SEC Company Response from NATIONAL STEEL (SID) — May 6, 2016
NATIONAL STEEL CO
Date: May 6, 2016 · CIK: 0001049659 · Accession: 0001292814-16-004534
AI Filing Summary & Sentiment
Referenced dates: March 8, 2016
Letter
Form 6-K Filed March 29, 2016 File No. 1-14732
Re: National Steel Company Form 20-F for the fiscal year ended December 31, 2014 Filed April 30, 2015 Response Letter Dated March 8, 2016
Dear Mr. O’Brien:
Reference is made to the comment letters from the staff of the United States Securities and Exchange Commission (the “Staff”) received by Companhia Siderúrgica Nacional (the “Company” or “CSN”) on December 15, 2015, February 8, 2016 and April 15, 2016 concerning the Company’s annual report on Form 20-F for the fiscal year ended December 31, 2014 and filed on April 30, 2015 (the “2014 Form 20-F”) and the Company’s report on Form 6-K furnished to the SEC on March 29, 2016 (the “Earnings 6-K”). On January 14, 2016 and March 8, 2016 we provided letters with our responses to the Staff’s comments. This letter provides the Company’s responses to the Staff’s additional comments in your April 15, 2016 letter. For your convenience, we have reproduced below in italics the Staff’s comments and have provided responses immediately below such comments. All page numbers referred to herein are to the 2014 Form 20-F.
Companhia Siderúrgica Nacional
Escritório Central
Av. Brigadeiro Faria Lima, 3400 – 20º andar - EdificioFinancial Faria Lima Center
Cep: 04538-132 - São Paulo - SP
SEC Comment No. 1.
Note 2 – Summary of Significant Accounting Policies, page FS-8
2.n) Concessions, page FS-16
1) We have read your response to prior comment 1 from our letter to you dated February 8, 2016. With reference to the terms of your concessions agreements, please expand your disclosures to provide the basis for using lease accounting for your concessions. Please also quantify the amount of your assets which are subject to reversion to the grantor and where they are classified in your financial statements.
Response to Comment No. 1.
In deciding the best accounting treatment for our concessions, the first analysis we performed comprised the accounting treatment of the assets received from the grantor for operation by us and the amount of the lease paid for the use of such assets. Because our concessions are, in essence, lease agreements, we have analyzed the indicators provided for in IAS 17, items 10 and 11, summarized in the table below:
IFRS Item of analysis
CSN Analysis
10 (a) the lease transfers ownership of the asset to the lessee by the end of the lease term.
Our agreements do not transfer ownership of assets upon termination or expiration.
10 (b) the lessee has the option to purchase the asset at a price that is expected to be sufficiently lower than the fair value at the date the option becomes exercisable for it to be reasonably certain, at the inception of the lease, that the option will be exercised.
Our agreements do not have any option to purchase the assets.
10 (c) the lease term is for the major part of the economic life of the asset even if title is not transferred.
Our concession agreements have terms of twenty five or thirty years, renewable for an additional period of the same length. In our port concessions, the leases cover land, an asset without a defined useful life, therefore, the lease term does not coincide or cover the major part of the assets’ useful life. In our railroad concessions, the leases cover land and operating assets, such as wagons, trains, railway systems, etc. Land does not have a defined useful life and the other assets received from the grantor were substantially depreciated at the time of the grant and, therefore, the useful life was shorter than the lease term.
10 (d) at the inception of the lease the present value of the minimum lease payments amounts to at least substantially all of the fair value of the leased asset.
These assets are owned by the Brazilian federal government. Accordingly, there is no active market for these assets since Brazilian law does not permit the sale of public assets in most circumstances. Therefore, there are no similar assets available for sale in the Brazilian market and, accordingly, the fair market value of the leased assets cannot be determined, so this item is not applicable.
10 (e) the leased assets are of such a specialized nature that only the lessee can use them without major modifications.
The leased assets are usual in the provision of the services related to the different agreements. There are no specific assets that could be considered exclusive to us or for the provision of the services by us and, therefore, this item is not applicable.
11(a) if the lessee can cancel the lease, the lessor’s losses associated with the cancellation are borne by the lessee.
The unilateral termination of the different agreements is limited to certain exceptional conditions in case we have not fulfilled certain of our contractual requirements. In this case, we would be indemnified for the residual carrying amount of the assets at the termination date and, although the grantor may file a lawsuit to claim indemnity for breach of the relevant agreement, there is no contractually set indemnity we would owe.
