Exhibit 2.1

Protocol and Justification to the Merger by Companhia Belgo-Mineira Of
Shares Issued by Companhia Siderúrgica de Tubarão

between

Companhia Siderúrgica de Tubarão

and

Companhia Siderúrgica Belgo-Mineira

________________________________

Dated of July 27, 2005

________________________________

Protocol and Justification to the Merger by Companhia Belgo-Mineira of Shares Issued by Companhia Siderúrgica de Tubarão

By this private instrument, “Protocol and Justification to the Merger by Companhia Belgo-Mineira of Shares Issued by Companhia Siderúrgica de Tubarão for its Conversion into a Wholly-Owned Subsidiary” entered into on July 27, 2005 (“Protocol and Justification”), the parties:

WHEREAS BELGO is a publicly-held company, which capital stock fully subscribed and paid up is R$ 3.000.000.000,00 divided as of this date into 3.905.001.336 common shares and 3.179.127.961 preferred shares, all registered and without par value;

WHEREAS CST is a publicly-held company, which capital stock fully subscribed and paid up is R$ 2.782.105.976,27, divided as of this date into 19.666.329.000 common shares and 31.310.111.303 preferred shares, all registered and without par value;

WHEREAS there is an interest in consolidating in BELGO the assets of CST and Vega do Sul S.A.;

WHEREAS such consolidation process comprises the following corporate acts: (a) the merger of Arcelor Aços do Brasil Ltda. (“AAB”) into BELGO; (b) the merger of APSL ONPN Participações S.A. (“APSL”) into BELGO (collectively, “AAB and APSL’s Mergers”), assuming the approval of such acts for the purposes of this Protocol and Justification; and (c) the merger of CST shares, by BELGO, with the purpose of converting CST into a wholly-owned subsidiary of BELGO (“Merger of CST’s Shares” and collectively with the AAB and APSL’s Mergers, “Restructuring”);

WHEREAS each of such corporate acts is an essential and indispensable element of the

Restructuring, all of which intrinsically connected;

WHEREAS, in addition to the Restructuring, it is intended to convert, prior to the Merger of CST’s Shares, all preferred shares of BELGO into common shares, in the proportion of one common share per each preferred share (“Conversion”); and

WHEREAS the management of BELGO and CST, by means of this Protocol and Justification, intend to establish the proposed terms and conditions of the Merger of CST’s Shares and assuming the implementation of the AAB and APSL’s Mergers.

NOW, THEREFORE, the managers of BELGO and CST, for the purposes of Article 252 of Law 6,404, of December 15, 1976 (“Brazilian Corporate Law”), decide to enter into this Protocol and Justification in accordance with the following terms and conditions.

Section One
Number, Type and Class of Shares to be assigned

1.1. Number, Type and Class of Shares to be assigned. As a result of the Merger of CST’s Shares, one common share issued by BELGO will be assigned to each 9,32 common or preferred shares issued by CST.

1.2. Criteria Used to Determine the Exchange Ratio. The established exchange ratio was determined based on the criterion of BELGO and CST future profitability prospect pursuant to the appraisal included in Exhibit 3, Exhibit 4 and Exhibit 5.

1.3. Fractional Shares. Fractional shares resulting from the replacement of the position of each CST shareholder will be rounded down to the nearest whole number and the difference will be paid in cash by BELGO within three business days from the receipt of the product of the sale of the shares correspondent to such fractions by BELGO on the São Paulo Stock Exchange.

Section Two
BELGO and CST Net Equity Appraisal Criteria

2.1. Accounting Appraisal. For the increase of the capital stock of BELGO resulting from the Merger of CST’s Shares, the shares issued by CST were appraised based on their book value according to the balance sheet dated May 31, 2005, audited by Deloitte

Touche Tohmatsu Auditores Independentes. In accordance with Article 226 and §1 st of Article 252 of the Brazilian Corporate Law, the specialized company Afas Adviser Consultores Associados, with head office at Rua Manoel da Nóbrega, 1280, 10º andar, São Paulo - SP, enrolled with the Corporate Taxpayer Registry under No. 66.050.410/0001-55, and with the Regional Accountants Board under No. 2SP016333/0-0, represented by its partner Paulo Schiesari Filho , was chosen to carry out such appraisal. The choice of Afas Consultores Associados Ltda. must be confirmed by Belgo’s shareholders. The appraisal basis date was May 31 2005, pursuant to the report of Exhibit 1 (“Accounting Report”), which resulted in the amount of R$3.411.594.514,39 for the shares of CST object of the Merger of CST’s Shares.

2.2. Appraisal based on the Future Profitability Prospect. In order to determine the exchange ratio under Section 1, Deutsche Bank Securities, Inc., a company with head office at 60 Wall Street, New York, NY, United States of America was retained to appraise BELGO and CST based on their future profitability prospect, pursuant to the economic and financial report included in Exhibit 3. Also, Banco UBS S.A. was retained by CST to prepare the appraisal reports included in Exhibits 4 and 5, also based on CST and Belgo’s future profitability prospect. The appraisal reports prepared by Deutsche Bank Securities, Inc. and Banco UBS S.A. are dated May 31, 2005.

2.3. Net Equity Appraisal at Market Prices. Pursuant to Article 264 of the Brazilian Corporate Law, Apsis Consultoria Empresarial S/C Ltda., a specialized company with head office at Rua São José 90, grupo 1.802, in the Capital of the State of Rio de Janeiro, enrolled with the Corporate Taxpayer Registry under No. 27.281.922/0001-70, represented by its partner Ana Cristina França, was chosen to prepare the appraisal report on the net equity of BELGO and CST at market prices. BELGO and CST appraisals have been prepared pursuant to the same criteria and on the basis date of May 31 2005. Belgo’s appraisal was adjusted to reflect AAB and APSL’s Mergers, pursuant to the report of Exhibit 2 (“Net Equity at Market Prices Report”). In accordance with the caput of Article 264 of the Brazilian Corporate Law, the Net Equity at Market Prices Report resulted in the exchange ratio of 7,790463 shares issued by CST per each share issued by BELGO.

