The conditions that must be met to retain your concessions or leases, including quantification and timing of all necessary payments, annual maintenance fees, and disclose who is responsible for paying these fees.
· The area of your concessions, either in hectares or in acres.
Please ensure that you fully discuss the material terms of the land or mineral rights securing agreements, as required under paragraph (b)(2) of Industry Guide 7.
Companhia Siderúrgica Nacional
Escritório Central
Av. Brigadeiro Faria Lima, 3400 – 20º andar - Edificio Financial Faria Lima Center Cep: 04538-132 - São Paulo - SP
Response to Comment No. 2.
We note the Staff’s comment but kindly request to continue to not include this information regarding our limestone (Bocaina), dolomite (also Bocaina) and tin (Santa Barbara) properties as neither property is material to our business.
Limestone, dolomite and tin are abundant and easily available in the Brazilian market and these properties have the sole purpose of supplying our internal needs. In addition, we also purchase tin in the market as our internal production is not sufficient to supply all our needs.
Limestone is used in our cement segment to produce clinker. In 2012, the cement segment represented 2.3% (R$388 million) of our total net operating revenues and 2.4% (R$286 million) of our total cost of goods sold. Also in 2012, limestone represented approximately 2.9% (R$8 million) of our cost of goods sold in that segment.
In addition, we also use trace amounts of limestone and dolomite in our steel segment to produce certain products and, in the case of dolomite, to coat our blast furnaces. Although steel is our largest segment, in 2012, limestone represented approximately 0.7% (R$59 million) and dolomite represented approximately 0.3% (R$27 million) of the cost of goods sold in the steel segment.
Tin is used in our steel segment only to coat tin plates. In 2012, we sold 574 thousand tons of tin plates, which represented 10.1% (R$1,712 million) of our total net operating revenues and 9.4% (R$1,140 million) of our total cost of goods sold. Also in 2012, tin represented approximately 6.1% (R$70 million) of the cost of goods sold for tin plates, of which only approximately half came from our properties.
SEC Comment No. 3.
3) In future filings, please disclose the information required under paragraph (b) of Industry Guide 7 for your Bocaina and Santa Barbara properties.
· The location and means of access to your property, including the modes of transportation utilized to and from the property.
· A brief description of the rock formations and mineralization of existing or potential economic significance on the property.
· A description of any work completed on the property and its present condition.
· The details as to modernization and physical condition of the plant and equipment, including subsurface improvements and equipment.
· A description of equipment, infrastructure, and other facilities.
· The source of power and water that can be utilized at the property.
· If applicable, provide a clear statement that the property is without known reserves and the proposed program is exploratory in nature.
You may refer to Industry Guide 7, paragraphs (b) (1) through (5), for specific guidance pertaining to the foregoing, available on our website at the following address: www.sec.gov/about/forms/industryguides.pdf
Companhia Siderúrgica Nacional
Escritório Central
Av. Brigadeiro Faria Lima, 3400 – 20º andar - Edificio Financial Faria Lima Center Cep: 04538-132 - São Paulo - SP
Response to Comment No. 3.
We note the Staff’s comment but kindly request to continue to not include this information regarding our limestone (Bocaina), dolomite (also Bocaina) and tin (Santa Barbara) properties as neither property is material to our business, as discussed in our response to the Staff’s comment No. 2.
SEC Comment No. 4.
4) Please add disclosure for your Bocaina and Santa Barbara properties in future filings, describing your annual production as required by instruction 1(a) to Item 4.D of Form 20-F. This would include resource/reserve materials mined and salable products.
Response to Comment No. 4.
We note the Staff’s comment but kindly request to continue to not include this information regarding our limestone (Bocaina), dolomite (also Bocaina) and tin (Santa Barbara) properties as neither property is material to our business, as discussed in our response to the Staff’s comment No. 2.
SEC Comment No. 5.