11 (b) gains or losses from the fluctuation in the fair value of the residual accrue to the lessee (for example, in the form of a rent rebate equaling most of the sales proceeds at the end of the lease).
Our agreements do not have any provisions for this or similar adjustments.
11 (c) the lessee has the ability to continue the lease for a secondary period at a rent that is substantially lower than market rent.
Our agreements may be renewed for an additional lease period and the grant amount for this extension will be determined by the grantor at the time of the extension. Our agreements do not provide for any reduction in amounts upon extension.
Companhia Siderúrgica Nacional
Escritório Central
Av. Brigadeiro Faria Lima, 3400 – 20º andar - Edificio Financial Faria Lima Center
Cep: 04538-132 - São Paulo - SP
Based on the analysis of the indicators above, we classified our concessions as operating leases and payments provided for in our agreements are recognized as profit or loss for the year under the straight-line method.
The second analysis we performed refers to assets acquired directly by us subsequent to the agreement signing date. According to the terms established in our concession agreements, we have control over these assets and assume the risks and rewards associated with them. At the end of the concession, if there is any residual value, the grantor has to reimburse us for these amounts. As a result, assets acquired or constructed by us are recorded in property, plant or equipment or in intangible assets, when applicable, according to the parameters defined in IAS16 and IAS 38.
The residual carrying amounts subject to reversion to the grantor in our concessions at December 31, 2015 are listed below with an indication of their classification in our financial statements:
Companhia Siderúrgica Nacional
Escritório Central
Av. Brigadeiro Faria Lima, 3400 – 20º andar - Edificio Financial Faria Lima Center
Cep: 04538-132 - São Paulo - SP
Concession
Residual carrying amount
Classification in the balance sheet
TECON
R$ 244 million
Fixed assets: Property, plant and equipment
Intangible assets: software
TECAR
R$ 1,611 million
Fixed assets: Property, plant and equipment
Intangible assets: software
FTL
R$263 million
Fixed assets: Property, plant and equipment
Intangible assets: software
TLSA
R$7,001 million(1)
Investments
MRS
R$3,679 million(2)
Investments
_______________________
(1) The amount of fixed and intangible assets is recognized in TLSA’s financial statements. We recognize our interest in the net assets of TLSA under the equity method and our investment balance in TLSA as of December 31, 2015 was R$1.930 million.
(2) The amount of fixed and intangible assets is recognized in MRS’s financial statements. We recognize our interest in the net assets of MRS under de equity method and our investment balance in MRS as of December 31, 2015 was R$557 million.
We intend to expand our disclosure in future filings to provide the basis for using lease accounting for our concessions as set forth below. We note that this language will be included in our annual report on Form 20-F for the year ended December 31, 2015.
“2.n) Concessions
The Company has governmental concessions to provide the following types of services: railway and port transportation managed by Company’s subsidiaries and joint-ventures. The concessions included in the consolidated financial statements are related to the rail network in the Northeast area, managed by the subsidiary FTL, the container terminal in Itaguaí, managed by the subsidiary TECON and the port terminal TECAR for exporting iron ore and importing coal, which is managed by the subsidiary Congonhas. The joint venture concessions are related to TLSA and MRS and are not disclosed in these financial statements.
Companhia Siderúrgica Nacional
Escritório Central
Av. Brigadeiro Faria Lima, 3400 – 20º andar - Edificio Financial Faria Lima Center
Cep: 04538-132 - São Paulo - SP
The Company’s concession contracts are not within the scope of the international interpretative standard IFRIC 12, considering that the grantor (refers to the government) has effectively no control over what, to whom and at what price the services will be provided by the dealer (refers to the private part) to the customers.
In essence, the payments made under our concession contracts has operating lease characteristics. Therefore, the accounting should follow the accounting rules applicable to leases – IAS 17. Our concession agreements provide for the use of a specific asset for an agreed period of time, but without any transfer of ownership to the Company or option to buy these assets after termination of these contracts. These payments are recognized in the income statement on a straight line basis over the period of the contracts.