2.4. Treatment of Future Equity Variations. From May 31, 2005, which is the basis date for the Merger of CST’s Shares, until the date of the shareholders meeting to be held for approval of the Merger of CST’s Shares, CST equity variations will be accounted by BELGO as a result of the equity adjustment (equivalência patrimonial).

2.4.1. Treatment of CST Revaluation Reserve. Considering that BELGO and its controlled companies have no asset revaluation reserve and that CST, on the other hand, accounts such reserve, and in order to meet the uniformity and consistency accounting principles also included in items 46 and 54 of IBRACON’s Pronouncement approved by CVM Resolution No. 183/95, the revaluation reserve of CST will be reversed after the

Merger of CST’s Shares, having been so considered in all of the appraisal reports.

Section Three
Shares of a Company Held by Other and Treasury Shares

3.1. Treatment of the Shares of a Company Held by the Other. There are no shares issued by BELGO held by CST. The shares that BELGO will hold in CST due to the AAB and APSL’s Mergers will remain owned by BELGO.

3.2. Treatment of Treasury Shares. There are no treasury shares issued by CST. The 68.300.000 preferred treasury shares issued by BELGO have not been considered in the above-referred appraisal reports.

Section Four
Increase of the Capital Stock of BELGO :

4.1. Increase of the Subscribed Capital Stock of BELGO. The Merger of CST’s Shares will result in an increase of the capital stock of BELGO by the conveyance of all shares of the shareholders of CST (except for the shares owned by BELGO as consequence of the AAB and APSL’s Mergers) to the capital stock of BELGO. The capital stock of BELGO, in the amount of R$ 6.002.196.896,39 will be increased to R$ 9.413.791.410,78 , which increase will be in the amount of R$ 3.411.594.514,39 , pursuant to the Accounting Report. BELGO will issue 3.080.348.074 new common shares, registered and without face value. These shares will be paid up with the shares issued by CST (except those held by BELGO) and assigned to the shareholders of CST (except BELGO) in accordance with the exchange ratio mentioned in Section 1.1.

Section Five
Project for the Amendment to the Bylaws of BELGO

5.1. Amendments to the Bylaws. As a result of the Merger of CST’s Shares, the Bylaws of BELGO shall be amended in order to reflect the increase of the capital stock and respective number of shares. Therefore, the following proposal to amend the caput of Article 5 of the Bylaws will be submitted to BELGO shareholders:

“The fully subscribed and paid-up capital stock of the Company is R$ 9.413.791.410,78 (nine billion, four hundred and thirteen million, seven hundred and ninety-one thousand, four hundred and ten reais and seventy-eight centavos), divided into 13.020.076.590 (thirteen billion, twenty million, seventy-six thousand,

five hundred and ninety) common shares.”

However, if the Conversion is not implemented before the Merger of CST’s Shares, the proposal to amend the caput of Article 5 of the Bylaws will be the following:

“The fully subscribed and paid-up capital stock of the Company is R$ 9.413.791.410,78 (nine billion, four hundred and thirteen million, seven hundred and ninety-one thousand, four hundred and ten reais and seventy-eight centavos), divided into 13.020.076.590 (thirteen billion, twenty million, seventy-six thousand, five hundred and ninety), as 8.574.772.170 (eight billion, five hundred and seventy-four million, seven hundred and seventy two thousand, one hundred and seventy) common shares and 4.445.304.420 (four billion four hundred and forty five million, three hundred and four thousand, four hundred and twenty) preferred shares.”

Section Six
Reasons for the Merger of CST’s Shares

6.1. Reasons for the Merger of CST’s Shares . The management of the Companies expect that the following purposes be reached through the Restructuring:

Section Seven
Type of Shares to be Delivered to Preferred Shareholders

7.1. Shares to be Delivered to Preferred Shareholders . In view of the purpose of creating a single class of share structure, with equal rights, including voting rights, for the purpose of liquidity increase, the preferred shareholders of CST will receive common shares of BELGO for their shares, pursuant to Section 1 above. After the corporate restructuring, BELGO intends to improve its corporate governance practices, and grant all of its shareholders the right for joint sale for a price equal to 100% of the sale price in case of alienation of control, pursuant to Article 254-A of the Brazilian Corporate Law. AAB and APSL’s capital stock do not comprise preferred shares.

Section Eight
Composition of Belgo Subscribed Capital Stock after the Merger of CST’s
Shares

8.1. BELGO Subscribed Capital Stock after the Merger of CST’s Shares. BELGO capital stock will be in the amount of R$ 9.413.791.410,78, represented by 13.020.076.590 common shares, registered and without par value (or in case the Conversion is not implemented before the Merger of CST’s Shares, the capital stock of BELGO will be represented by 8.574.772.170 common shares and 4.445.304.420 preferred shares), registered and without par value.

Section Nine
Appraisal Rights and Amount of the Refund of Shares

9.1. Appraisal Rights of BELGO and CST Shareholders. As set forth below, and in accordance with the provisions of Article 252, §1 st and §2 nd of the Brazilian Corporate Law, will be assured the appraisal rights to the shareholders of BELGO and CST who disagree with or abstain from voting in the Merger of CST’s Shares’ resolution, or who fail to attend the applicable Shareholders Meeting, and who manifest the intention t exercise the appraisal rights, within 30 (thirty) days as of publication of the minutes of the respective Shareholders Meeting that approved the Merger of CST’s Shares, may exercise their appraisal rights. The payment of the respective refund will depend upon effective completion of the transaction pursuant to the provisions of Article 230 of the Brazilian Corporate Law, and shall be carried out by the applicable company up to the third business day following to the date of the respective transaction’s implementation. The refund of the amount of t he shares will only be assured in relation to the shares that the dissenting shareholder is evidenced as the owner on the earlier of the date of publication of the first call notice of the relevant Shareholders Meeting considering the Merger of CST’s Shares or the publication of the notice regarding such transaction, pursuant to Article 137 of the Brazilian Corporate Law.

9.2. Refund Amount of BELGO Shareholders. The dissenting shareholders of BELGO will be entitled to the refund of their shares, in the amount of R$ 493,68 per lot of one thousand shares, pursuant to the last balance sheet approved by the Shareholders Meeting of BELGO, that is of December 31, 2004 .