5) Please insert a small-scale map showing the location and access to each material property, as required by Instruction 1(a) to Item 4.D of Form 20-F in your future filings. Please note the EDGAR program now accepts Adobe PDF files and digital maps, so please include these maps in any amendments that are uploaded to EDGAR. It is relatively easy to include automatic links at the appropriate locations within the document to GIF or JPEG files, which will allow figures and diagrams to appear in the right location when the document is viewed on the Internet. For more information, please consult the EDGAR manual, and if additional assistance is required, please call Filer Support at (202) 551-3600 for Post-Acceptance Filing Issues or (202) 551-8900 for Pre-Acceptance Filing Issues. We believe the guidance in Instruction 1(a) to Item 4.D of Form 20-F would generally require maps and drawings to comply with the following features:
· A legend or explanation showing, by means of pattern or symbol, every pattern or symbol used on the map or drawing.
· A graphical bar scale should be included. Additional representations of scale such as "one inch equals one mile" may be utilized provided the original scale of the map has not been altered.
· A north arrow.
· An index map showing where the property is situated in relationship to the state or province, etc., in which it was located.
· A title of the map or drawing, and the date on which it was drawn.
· In the event interpretive data is submitted in conjunction with any map, the identity of the geologist or engineer that prepared such data.
· Any drawing should be simple enough or of sufficiently large scale to clearly show all features on the drawing.
Companhia Siderúrgica Nacional
Escritório Central
Av. Brigadeiro Faria Lima, 3400 – 20º andar - Edificio Financial Faria Lima Center Cep: 04538-132 - São Paulo - SP
Response to Comment No. 5.
We note the Staff’s comment and will include the information requested regarding our iron ore (Casa de Pedra, Engenho, and Fernandinho) properties in future filings. We kindly request to continue to not include this information regarding our limestone (Bocaina), dolomite (also Bocaina) and tin (Santa Barbara) properties as neither property is material to our business, as discussed in our response to the Staff’s comment No. 2.
SEC Comment No. 6.
Operating and Financial Review and Prospects, page 63
Liquidity and Capital Resources, page 87
Sources of Funds and Working Capital, page 87
Year 2012 Compared to Year 2011, page 87
6) We note your disclosure stating that the decrease in your cash provided by operations from 2011 to 2012 was mainly due to a decrease of R$1,215 million in net income adjusted for items that do not impact cash and a decrease of R$501 million in working capital. Given the significant impact items like deferred income taxes, impairments on available for sales securities and inflation adjustments had on operating cash flows, please expand your disclosure to discuss and quantify the underlying reasons for changes in line items presented on your statement of cash flows. Refer to FRC Section 501.13.b and 13.b.1. Submit any proposed disclosure revisions with your response.
Companhia Siderúrgica Nacional
Escritório Central
Av. Brigadeiro Faria Lima, 3400 – 20º andar - Edificio Financial Faria Lima Center Cep: 04538-132 - São Paulo - SP
Response to Comment No. 6.
We note the Staff’s comment and would like to clarify that in 2012 our operating results were impacted by significant non-cash items as follows:
- In 2012, we recognized the impairment of our investment in Usiminas’ shares and consequently reclassified the accumulated losses recorded in shareholders’ equity in the amount of R$2,023 million to other operating expenses (income statement) partially offset by R$688 million in deferred taxes. This reclassification is also the reason for the significant impact on the items “Impairment of available-for-sale investments” and “deferred income tax and social contribution.” For a more detailed description of our policy regarding impairment of financial assets, see Note 13.II. to the consolidated financial statements included in “Item 18. Financial Statements.”
- In 2012, inflation adjustments and exchange differences effects totaled R$1,247 million mainly due to the depreciation of the real against the U.S. dollar and the increase of our foreign exchange exposure.