Assets acquired or constructed by us are recorded in property, plant or equipment or in intangible assets, when applicable, according to the parameters defined in IAS16 and IAS 38. Under our agreements, we have control over these assets and assume the risks and rewards associated with them. At the end of the concession, if there is any residual value, the grantor has to reimburse us for these amounts.”
SEC Comment No. 2.
Form 6-K Filed March 29, 2016
· Recognition and measurement, page FS-19
2) We note your disclosure on page 15 of your 4Q15 and 2015 Earnings Release that in November 2015, the strategic alliance was concluded between you and the Asian Consortium through the combination, in a new company, Congonhas Minérios S.A., of the mining and associated logistics businesses of yours and Nacional Minérios S.A. (Namisa). Further, we note you accounted for the transaction in accordance with IFRS 3, which resulted in a gain in the income statement of R$2.9 billion, net of deferred taxes, and an increase in total equity of R$4.8 billion. We have the following comments in this regard.
· We note that you, prior to the November 2015 transaction, accounted for Namisa under the equity method of accounting. With reference to IFRS 10, including
Appendix B, please provide sufficiently detailed additional information to support this accounting. Ensure your analysis addresses the disclosure on page 67 of your 2013 Form 20-F which indicates “In addition, certain other agreements, including the share purchase agreement between us and the Asian consortium and the long-term operational agreements between Namisa and us, provide for certain obligations that, in case breached or not cured within the relevant cure period, may give rise, in certain situations, to the right of the non-breaching party to exercise a call or a put option, as the case may be, with respect to the Asian consortium’s ownership interest in Namisa.” Specifically address whether CSN’s call option on the Asia consortium’s ownership interest in Namisa represents a substantive right of CSN to remove the Asian consortium; and
Companhia Siderúrgica Nacional
Escritório Central
Av. Brigadeiro Faria Lima, 3400 – 20º andar - Edificio Financial Faria Lima Center
Cep: 04538-132 - São Paulo - SP
· Notwithstanding the above bullet, with reference to each step of the transaction, please explain the related accounting treatment, as well as the authoritative literature you relied upon
Response to Comment No. 2.
Accounting classification of Namisa under IFRS 10 and 11
Until November 30, 2015, we classified our interest in Namisa in accordance with IFRS 10, assessing the classification of the rights and obligations provided for in the Shareholders’ Agreement, entered into on December 30, 2008, as amended (“Shareholders’ Agreement”), between CSN and the Asian Consortium, in order to determine whether we unilaterally held the control of Namisa considering the following requirements:
· power over relevant decisions regarding Namisa;
· exposure and rights to Namisa’s results; and
· ability to use our power to affect Namisa’s results.
Under IFRS 10, all of the requirements above should have been cumulatively met so that Namisa could be classified as our subsidiary.
Namisa was established as a corporation and its equity instruments assured voting rights to its shareholders in the same proportion of the interest held in its share capital. In addition, the Shareholders’ Agreement determined the principles of the relationship between the shareholders, as well as their rights and obligations. Under the Shareholders’ Agreement, Namisa was managed by a board of directors comprised of five members appointed by us and four members appointed by the Asian Consortium.
Companhia Siderúrgica Nacional
Escritório Central
Av. Brigadeiro Faria Lima, 3400 – 20º andar - Edificio Financial Faria Lima Center
Cep: 04538-132 - São Paulo - SP
A number of significant decisions regarding Namisa’s business, which are considered relevant within the scope of IFRS 10 for power assessment, required, under the Shareholders’ Agreement, the approval of both shareholders (CSN and the Asian Consortium) or the affirmative vote of at least one member appointed by the Asian Consortium, as shown in the table below:
MAJOR DECISIONS
Board of Directors: decisions that depended upon the affirmative vote of least one member of the Asian Consortium
Shareholders Meeting: decisions that depended upon the vote of at least sixty one percent of the shareholders (greater than our total interest of 60%).
Annual compensation of officers
Approval of the annual financial statements
Appointment of officers
Approval of Long-Term, Mid-Term business plan and Annual Operating Budget or any amendment
Any amendments to the Operating Agreements, as defined in the Shareholders’ Agreement
Entry into, modification, renewal or termination of any transaction in excess of US$25 million, except if approved in Annual Operating Budget
Amendment to, renewal or settlement of intercompany financial agreements
Incurrence of indebtedness in excess of US$150 million, except if approved in Annual Operating Budget
Any decisions on mining rights, pellet plants and material assets.