9.2.1. BELGO Special Balance Sheet. The dissenting shareholders could, when exercise the appraisal right, request the preparation of a special balance sheet of BELGO, pursuant to the provisions of §2 nd of Article 45 of the Brazilian Corporate Law. In this event, after the term established to reconsider the Merger of CST’s Shares in accordance with §3 rd of Article 137 of the Brazilian Corporate Law, the shareholder will receive 80% of the refund amount, and the relevant balance, if any, will be paid within 120 (one hundred and twenty days) from the date of publication of the general meeting resolution.

9.3. Refund Amount of CST Shareholders. The dissenting shareholders of CST will be entitled to a refund in the amount of R$123 per lot of one thousand shares, based on the economic value of CST, according to the Economic and Financial Appraisal – UBS (hereinafter defined). The shareholders of CST may also choose to exercise the appraisal right based on the net equity at market prices, pursuant to the Net Equity at Market Price Report, which is in the amount of R$ 122,45 per lot of one thousand shares.

9.3.1. Engagement of a Specialized Company to Determine the Refund Amount at the Economic Value of CST. Banco UBS S.A., a company with head office at Avenida Juscelino Kubitschek, 50, 6 th floor, São Paulo - SP, enrolled with the Corporate Taxpayer Registry under No. 30.131.502/003-84, was retained to prepare the appraisal of CST, at its economic value using the future profitability prospect, pursuant to the report of Exhibit 5 (“CST’s Economic and Financial Appraisal - UBS”), in order to determine the refund amount in case the appraisal right is exercised by CST shareholders, pursuant to Section 9.3. The appraisal basis date is May 31, 2005, and this appraisal has indicated the following value range: R$ 102,74 to R$ 123,38 per lot of one thousand shares issued by CST. The engagement of Banco UBS S.A. and CST’s Economic and Financial Appraisal - UBS must be ratified by the shareholders of CST at the Shareholders Meeting considering the Merger of CST’s Shares pursuant to Article 45, §4 th of the Brazilian Corporate Law.

Section Ten
Miscellaneous

10.1. No Succession. After implementing the Merger of CST’s Shares, BELGO will not incorporate the property, rights, assets, obligations and liabilities of CST, which legal identity shall be kept unaltered, and there will be no succession.

10.2. Documents Available to the Shareholders. All documents mentioned in this Protocol and Justification will be available to the shareholders of BELGO and CST, as of the date hereof, and may be examined at the following addresses: CST shareholders, Avenida Brigadeiro Eduardo Gomes, No. 930, Cidade da Serra, State of Espírito Santo, and BELGO shareholders, Avenida Carandaí, 1.115, 24 rd Floor, City of Belo Horizonte, State of Minas Gerais.

10.3. SEC Registration. The Merger of CST’s Shares, and the resulting issuance of new shares by BELGO, will be subject to the granting of the applicable registration at the Securities and Exchange Commission (“SEC”).

10.4. Profit Sharing of Year 2005. The shares to be issued by BELGO as result of the Merger of CST’s Shares will have full right to all dividends and interest on net equity to

be declared by BELGO as of the date such shares are issued.

10.5. Revaluation. Each of BELGO and CST reserve itself the right to reevaluate the project of the Merger of CST’s Shares in case the payment of the refund of shares resulting from the appraisal rights request made by the shareholder that timely inform of its disagreement affects adversely their financial stability in accordance with Article 137 of the Brazilian Corporate Law.

10.6. Amendments. This Protocol and Justification may not be amended unless in writing and approved by the shareholders meetings of BELGO and CST.

10.7. Survival of Valid Sections. In case any clause, provision, term or condition of this Protocol and Justification is considered invalid, the other clauses, provisions, terms and conditions not affected by such invalidity will not be affected.

10.8. Jurisdiction. The parties hereby elect the jurisdiction of the Capital of the State of Minas Gerais to settle any dispute eventually arisen out of this Protocol and Justification, and hereby waive any other court, the most privileged it may be.

IN WITNESS WHEREOF, the parties sign this Protocol and Justification in two (02) counterparts of identical tenor and form, in the presence of the two (2) undersigned witnesses.

Belo Horizonte, July 27, 2005

Companhia Siderúrgica de Tubarão

Companhia Siderúrgica Belgo-Mineira

Witnesses:

Exhibit 1
Accounting Report

COMPANHIA SIDERÚRGICA DE TUBARÃO

CNPJ 27.251.974/0001 -02

APPRAISAL REPORT OF SHAREHOLDER’S EQUITY
AND BOOK VALUE OF SHARES

AFAS ADVISER CONSULTORES ASSOCIADOS LTDA., enrolled with the Corporate Taxpayer Registry of the Ministry of Finance - CNPJ 66.050.410/0001 - 55, with head office at Rua Manoel da Nóbrega, 1280, 10º andar, herein represented by its partner Mr. PAULO SCHIESARI FILHO, Brazilian citizen, accountant, married, with office at Rua Manoel da Nóbrega, 1280, 10 andar, São Paulo - Capital, enrolled with Regional Accountants’ Board of the State of São Paulo under No. CRC/SP 140.342/O -8 and with the Individual Taxpayer Registry of the Ministry of Finance - CPF/MF No 873.631.948/15, pursuant to article eight of law 6,404/76 (Corporation Law), a specialized firm appointed ad referendum to carry out the appraisal of the Shareholders’ Equity and Book Value of the Shares of COMPANHIA SIDERÚRGICA DE TUBARÃO, with head office at Avenida Brigadeiro Eduardo Gomes, 930, Serra, State of Espírito Santo, enrolled with the Corporate Taxpayer Registry of the Ministry of Finance -CNPJ 27.251.974. /0001-02, which equity will be merged by COMPANHIA SIDERÚRGICA BELGO MINEIRA - CNPJ 24.315.012/0001 -73.

OBJECT OF THE APPRAISAL

The abovementioned appraisal was prepared to comply with the requirements of Law 6,404/76, and to be a part of the merger by COMPANHIA SIDERÚRGICA BELGO MINEIRA of the shareholders’ equity of COMPANHIA SIDERÚRGICA DE TUBARÃO.