However, based on the FRC Section 501.13.b and 13.b.1, we believe our explanations should focus on operations that have cash impacts and we therefore propose to revise our disclosure in future filings as follows:
“Operating Activities
Cash provided by operations was R$3,488 million and R$4,202 million, in 2012 and 2011, respectively. The R$714 million decrease was mainly due to a decrease of R$1,215 million in net income adjusted for items that do not impact cash and a decrease of R$501 million in our working capital the decrease of 28.2% in gross profit driven by significant increases in production costs, partially offset by a better working capital management, as explained below:
- Increase of trade receivables driven by the higher steel sales volume to domestic and foreign markets in 2012.
- Reduction of inventories mainly due to a better inventory management. In 2012 the average inventory turnover period fell by 27 days (from 103 days on December 31, 2011 to 76 days on December 31, 2012).”
Companhia Siderúrgica Nacional
Escritório Central
Av. Brigadeiro Faria Lima, 3400 – 20º andar - Edificio Financial Faria Lima Center Cep: 04538-132 - São Paulo - SP
SEC Comment No. 7.
Directors, Senior Management, and Employees, page 97
7) Please expand your disclosures under this heading to include the information required by Item 6 of Form 20-F for your Chief Financial Officer, Mr. Rogerio Leme Borges dos Santos, or tell us why you believe this information has been appropriately omitted. Submit any proposed disclosure revisions with your response.
Response to Comment No. 7.
We note the Staff’s comment and would like to clarify that we include under members of our executive board only statutory executive officers who are appointed pursuant to Brazilian law and our by-laws. Mr. Rogerio Leme Borges dos Santos is not one of these statutory executives officers and we do not have a chief financial officer (CFO) as such term is generally used in the market. Nonetheless, for 2012 we determined that, for purposes of the 20-F and related certifications, Mr. Rogério Leme Borges dos Santos was our principal financial officer.
We will include the information requested in future filings. We propose to revise our disclosure as follows:
“Other Key Executives
In addition to our statutory board of executive officers, who are appointed pursuant to Brazilian corporate law and our by-laws, our controller, Mr. Rogério Leme Borges dos Santos, is also one of our key executives.
Rogério Leme Borges dos Santos. Mr. Santos has been our controller since April, 2009 and is currently our principal financial officer. Previously to
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CORRESP 1 filename1.htm sid20140110_corresp.htm - Generated by SEC Publisher for SEC Filing January 10, 2014 Via EDGAR Transmission Ms. Melissa Rocha Senior Assistant Chief Accountant Division of Corporation Finance United States Securities and Exchange Commission 100 F Street, N.E. Washington, D.C. 20549-4631 Re: National Steel Company Form 20-F for the fiscal year ended December 31, 2012 Filed April 30, 2013 File No. 1-14732 Response to Staff Comment Letter dated November 25, 2013 Dear Ms. Rocha: Companhia Siderúgica Nacional (the “Company”) received a comment letter from the staff of the United States Securities and Exchange Commission (the “Staff”) on November 25, 2013, concerning the Company’s annual report on Form 20-F filed on April 30, 2013 (the “2012 Form 20-F”). This letter provides the Company’s responses to the Staff’s comments. For your convenience, we have reproduced below in italics the Staff’s comments numbered 1 through 9 and have provided responses immediately below such comments. All page numbers referred to herein are to the 2012 Form 20-F. SEC Comment No. 1. Information on the Company, page 15 Business Overview, page 17 1) In future filings, please disclose and update your resources and/or reserves tabulations annually for your iron ore (Casa de Pedra, Engenho, and Fernandinho), limestone (Bocaina), and tin (Santa Barbara) properties reflecting the depletion of your resources/reserves due to your annual production, coinciding with your fiscal year end. Response to Comment No. 1. We note the Staff’s comment and will include the information requested in future filings to the extent available. We note that we currently only have resources/reserves data for our Casa de Pedra property, as shown in the table on page 37 of our 2012 Form 20-F. We are in the process of performing reserve studies for our Namisa properties (Engenho and Fernandinho) and expect it will be completed by late 2014 (also as discussed in page 37 of our 2012 Form 20-F). Companhia Siderúrgica Nacional Escritório Central Av. Brigadeiro Faria Lima, 3400 – 20º andar - Edificio Financial Faria Lima Center Cep: 04538-132 - São Paulo - SP 1 As to our Bocaina and Santa Barbara properties, we do not have resources/reserves studies and do not currently plan to begin campaigns to complete a study in connection with these properties in light of their low materiality to our business, the fact that these properties have the sole purpose of supplying our internal needs and the abundant availability of limestone, dolomite and tin in the Brazilian market, as discussed further in our response to the Staff’s comment No. 2. As an example, for our 2012 Form 20-F, this disclosure would have been: Summary of Casa de Pedra Mine Iron Ore Reserves(1) Proven - 2012 Probable - 2012 Total - 2012 Total - 2011 Ore Tonnage(2) Ore Tonnage Ore Tonnage Grade(3) Ore Tonnage Grade Reserves 957 514 1,471 47.49% 1,499 47.49% (1) Reserves means the part of a mineral deposit which could be economically and legally extracted or produced at the time of the reserve determination. The reserves for the Casa de Pedra mine were audited in 2006 and we have reduced the amount of proven reserves by our annual production since then. (2) Represents ROM material. (3) Grade is the proportion of metal or mineral present in ore or any other host material. SEC Comment No. 2. 2) Please add disclosure for your Bocaina and Santa Barbara properties in future filings and describe the following: · A description of your ownership or interest in the properties and all other interests in your properties, including the terms of all underlying agreements and royalties. · Please include certain identifying information, such as the property names, claim numbers, grant numbers, mining concession name or number, and dates of recording and expiration that is sufficient to enable the claims to be distinguished from other concessions that may exist in the area of your properties. · The conditions that must be met to retain your concessions or leases, including quantification and timing of all necessary payments, annual maintenance fees, and disclose who is responsible for paying these fees. · The area of your concessions, either in hectares or in acres. Please ensure that you fully discuss the material terms of the land or mineral rights securing agreements, as required under paragraph (b)(2) of Industry Guide 7. Companhia Siderúrgica Nacional Escritório Central Av. Brigadeiro Faria Lima, 3400 – 20º andar - Edificio Financial Faria Lima Center Cep: 04538-132 - São Paulo - SP 2 Response to Comment No. 2. We note the Staff’s comment but kindly request to continue to not include this information regarding our limestone (Bocaina), dolomite (also Bocaina) and tin (Santa Barbara) properties as neither property is material to our business. Limestone, dolomite and tin are abundant and easily available in the Brazilian market and these properties have the sole purpose of supplying our internal needs. In addition, we also purchase tin in the market as our internal production is not sufficient to supply all our needs. Limestone is used in our cement segment to produce clinker. In 2012, the cement segment represented 2.3% (R$388 million) of our total net operating revenues and 2.4% (R$286 million) of our total cost of goods sold. Also in 2012, limestone represented approximately 2.9% (R$8 million) of our cost of goods sold in that segment. In addition, we also use trace amounts of limestone and dolomite in our steel segment to produce certain products and, in the case of dolomite, to coat our blast furnaces. Although steel is our largest segment, in 2012, limestone represented approximately 0.7% (R$59 million) and dolomite represented approximately 0.3% (R$27 million) of the cost of goods sold in the steel segment. Tin is used in our steel segment only to coat tin plates. In 2012, we sold 574 thousand tons of tin plates, which represented 10.1% (R$1,712 million) of our total net operating revenues and 9.4% (R$1,140 million) of our total cost of goods sold. Also in 2012, tin represented approximately 6.1% (R$70 million) of the cost of goods sold for tin plates, of which only approximately half came from our properties. SEC Comment No. 3. 