Modification, renewal or termination of any of the Financing Agreements, as defined in the Shareholders’ Agreement
Approval of guarantees, security and indemnities
Inves
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CORRESP 1 filename1.htm sid20160505_corresp.htm - Generated by SEC Publisher for SEC Filing May 6, 2016 Via Email Mr. Terence O’Brien Branch Chief Office of Manufacturing and Construction 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, 2014 Filed April 30, 2015 Response Letter Dated March 8, 2016 Form 6-K Filed March 29, 2016 File No. 1-14732 Dear Mr. O’Brien: Reference is made to the comment letters from the staff of the United States Securities and Exchange Commission (the “Staff”) received by Companhia Siderúrgica Nacional (the “Company” or “CSN”) on December 15, 2015, February 8, 2016 and April 15, 2016 concerning the Company’s annual report on Form 20-F for the fiscal year ended December 31, 2014 and filed on April 30, 2015 (the “2014 Form 20-F”) and the Company’s report on Form 6-K furnished to the SEC on March 29, 2016 (the “Earnings 6-K”). On January 14, 2016 and March 8, 2016 we provided letters with our responses to the Staff’s comments. This letter provides the Company’s responses to the Staff’s additional comments in your April 15, 2016 letter. For your convenience, we have reproduced below in italics the Staff’s comments and have provided responses immediately below such comments. All page numbers referred to herein are to the 2014 Form 20-F. Companhia Siderúrgica Nacional 1 Escritório Central Av. Brigadeiro Faria Lima, 3400 – 20º andar - EdificioFinancial Faria Lima Center Cep: 04538-132 - São Paulo - SP SEC Comment No. 1. Note 2 – Summary of Significant Accounting Policies, page FS-8 2.n) Concessions, page FS-16 1) We have read your response to prior comment 1 from our letter to you dated February 8, 2016. With reference to the terms of your concessions agreements, please expand your disclosures to provide the basis for using lease accounting for your concessions. Please also quantify the amount of your assets which are subject to reversion to the grantor and where they are classified in your financial statements. Response to Comment No. 1. In deciding the best accounting treatment for our concessions, the first analysis we performed comprised the accounting treatment of the assets received from the grantor for operation by us and the amount of the lease paid for the use of such assets. Because our concessions are, in essence, lease agreements, we have analyzed the indicators provided for in IAS 17, items 10 and 11, summarized in the table below: IFRS Item of analysis CSN Analysis 10 (a) the lease transfers ownership of the asset to the lessee by the end of the lease term. Our agreements do not transfer ownership of assets upon termination or expiration. 10 (b) the lessee has the option to purchase the asset at a price that is expected to be sufficiently lower than the fair value at the date the option becomes exercisable for it to be reasonably certain, at the inception of the lease, that the option will be exercised. Our agreements do not have any option to purchase the assets. 10 (c) the lease term is for the major part of the economic life of the asset even if title is not transferred. Our concession agreements have terms of twenty five or thirty years, renewable for an additional period of the same length. In our port concessions, the leases cover land, an asset without a defined useful life, therefore, the lease term does not coincide or cover the major part of the assets’ useful life. In our railroad concessions, the leases cover land and operating assets, such as wagons, trains, railway systems, etc. Land does not have a defined useful life and the other assets received from the grantor were substantially depreciated at the time of the grant and, therefore, the useful life was shorter than the lease term. 10 (d) at the inception of the lease the present value of the minimum lease payments amounts to at least substantially all of the fair value of the leased asset. These assets are owned by the Brazilian federal government. Accordingly, there is no active market for these assets since Brazilian law does not permit the sale of public assets in most circumstances. Therefore, there are no similar assets available for sale in the Brazilian market and, accordingly, the fair market value of the leased assets cannot be determined, so this item is not applicable. 10 (e) the leased assets are of such a specialized nature that only the lessee can use them without major modifications. The leased assets are usual in the provision of the services related to the different agreements. There are no specific assets that could be considered exclusive to us or for the provision of the services by us and, therefore, this item is not applicable. 