APPRAISAL CRITERIA

Our analysis was conducted using the appraisal criteria set forth in articles 183 and 184 of Law 6,404/76 to appraise the book value of the shares of the Capital Stock, Assets and Liabilities of the Interim Balance Sheet of COMPANHIA SIDERÚRGICA DE TUBARÃO as of May 31, 2005.

APPRAISED ASSET

Based upon the analysis of the interim balance sheet of COMPANHIA SIDERÚRGICA DE TUBARÃO as of May 31, 2005, a copy of which is a part hereto as Exhibit A, we concluded that the Shareholders’ Equity on May 31, 2005, is positive in the amount of R$7,937,883,181.22 (seven billion, nine hundred and thirty-seven million, eight hundred and eighty-three thousand, one hundred and eighty-one reais and twenty-two cents) and that the book value per share as of said date is positive in the amount of R$0.15571670317, showed as follows:

São Paulo, July 19, 2005

AFAS ADVISER CONSULTORES ASSOCIADOS S/C LTDA
Paulo Schiesari Filho
CPF/MF 873.631.948 -15

Exhibit 2
Belgo and CST Net Equity at Market Prices Report

REPORT

RJ-057/05

1

EXECUTIVE SUMMARY

APSIS CONSULTORIA EMPRESARIAL S/C Ltda. (APSIS) was contracted by BELGO and CST to:

calculate the swap ratios of AAB quotas and APSL shares for BELGO’s shares, with the appraisal of the equity of all companies, under the same criteria and on the same dates, at market price for the purposes of Article 264 of Law 6.404, of December 15, 1976 (Stock Corporations Act); and

Calculate the swap ratios of CST shares not owned by Belgo, for Belgo shares, with the appraisal of the equity of all companies, under the same criteria and on the same dates at market price, for the purposes of Article 265 of Law 6.404, of December 15, 1976 (Stock Corporations Act).

The technical procedures employed in this report are compliant with the appraisal norms criteria, and the appraising calculations to determine the assets value were based on the income, assets and market approach.

This report shows the companies’ assets and liabilities at market values, as used to adjust the book Net Equity of AAB, APSL, CST and BELGO based on the assets approach.

EVENTS AND ADJUSTMENTS CONSIDERED IN THE APPRAISAL

	For this appraisal, in Phase 1, which consists of the AAB and APSL  merger by BELGO, we considered APSL’s capital increase by  subscription performed on June 3, 2005, in the amount of R$  248,852,480.00 with the issuance of 2,262,349,818 shares, and  APSL’s acquisition of 2,721,968,485 shares in CST, made with  funds from the capital increase. These events will be reflected  in the adjusted balance sheet of APSL
	In Phase 2, which refers to the merger of CST shares, we already  considered the effects of the AAB and APSL merger by BELGO, assuming that this operation will be approved. Thus, we  considered that BELGO owns 22,267,595,982 shares in CST and  200,965,646 shares in VEGA DO SUL S/A, and the new amount of  BELGO shares, according to the Protocol of Merger (Phase 1) is  equal to 9,871,421,612 shares.

2

3

4

5

6

7

SWAP RATIO CALCULATION

PHASE 1 (AAB and APSL MERGER)

Note: Amount of AAB or APSL quotas / shares for one BELGO share, considering the events and adjustments in Chapter 9

PHASE 2 (CST SHARES MERGER)

Note: Amount of CST shares for one BELGO share, considering the realizations in Phase 1

8

SUMMARY

9

1. INTRODUCTION

APSIS CONSULTORIA EMPRESARIAL S/C Ltda. (APSIS) was contracted by BELGO and CST to:

calculate the swap ratios of AAB quotas and APSL shares for BELGO shares, with the appraisal of the equity of all companies under the same criteria and on the same dates, at market price, for the purposes of Article 264 of Law # 6.404, of December 15, 1976 (Stock Corporations Act).

Calculate the swap ratios of CST shares not owned by BELGO for BELGO shares, with the appraisal of the equity of all companies under the same criteria and on the same dates, at market price, for the purposes of Article 264 of Law # 6.404, of December 15, 1976 (Stock Corporations Act).

To prepare this work, we used data and information provided by third parties, in the form of documents and verbal interviews with clients. The estimations used in this process are based on documents and information, including the following:

bylaws or charter of the companies;

accounting statements of the companies group;

organizational chart and list of shareholders;

list of the property, plant and equipment;

Annual Information (IAN) and Quarter Information (ITR) for the companies;

set of architecture plans;

list of areas; and

documents with general information on the industrial plant appraised, including productive capacity data.

The plants were inspected in March, April and May, 2005.

APSIS team responsible for coordinating and performing this work is composed of professionals:

ANA CRISTINA FRANÇA DE SOUZA
civil engineer
post-graduated in accounting sciences (CREA/RJ 91.1.03043 -4)

CARLO HEITOR MIRANDADE FARIA
civil engineer
master degree in production engineering (CREA/RJ 11.533 -D)

CESAR DE FREITAS SILVESTRE
accountant
(CRC/RJ 44779/O-3)

CLÁUDIO AZEVEDO
metallurgic engineer
(CREA/MG 27.805)

CLAUDIO MARÇAL DE FREITAS
accountant
(CRC/RJ 55029/O-1 )

  FRANCISCO JOSÉ DA ROCHA MAIOLINO
aeronautical engineer
post-graduated in finances (CREA/SP 92338)

LAURO JOSÉ DE SALES CHEVRAND
metallurgic engineer

   LUIZ FERNANDO SARCINELLI GARCIA
metallurgic engineer
(CREA/RJ 11.385 -D)

  LUIZ PAULO CESAR SILVEIRA
mechanic engineer
master degree in business administration (CREA/RJ 89.1.00165 -1)

MARCELO UNFER PARABONI
business administrator
post-graduated in financial administration (CRA/RJ 20-47.164 -6)

MARGARETH GUIZAN DA SILVA OLIVEIRA
civil engineer
(CREA/RJ 91.1.03035 -3 )

RICARDO DUARTE CARNEIRO MONTEIRO
civil engineer
post-graduated in economic engineering (CREA/RJ 30137-D)

SÉRGIO FREITAS DE SOUZA
economist
(CORECON/RJ 23521-0)

VERÔNICA ROCHA DE OLIVEIRA
accountant
(CRC/RJ 69548/O-9 )

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2. PRINCIPLES AND QUALIFICATIONS

This report is strictly compliant with the basic principles described below.