3) In future filings, please disclose the information required under paragraph (b) of Industry Guide 7 for your Bocaina and Santa Barbara properties. · The location and means of access to your property, including the modes of transportation utilized to and from the property. · A brief description of the rock formations and mineralization of existing or potential economic significance on the property. · A description of any work completed on the property and its present condition. · The details as to modernization and physical condition of the plant and equipment, including subsurface improvements and equipment. · A description of equipment, infrastructure, and other facilities. · The source of power and water that can be utilized at the property. · If applicable, provide a clear statement that the property is without known reserves and the proposed program is exploratory in nature. You may refer to Industry Guide 7, paragraphs (b) (1) through (5), for specific guidance pertaining to the foregoing, available on our website at the following address: www.sec.gov/about/forms/industryguides.pdf Companhia Siderúrgica Nacional Escritório Central Av. Brigadeiro Faria Lima, 3400 – 20º andar - Edificio Financial Faria Lima Center Cep: 04538-132 - São Paulo - SP 3 Response to Comment No. 3. We note the Staff’s comment but kindly request to continue to not include this information regarding our limestone (Bocaina), dolomite (also Bocaina) and tin (Santa Barbara) properties as neither property is material to our business, as discussed in our response to the Staff’s comment No. 2. SEC Comment No. 4. 4) Please add disclosure for your Bocaina and Santa Barbara properties in future filings, describing your annual production as required by instruction 1(a) to Item 4.D of Form 20-F. This would include resource/reserve materials mined and salable products. Response to Comment No. 4. We note the Staff’s comment but kindly request to continue to not include this information regarding our limestone (Bocaina), dolomite (also Bocaina) and tin (Santa Barbara) properties as neither property is material to our business, as discussed in our response to the Staff’s comment No. 2. SEC Comment No. 5. 5) Please insert a small-scale map showing the location and access to each material property, as required by Instruction 1(a) to Item 4.D of Form 20-F in your future filings. Please note the EDGAR program now accepts Adobe PDF files and digital maps, so please include these maps in any amendments that are uploaded to EDGAR. It is relatively easy to include automatic links at the appropriate locations within the document to GIF or JPEG files, which will allow figures and diagrams to appear in the right location when the document is viewed on the Internet. For more information, please consult the EDGAR manual, and if additional assistance is required, please call Filer Support at (202) 551-3600 for Post-Acceptance Filing Issues or (202) 551-8900 for Pre-Acceptance Filing Issues. We believe the guidance in Instruction 1(a) to Item 4.D of Form 20-F would generally require maps and drawings to comply with the following features: · A legend or explanation showing, by means of pattern or symbol, every pattern or symbol used on the map or drawing. · A graphical bar scale should be included. Additional representations of scale such as "one inch equals one mile" may be utilized provided the original scale of the map has not been altered. · A north arrow. · An index map showing where the property is situated in relationship to the state or province, etc., in which it was located. · A title of the map or drawing, and the date on which it was drawn. · In the event interpretive data is submitted in conjunction with any map, the identity of the geologist or engineer that prepared such data. · Any drawing should be simple enough or of sufficiently large scale to clearly show all features on the drawing. Companhia Siderúrgica Nacional Escritório Central Av. Brigadeiro Faria Lima, 3400 – 20º andar - Edificio Financial Faria Lima Center Cep: 04538-132 - São Paulo - SP 4 Response to Comment No. 5. We note the Staff’s comment and will include the information requested regarding our iron ore (Casa de Pedra, Engenho, and Fernandinho) properties in future filings. We kindly request to continue to not include this information regarding our limestone (Bocaina), dolomite (also Bocaina) and tin (Santa Barbara) properties as neither property is material to our business, as discussed in our response to the Staff’s comment No. 2. SEC Comment No. 6. Operating and Financial Review and Prospects, page 63 Liquidity and Capital Resources, page 87 Sources of Funds and Working Capital, page 87 Year 2012 