11(a) if the lessee can cancel the lease, the lessor’s losses associated with the cancellation are borne by the lessee. The unilateral termination of the different agreements is limited to certain exceptional conditions in case we have not fulfilled certain of our contractual requirements. In this case, we would be indemnified for the residual carrying amount of the assets at the termination date and, although the grantor may file a lawsuit to claim indemnity for breach of the relevant agreement, there is no contractually set indemnity we would owe. 11 (b) gains or losses from the fluctuation in the fair value of the residual accrue to the lessee (for example, in the form of a rent rebate equaling most of the sales proceeds at the end of the lease). Our agreements do not have any provisions for this or similar adjustments. 11 (c) the lessee has the ability to continue the lease for a secondary period at a rent that is substantially lower than market rent. Our agreements may be renewed for an additional lease period and the grant amount for this extension will be determined by the grantor at the time of the extension. Our agreements do not provide for any reduction in amounts upon extension. Companhia Siderúrgica Nacional 2 Escritório Central Av. Brigadeiro Faria Lima, 3400 – 20º andar - Edificio Financial Faria Lima Center Cep: 04538-132 - São Paulo - SP Based on the analysis of the indicators above, we classified our concessions as operating leases and payments provided for in our agreements are recognized as profit or loss for the year under the straight-line method. The second analysis we performed refers to assets acquired directly by us subsequent to the agreement signing date. According to the terms established in our concession agreements, we have control over these assets and assume the risks and rewards associated with them. At the end of the concession, if there is any residual value, the grantor has to reimburse us for these amounts. As a result, assets acquired or constructed by us are recorded in property, plant or equipment or in intangible assets, when applicable, according to the parameters defined in IAS16 and IAS 38. The residual carrying amounts subject to reversion to the grantor in our concessions at December 31, 2015 are listed below with an indication of their classification in our financial statements: Companhia Siderúrgica Nacional 3 Escritório Central Av. Brigadeiro Faria Lima, 3400 – 20º andar - Edificio Financial Faria Lima Center Cep: 04538-132 - São Paulo - SP Concession Residual carrying amount Classification in the balance sheet TECON R$ 244 million Fixed assets: Property, plant and equipment Intangible assets: software TECAR R$ 1,611 million Fixed assets: Property, plant and equipment Intangible assets: software FTL R$263 million Fixed assets: Property, plant and equipment Intangible assets: software TLSA R$7,001 million(1) Investments MRS R$3,679 million(2) Investments _______________________ (1) The amount of fixed and intangible assets is recognized in TLSA’s financial statements. We recognize our interest in the net assets of TLSA under the equity method and our investment balance in TLSA as of December 31, 2015 was R$1.930 million. (2) The amount of fixed and intangible assets is recognized in MRS’s financial statements. We recognize our interest in the net assets of MRS under de equity method and our investment balance in MRS as of December 31, 2015 was R$557 million. We intend to expand our disclosure in future filings to provide the basis for using lease accounting for our concessions as set forth below. We note that this language will be included in our annual report on Form 20-F for the year ended December 31, 2015. “2.n) Concessions The Company has governmental concessions to provide the following types of services: railway and port transportation managed by Company’s subsidiaries and joint-ventures. The concessions included in the consolidated financial statements are related to the rail network in the Northeast area, managed by the subsidiary FTL, the container terminal in Itaguaí, managed by the subsidiary TECON and the port terminal TECAR for exporting iron ore and importing coal, which is managed by the subsidiary Congonhas. The joint venture concessions are related to TLSA and MRS and are not disclosed in these financial statements. Companhia Siderúrgica Nacional 4 Escritório Central Av. Brigadeiro Faria Lima, 3400 – 20º andar - Edificio Financial Faria Lima Center Cep: 04538-132 - São Paulo - SP The Company’s concession contracts are not within the scope of the international interpretative standard IFRIC 12, considering that the grantor (refers to the government) has effectively no control over what, to whom and at what price the services will be provided by the dealer (refers to the private part) to the customers. In essence, the payments made under our concession contracts has operating lease characteristics. Therefore, the accounting should follow the accounting rules applicable to leases – IAS 17. Our concession agreements provide for the use of a specific asset for an agreed period of time, but without any transfer of ownership to the Company or option to buy these assets after termination of these contracts. These payments are recognized in the income statement on a straight line basis over the period of the contracts. Assets acquired or constructed by us are recorded in property, plant or equipment or in intangible assets, when applicable, according to the parameters defined in IAS16 and IAS 38. Under