The consultants and appraisers neither have any personal relation with the issue of this report nor will they obtain any advantage from it.

In no circumstance the APSIS professional fees are subject to the conclusion of this report.

This report was prepared by APSIS, and no one other than the consultants themselves prepared the analysis and respective conclusions.

In this report, the information received from third parties is assumed to be accurate, and their sources are included in the report.

To the extent of the consultants’ knowledge and belief, the analysis, opinions and conclusions expressed in this report are based on true and accurate data, activities, research and surveys.

APSIS assumes full responsibility for the Engineering and Appraisals issues, including the implicit ones, to perform its honorable functions essentially established in laws, codes or applicable regulations.

For the purposes of estimation, we started our work assuming that the asset subject matter of this work is free of any judicial or extrajudicial charge or encumbrance, except for those listed in this report.

This Report is compliant with the specifications and criteria of the Brazilian Association of Technical Standards (ABNT), the specifications and criteria of the Uniform Standards of Professional Appraisal Practice (USPAP), in addition to the requirements set by different bodies, such as the Ministry of Finance, the Brazilian Central Bank, Banco do Brasil, Brazilian Securities and Exchange Commission (CVM), Superintendence of Private Insurance (SUSEP), etc.

The report presents all limiting conditions provided for the methodologies adopted, which affect the analysis, opinions and conclusions contained on same.

APSIS declares that it has no direct or indirect interest in the companies that are subject matter of this report, or in their respective controlling companies, or the operation to which the “Plan and Justification” refers. And, further, that there is no material event that may characterize any current or potential conflict or pooling of interests for the issuance of this Appraisal Report.

In the course of our work, the controlling shareholders and managers of the companies subject matter of this report have not directed, limited, caused difficulties or performed any acts that had or may have affected the access, use or knowledge of the information, goods, documents or work methodologies important for the quality of our conclusions.

The Report was prepared in full compliance with the requirements of the Codes of Professional Ethics of the Federal Council of Engineering, Architecture and Agronomy (CONFEA) of the Institute of Legal Engineering.

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3. LIMITATION OF LIABILITY

To prepare this report, APSIS used non-audit historical information and data or those audited by third parties, and projected, non-audited data provided verbally or in writing by the company’s management, or obtained from the sources mentioned here. Accordingly, APSIS assumed that the data and information obtained for this report are true, and that APSIS has no liability in relation to its accurateness.

The scope of this work does not include auditing the financial statements or reviewing the services performed by their auditors.

Our work was developed exclusively for the use of the applicants, aiming the purpose previously stated. Therefore, this report may be disclosed as part of the documents of Belgo’s corporate restructuring (APSL and AAB merger and CST shares merger), and the reference to this document in the related publications is authorized. It also may be filed with the SEC and CVM (Brazilian and Exchange Commission) and made available to shareholders and third parties, including through the websites of the companies involved.

Please not that the comprehension of the conclusion of this report requires its integral reading, including its attachments. Therefore, one may not reach to conclusions from its partial reading.

We will not be liable for incidental losses of the applicant and its shareholders, officers, creditors or other parts, resulting from the use of the data and information provided by the company and included in this report.

The analysis and conclusions in this report are based on several assumptions, on this date, of future operational plans, such as: macroeconomic factors, values adopted by the market, exchange rate fluctuation, sales prices, volumes, market share, earnings, taxes, investments, operational margins, etc. Thus, the future results may be different from any forecast or estimate contained in this report.

This appraisal does not reflect events and their respective effects occurred after the issuance of this report.

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4. APPRAISAL METHODOLOGY

ASSETS APPROACH – NET EQUITY AT MARKET VALUE

This methodology derives from the generally accepted accounting principles (GAAP), where the financial statements are prepared based on the historical cost principle, i. e. the acquisition cost. Due to this and the basic accounting principles, the book value of a company’s assets minus the book value of its liabilities is equal to the book value of its net equity.

The methodology first considers the book value of the assets and liabilities, and requires adjustments to a few of these items, so as to reflect their likely realization values. The result of this method may give an initial base to estimate a company’s value, and a useful base to compare the results of other methodologies.

On the other hand, the basic principles of economics allow us to create the following appraisal technique: the assets defined value minus the liability defined value is equal to the defined value of a company’s net equity. Within an appraisal view, the relevant value definitions are those appropriate to the appraisal purposes.

Therefore, the asset approach aims to evaluate a company value by adjusting the book values (net balance) to their respective fair market values. The assets and liabilities deemed relevant are evaluated by the fair market value, with the comparison of this value and its book value (net balance).

The general appraisal criteria used to adjust the assets subject to appraisal at market price are detailed in chapter 10 of the report.

These adjustments, duly analyzed, are added to the book Net Equity value to determine a company’s market value by the assets approach. The fair market value of a company will be the Net Equity, with due regard for the adjustments found for the appraised assets and liabilities.

13

Please note that our work did not include the identification and valuation of the Company’s property, plant and equipment, non-recorded in the accounting statements, nor the identification and quantification of assets non-recorded or non-disclosed by the Company’s management.

In this appraisal, the methodology and the scope adopted aimed to evaluate a company in going concern. Therefore, the costs incurred with the realization of assets or requirement of liabilities, as well as those related to the companies’ bankruptcy or liquidation processes, have not been included in the calculations.

MAIN PHASES OF THE APPRAISAL

Reading and analysis of the companies’ interim balance sheets.

Analysis of the assets and liabilities accounts recorded in the company balance sheet to identify the accounts subject to adjustments and to calculate its probable market values.

The company’s property, plant and equipment adjustments at their respective market values, based on the equity appraisals performed by APSIS.

Application of the equity adjustment method to the net equity at market values for the controlled and affiliate companies to calculate the amount of investments.

Calculation at market value of the net equity of the companies and their shares and/or quotas.

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5. MARKET ANALYSIS

Brazil is the largest steel and iron producer in Latin America. The table below shows the crude steel production per country for year 2004:

In Brazil, the most produced category is the pig iron, followed by the crude steel.