Compared to Year 2011, page 87 6) We note your disclosure stating that the decrease in your cash provided by operations from 2011 to 2012 was mainly due to a decrease of R$1,215 million in net income adjusted for items that do not impact cash and a decrease of R$501 million in working capital. Given the significant impact items like deferred income taxes, impairments on available for sales securities and inflation adjustments had on operating cash flows, please expand your disclosure to discuss and quantify the underlying reasons for changes in line items presented on your statement of cash flows. Refer to FRC Section 501.13.b and 13.b.1. Submit any proposed disclosure revisions with your response. Companhia Siderúrgica Nacional Escritório Central Av. Brigadeiro Faria Lima, 3400 – 20º andar - Edificio Financial Faria Lima Center Cep: 04538-132 - São Paulo - SP 5 Response to Comment No. 6. We note the Staff’s comment and would like to clarify that in 2012 our operating results were impacted by significant non-cash items as follows: - In 2012, we recognized the impairment of our investment in Usiminas’ shares and consequently reclassified the accumulated losses recorded in shareholders’ equity in the amount of R$2,023 million to other operating expenses (income statement) partially offset by R$688 million in deferred taxes. This reclassification is also the reason for the significant impact on the items “Impairment of available-for-sale investments” and “deferred income tax and social contribution.” For a more detailed description of our policy regarding impairment of financial assets, see Note 13.II. to the consolidated financial statements included in “Item 18. Financial Statements.” - In 2012, inflation adjustments and exchange differences effects totaled R$1,247 million mainly due to the depreciation of the real against the U.S. dollar and the increase of our foreign exchange exposure. However, based on the FRC Section 501.13.b and 13.b.1, we believe our explanations should focus on operations that have cash impacts and we therefore propose to revise our disclosure in future filings as follows: “Operating Activities Cash provided by operations was R$3,488 million and R$4,202 million, in 2012 and 2011, respectively. The R$714 million decrease was mainly due to a decrease of R$1,215 million in net income adjusted for items that do not impact cash and a decrease of R$501 million in our working capital the decrease of 28.2% in gross profit driven by significant increases in production costs, partially offset by a better working capital management, as explained below: - Increase of trade receivables driven by the higher steel sales volume to domestic and foreign markets in 2012. - Reduction of inventories mainly due to a better inventory management. In 2012 the average inventory turnover period fell by 27 days (from 103 days on December 31, 2011 to 76 days on December 31, 2012).” Companhia Siderúrgica Nacional Escritório Central Av. Brigadeiro Faria Lima, 3400 – 20º andar - Edificio Financial Faria Lima Center Cep: 04538-132 - São Paulo - SP 6 SEC Comment No. 7. Directors, Senior Management, and Employees, page 97 7) Please expand your disclosures under this heading to include the information required by Item 6 of Form 20-F for your Chief Financial Officer, Mr. Rogerio Leme Borges dos Santos, or tell us why you believe this information has been appropriately omitted. Submit any proposed disclosure revisions with your response. Response to Comment No. 7. We note the Staff’s comment and would like to clarify that we include under members of our executive board only statutory executive officers who are appointed pursuant to Brazilian law and our by-laws. Mr. Rogerio Leme Borges dos Santos is not one of these statutory executives officers and we do not have a chief financial officer (CFO) as such term is generally used in the market. Nonetheless, for 2012 we determined that, for purposes of the 20-F and related certifications, Mr. Rogério Leme Borges dos Santos was our principal financial officer. We will include the information requested in future filings. We propose to revise our disclosure as follows: “Other Key Executives In addition to our statutory board of executive officers, who are appointed pursuant to Brazilian corporate law and our by-laws, our controller, Mr. Rogério Leme Borges dos Santos, is also one of our key executives. Rogério Leme Borges dos Santos. Mr. Santos has been our controller since April, 2009 and is currently our principal financial officer. Previously to