our agreements, we have control over these assets and assume the risks and rewards associated with them. At the end of the concession, if there is any residual value, the grantor has to reimburse us for these amounts.” SEC Comment No. 2. Form 6-K Filed March 29, 2016 · Recognition and measurement, page FS-19 2) We note your disclosure on page 15 of your 4Q15 and 2015 Earnings Release that in November 2015, the strategic alliance was concluded between you and the Asian Consortium through the combination, in a new company, Congonhas Minérios S.A., of the mining and associated logistics businesses of yours and Nacional Minérios S.A. (Namisa). Further, we note you accounted for the transaction in accordance with IFRS 3, which resulted in a gain in the income statement of R$2.9 billion, net of deferred taxes, and an increase in total equity of R$4.8 billion. We have the following comments in this regard. · We note that you, prior to the November 2015 transaction, accounted for Namisa under the equity method of accounting. With reference to IFRS 10, including Appendix B, please provide sufficiently detailed additional information to support this accounting. Ensure your analysis addresses the disclosure on page 67 of your 2013 Form 20-F which indicates “In addition, certain other agreements, including the share purchase agreement between us and the Asian consortium and the long-term operational agreements between Namisa and us, provide for certain obligations that, in case breached or not cured within the relevant cure period, may give rise, in certain situations, to the right of the non-breaching party to exercise a call or a put option, as the case may be, with respect to the Asian consortium’s ownership interest in Namisa.” Specifically address whether CSN’s call option on the Asia consortium’s ownership interest in Namisa represents a substantive right of CSN to remove the Asian consortium; and Companhia Siderúrgica Nacional 5 Escritório Central Av. Brigadeiro Faria Lima, 3400 – 20º andar - Edificio Financial Faria Lima Center Cep: 04538-132 - São Paulo - SP · Notwithstanding the above bullet, with reference to each step of the transaction, please explain the related accounting treatment, as well as the authoritative literature you relied upon Response to Comment No. 2. Accounting classification of Namisa under IFRS 10 and 11 Until November 30, 2015, we classified our interest in Namisa in accordance with IFRS 10, assessing the classification of the rights and obligations provided for in the Shareholders’ Agreement, entered into on December 30, 2008, as amended (“Shareholders’ Agreement”), between CSN and the Asian Consortium, in order to determine whether we unilaterally held the control of Namisa considering the following requirements: · power over relevant decisions regarding Namisa; · exposure and rights to Namisa’s results; and · ability to use our power to affect Namisa’s results. Under IFRS 10, all of the requirements above should have been cumulatively met so that Namisa could be classified as our subsidiary. Namisa was established as a corporation and its equity instruments assured voting rights to its shareholders in the same proportion of the interest held in its share capital. In addition, the Shareholders’ Agreement determined the principles of the relationship between the shareholders, as well as their rights and obligations. Under the Shareholders’ Agreement, Namisa was managed by a board of directors comprised of five members appointed by us and four members appointed by the Asian Consortium. Companhia Siderúrgica Nacional 6 Escritório Central Av. Brigadeiro Faria Lima, 3400 – 20º andar - Edificio Financial Faria Lima Center Cep: 04538-132 - São Paulo - SP A number of significant decisions regarding Namisa’s business, which are considered relevant within the scope of IFRS 10 for power assessment, required, under the Shareholders’ Agreement, the approval of both shareholders (CSN and the Asian Consortium) or the affirmative vote of at least one member appointed by the Asian Consortium, as shown in the table below: MAJOR DECISIONS Board of Directors: decisions that depended upon the affirmative vote of least one member of the Asian Consortium Shareholders Meeting: decisions that depended upon the vote of at least sixty one percent of the shareholders (greater than our total interest of 60%). Annual compensation of officers Approval of the annual financial statements Appointment of officers Approval of Long-Term, Mid-Term business plan and Annual Operating Budget or any amendment Any amendments to the Operating Agreements, as defined in the Shareholders’ Agreement Entry into, modification, renewal or termination of any transaction in excess of US$25 million, except if approved in Annual Operating Budget Amendment to, renewal or settlement of intercompany financial agreements Incurrence of indebtedness in excess of US$150 million, except if approved in Annual Operating Budget Any decisions on mining rights, pellet plants and material assets. Modification, renewal or termination of any of the Financing Agreements, as defined in the Shareholders’ Agreement Approval of guarantees, security and indemnities Inves