The table below shows the iron and steel production in Brazil in 2004, according to several categories:

The Brazilian steel metallurgy started developed when the Portuguese real family came to Brazil. The Ipanema plant, near the city of Sorocaba was inaugurated in 1815. Other plants were constructed in the cities of Congonhas do Campo, Caeté and São Miguel de Piracicaba, all in the State of Minas Gerais.

Propelled by the development in the period of 1917 to 1930, the Brazilian steel metallurgy developed mainly because of the creation of BELGO in the city of Sabará, State of Minas Gerais, which in 1922 associated with Belgian capitals and became Companhia Siderúrgica

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Belgo-Mineira, one of the largest propellers of the national metallurgy.

In the 30’s decade the metallurgy continued growing, propelled by Belgo-Mineira. With the efforts of Getúlio Vargas’ government in 1941, in the municipality of Volta Redonda (RJ), of Companhia Siderúrgica Nacional (CSN). Another important event in that period was the creation of Companhia Vale do Rio Doce (CVRD) in 1942, also resulting from an agreement with the United States, with the mission of enhancing and developing that Minas Gerais valley.

In the 90’s decade the metallurgical park already counted on 43 public and private companies, which summed together approximately 120 blast furnaces.

The installation of these producing units concentrated mainly in the State of Minas Gerais and the Rio-São-Paulo connection, due to the proximity of the regions rich in raw material employed to produce steel, or places with high consumption potential.

In 1991, the Brazilian metallurgy started being privatized, leading to a high production growth over the subsequent years.

Arcelor is the world’s largest steel producer. According to the Metal Bulletin data, Arcelor’s production in 2003 was the highest one, as shows the ranking of the world’s largest steel producers.

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6. CHARACTERIZATION OF THE ARCELOR GROUP

Arcelor is the world’s leader in the metallurgical industry. It originated from the merger of these steel companies: Aceralia (Spain); Arbed (Luxemburg) and Usinor (France), concluded in February 2002. The group develops activities in four segments: (i) production of flat carbon steel, (ii) production of long carbon steel, (iii) production of stainless steel, (iiii) distribution, transformation and commercialization of steel.

The company employs almost 100 thousand people in the world. It produces annually 44 millions of steel tons, having revenues of US$33 billion, and 80% of its sales are destined to Europe.

GEOGRAPHIC PERFORMANCE IN THE WORLD:

In 2004, the South America operations represent 7.1% of the sales of the company, which ended the year with a total production of 46.9 million of tons of crude steel and sales of 43.9 million of rolled products.

The European group has been made most of the acquisitions in Brazil, where the production costs are lower than those in Europe, and the demand is increasing faster. The company states that it intends to invest at least US$ 3.9 billions in the country by the end of this decade. Arcelor is still more interested in markets that are not yet mature, because they have more perspectives.

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7. CHARACTERIZATION OF AAB AND APSL

In Brazil, the Arcelor group operates in the flat steel industry through Arcelor Aços do Brasil Ltda. (AAB) and APSL ONPN Participações S.A. (APSL), which are holdings created to manage the share ownership in the Brazilian metallurgical companies.

AAB holds share ownership in CIA SIDERÚRGICA DE TUBARÃO (CST) and VEGA DO SUL (VEGA). APSL holds share ownership only in CST.

CORPORATE CAPITAL OF AAB AND APSL

On the base date, the corporate capital of AAB and APSL were composed as follows:

AAB

APSL

NET EQUITY OF AAB AND APSL

On the base date, the Net Equity was the following:

AAB

APSL (considering the events and adjustments described in Chapter 9)

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LOCALIZATION MAPS (INDUSTRIAL PLANTS)

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CST

Companhia Siderúrgica de Tubarão (CST) was inaugurated in 1983. It is located in the municipality of Serra, State of Espírito Santo. It was created from the association of three important groups of the world’s metallurgical sector at that time: Siderurgia Brasileira S.A.- SIDERBRÁS (Brazil), whose minority partners are Kawasaki Steel Corporation - KSC (Japan) and Societá Finanziaria Siderúrgica Finsider (Italy).

CST is a coking metallurgical plant, with nominal capacity of 5,000,000 t/year of liquid steel, and 100% of its production is through continuous plate casting. Its main products are plates (67%) and coils (32%). It is one of the most important flat rolls companies of the internal market, and it has 27% hot coil market share.

The company exports great portion of its production. Over the past years, CST has sold over 91% of its production to the external market. In 2003, the company obtained the 8^th position in the national ranking of exporting companies, and it was responsible for 1.12% of the Brazilian general exports, in US$ Fob.

The table below shows the list of shareholders of CST in May 31, 2005:

LIST OF SHAREHOLDERS

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VEGA

The company started its activities in 2003. Its shareholders are AAB (75%) and CST (25%). It is focused on cold rolled and galvanized products through the processing of hot coils supplied exclusively by CST.

With a production capacity of 880 thousand of tons, it is the main consumer of the CST coils in the internal market, responsible for 28% of the total coil sales in 2004.

The company should operate with its full capacity until the end of 2005, consolidating itself in the galvanized steel category in Brazil. Approximately 70% of Vega do Sul’s sales are destined mainly to the automotive industry, where its estimated market share is 35%, and the production of vehicle bodies.

The table below shows the list of Vegas’ shareholders:

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8. CHARACTERIZATION OF BELGO

Since its foundation in 1921, BELGO belongs to the Arbed Group (Luxemburg). In 2002, the Arbed merged into other European metallurgical companies originating the Arcelor Group, the largest metallurgical group in the world. BELGO is now an industrial holding, since it does not have its own property, plant and equipment.

BELGO operates in the metallurgical industry through the companies Itaúna Siderúrgica Ltda., located in the city of Itaúna, State of Minas Gerais, and Belgo Siderurgia S.A., with industrial units in João Monlevade, Sabará and Juiz de Fora, in the State of Minas Gerais, and Piracicaba, in the State of São Paulo, and Vitória, State of Espírito Santo. Belgo Siderurgia is also the parent company of Acindar – Indústria Argentina de Aceros S.A., the largest long steel producer in Argentina.

It operates in the wire drawing sector through the companies BBA – Belgo Bekaert Arames S.A., with industrial units in Contagem and Sabará, State of Minas Gerais, in Osasco and Hortolândia, in the State of São Paulo; Jossan S.A., located in Feira de Santana, State of Bahia; BMB – Belgo-Mineira Bekaert Artefatos de Arame Ltda., with units in Vespasiano and Itaúna, in the State of Minas Gerais; and the BBA affiliate, Wire Rope Industries (WRI) Group, with plants in Canada, Peru, Chile and Brazil (in the city of Osasco, São Paulo).

CORPORATE CAPITAL

On the base date, the list of BELGO’s shareholders was the following:

For appraisal purposes, the treasury shares were excluded from the total outstanding shares.

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BELGO SIDERURGIA S/A

BELGO concentrates 99% of its investments in BELGO SIDERURGIA, which in turn directly operates the industrial units of Sabará, Monlevade, Juiz de Fora, Piracicaba and Vitória. It also operates as a holding of the wire drawing and services companies, and also of ACINDAR.

On the base date, the list of shareholders of BELGO SIDERURGIA was the following:

ACINDAR INDUSTRIA ARGENTINA DE ACEROS S/A

ACINDAR is an integrated steelworks that operates through a direct reduction unit that produces long products, including square iron bars, wire rod, slabs and shapes, hot stripes, wires and sewed tubs.

BELGO BEKAERT ARAMES S/A (BBA)

BBA is the main company in the wire drawing industry. It produces wire and cordages, and is the sole Brazilian producer of cordage thread for prestressed concrete. Its annual production capacity reaches 700,000 tons of wiredraws, and it has industrial units in Contagem and Sabará, State of Minas Gerais; Hortolândia and Osasco, in the State of São Paulo.

BELGO MINEIRA BEKAERT ART. DE ARAME LTDA (BMB)

It produces steel cord (steel cord for radial tire) and hose wire (wires to reinforce hoses), and it has plants in the cities of Vespasiano and Itaúna.

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BELGO BEKAERT NORDESTE S/A (BBN)

Trefilaria de Feira de Santana – BA. It produces nails and wire for agriculture.

CAF SANTA BÁRBARA LTDA.

CAF Santa Bárbara operates with reforestation and wood coal production. It produces timber for the furniture, agriculture and civil construction industries. In 2004, it produced around 933 thousand of cubic meters of wood coal.

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INDUSTRIAL PLANTS: LOCALIZATION MAPS AND OPERATIONS SUMMARIES

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OTHER COMPANIES OF THE BELGO GROUP

The companies below are service companies, small industries or only affiliates.

BELGO-MINEIRA PART. E IND. E COM. SA.

Belgo-Mineira Participação Indústria e Comércio S.A. (BMP) was created in 1995 especially to manage the leasing, with purchase option, of the facilities of Mendes Júnior Siderurgia S.A. (MJS), current industrial plant of Juiz de Fora. On the base date of this report, BMP had no operational activities.

BELGOPAR LTDA.

Dormant company without operational activities on the base date.

ITAÚNA SIDERURGIA LTDA.

Products for the metal working and metallic structures, furniture and metallurgical industries in general. It has a rolling mill with installed capacity of 100 thousand t/y.

SOL COQUERIA TUBARÃO

This company is still in the construction phase. It will be installed at the CST industrial park, in the municipality of Serra, State of Espírito Santo. As of 2006, SOL Coqueria Tubarão S.A. will produce 1.55 millions of tons of metallurgical coke to assist with the CST and other metallurgical plants expansion.

BMS – BELGO MINEIRA SISTEMAS S/A.

Established in January 1984, BMS - Belgo-Mineira Sistemas is engaged in the development of IT solutions and provision of services. BMS provides services to clients of most varied areas, such as metallurgy, industries, logistics, transports, health and financial areas in Brazil and abroad.

BELGO-MINEIRA ENGENHARIA LTDA.

This company provides engineering services to the group’s industrial units.

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BMF – BELGO-MINEIRA FOMENTO MERCANTIL LTDA.

This is a factoring company that works with the acquisition of assets. It also makes collections and provides technical-consulting support to the financial area.

BELGO-MINEIRA COMERCIAL EXPORTADORA SA.

This company provides foreign trade services to the other group companies.

USINA HIDRELÉTRICA GUILMAN-AMORIN SA

A power generation company, with capacity of 140 MW.

BEMEX INTERNACIONAL LTDA.

It provides foreign trade services to the other group companies.

BELGO-MINEIRA URUGUAY S.A.

It provides foreign trade services to the other group companies.

PBM - PICCHIONI BELGO-MINEIRA DTVM S.A.

It provides financing services to the other group companies.

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CIMAF CABOS S.A.

Company in which BBA holds 50% share ownership. It is controlled by Wire Rope Industries Group (WRI), Canada, and produces steel cables for the mechanical industry, for elevators, oil platforms and use in general. The company has operational unit in the city of Osasco, São Paulo.

PROCABLES S.A.

Company in which BBA holds 47.74% of the capital. It is controlled by Wire Rope Industries Group (WRI), of Canada. It produces steel cables for the mechanical industry, for elevators, oil platforms and use in general. The company has operational unit in Peru.

PRODUCTOS DE ACEROS S.A. – PRODINSA

Company in which BBA holds 50% of the capital. It is controlled by the WR Group. It produces steel cables for the mechanical industry, for elevators, oil platforms and for use in general. It has operational unit in Chile.

WIRE ROPE INDUSTRIES LIMITED

Company in which BBA holds 50% of the capital. It is controlled by the WRI Group. It produces steel cables for the mechanical industry, for elevators, oil platforms and use in general. It has operational unit in Canada.

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9. THE OPERATION

The Operation

PHASE 1: BELGO will merger AAB and APSL.

PHASE 2: BELGO will merger CST shares.

EVEN TS AND AJUSTMENTS CONSIDERED IN THE APPRAISAL

For this appraisal, in Phase 1, which consists of the AAB and APSL merger by BELGO, we considered APSL’s capital increase by subscription performed on June 3, 2005, in the amount of R$ 248,852,480.00 with the issuance of 2,262,349,818 shares, and APSL’s acquisition of 2,721,968,485 shares in CST, made with funds from the capital increase. These events will be reflected in the adjusted balance sheet of APSL

In Phase 2, which refers to the merger of CST shares, we already considered the effects of the AAB and APSL merger by BELGO, assuming that this operation will be approved. Thus, we considered that BELGO owns 22,267,595,982 shares in CST and 200,965,646 shares in VEGA DO SUL S/A, and the new amount of BELGO shares, according to the Protocol of Merger (Phase 1) is equal to 9,871,421,612 shares.

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10. GENERAL APPRAISAL CRITERIA

The table below shows the defined general criteria to evaluate each account and/or group of accounts of the companies involved in the operation:

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11. APPRAISAL OF THE CST NET EQUITY AT MARKET VALUE

In this appraisal, the assets approach was adopted to calculate the market value of the CST Net Equity. In this approach, we analyzed the relevant assets and liabilities so as to reflect their fair market value.

APPRAISAL OF THE PROPERTY, PLANT AND EQUIPMENT

The property, plant and equipment are the most important ones within CST. The appraisal of these assets is shown below:

APPRAISAL OF THE OTHER ASSETS AND LIABILITIES

The other assets were appraised under the criteria in chapter 10, as show the calculation charts in Attachment 1.

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AMOUNT OF THE CST NET EQUITY AT MARKET VALUE

The table below shows the CST Net Equity at market price, including the respective adjustments of the main accounts:

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VALUE OF THE CST SHARES

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12. APPRAISAL OF THE AAB NET EQUITY AT MARKET VALUE

APPRAISAL OF THE INVESTMENT IN VEGA

VEGA is a steel transformation plant that employs the most modern processes for scouring, cold rolling and galvanization. It was officially inaugurated on April 27, 2004, but the galvanization operations started in July 2003, and the scouring and rolling operations started in September and October, respectively.

As this is a newly-inaugurated plant, we considered the property, plant and equipment book value equal to the market value.

For the other assets and liabilities, we adopted the criteria described in chapter 10, as shown in the calculation chart of Attachment 1.

NET EQUITY AT MARKET VALUE

The table below shows the AAB Net Equity at market price, including the respective adjustments of the main accounts:

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ADJUSTMENT ORIGINS

The table below shows, in a summarized form, the origins of the adjustments of the AAB Net Equity:

VALUE OF THE AAB QUOTAS

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13. APPRAISAL OF THE APSL NET EQUITY AT MARKET VALUE

The criteria described in chapter 10, as shown in the calculation charts in Attachment 1, were used to appraise the APSL assets and liabilities.

We considered the subsequent events and adjustments described in Chapter 9 (see adjusted balance sheet in Attachment 2) to calculate the APS Net Equity at market and the swap ratio.

NET EQUITY AT MARKET VALUE

The table below shows the APSL Net Equity at market value, including the respective adjustments of the main accounts:

VALUE OF THE APSL SHARES

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14. APPRAISAL OF THE BELGO NET EQUITY AT MARKET VALUE

We adopted the asset approach to appraise the BELGO Net Equity at market value. In this approach, we calculated the relevant assets and liabilities so as to reflect their fair market value.

INVESTIMENTS

To appraise the BELGO investments we adopted the criteria described in Chapter 10.

The next table shows the appraisal of the property, plant and equipment of the invested companies’ operational units.

APPRAISAL OF THE OTHER ASSETS AND LIABILITES

To appraise the other assets and liabilities, we adopted the criteria described in Chapter 10, as shown in calculation plans in Attachment 1.

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BELGO SIDERURGIA NET EQUITY AT MARKET VALUE

The table below shows the BELGO SIDERURGIA Net Equity at market value. This company holds the majority portion of Belgo’s assets:

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BELGO NET EQUITY AT MARKET VALUE

The table below shows the BELGO Net Equity at market value, including the respective adjustment origins:

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ADJUSTMENT ORIGINS

The table below shows, in a summarized form, the origins of the adjustments of the Belgo Net Equity: valores em R$ milions

VALUE OF BELGO SHARES

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15. SWAP RATIO CALCULATION

PHASE 1 (AAB and APSL MERGER)

Note: Amount of AAB or APSL quotas / shares for one BELGO share, considering the events and adjustments in Chapter 9

PHASE 2 (CST SHARES MERGER)

Note: Amount of CST shares for one BELGO share, considering the realizations in Phase 1

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16. CONCLUSION

Based on the analysis of the above-mentioned documentation and the APSIS studies, the experts concluded that the swap ratios of the BELGO shares for AAB shares and APSL shares, appraised according to the Net Equity at market value under the asset approach on May 31, 2005, are the following:

And the swap ratio of BELGO shares, (after the merger of AAB and APSL), for the CST shares is the following:

Report RJ-057/05 is concluded. It is composed of seventy-eight (78) pages typed on one side, and four (4) attachments, and it was prepared in two (02) original counterparts. APSIS Consultoria Empresarial S/C Ltda., CREA/RJ 82.2.00620 -1 and CORECON/RJ RF/2.052 -4, an asset appraisal specialized company, undersigned by its legally authorized officers, is available for any necessary clarification.

Rio de Janeiro. July 19, 2005.

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17. LIST OF ATTACHMENTS

1. APPRAISALS

2. SUPPORTING DOCUMENTATION

3. GLOSSARY

4. APSIS PROFILE

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SWAP RATIO EVALUATION

VALUE ( R$ MILLION )

COMPANY: COMPANHIA SIDERÚRGICA BELGO-MINEIRA (APÓS INCORPORAÇÃO AAB e APSL)

Avaliação da Posição de Troca

COMPANY: APSL ONPN PARTICIPACOES S.A.

COMPANY: ARCELOR ACOS DO BRASIL LTDA

DEFERRED ASSETS

COMPANY: COMPANHIA SIDERURGICA TUBARÃO

COMPANY VEGA

COMPANY: SOL COQUERIA TUBARÃO S.A.

COMPANY COMPANHIA SIDERÚRGICA BELGO-MINEIRA

COMPANY BELGO-MINEIRA PARTIC. IND. COM. S/A.

COMPANY BELGOPAR LTDA.

COMPANY ITAÚNA SIDERÚRGICA LTDA.