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13. FINANCIAL INSTRUMENTS (Tables)
 12 Months Ended
Dec. 31, 2018
Financial Instruments Tables Abstract  
Financial instruments

 

      Consolidated
      Disclosed on 12/31/2017   Applied on 01/01/2018   Balance at 12/31/2017
Assets              
Current              
Cash and cash equivalents     Loans and Receivables   Amortized cost   3,411,572
Short term investments     Loans and Receivables   Amortized cost   735,712
Accounts Receivable Net     Loans and Receivables   Amortized cost   2,197,078
Loans with related parties     Loans and Receivables   Amortized cost   2,441
Derivative financial instruments     VJR   VJR    
Trading securities     VJR   VJR   2,952
Dividends receivable     Amortized cost   Amortized cost   41,528
               
Non-current              
Loans with related parties     Loans and Receivables   Amortized cost   554,694
Other trade receivables     Loans and Receivables   Amortized cost   20,024
Investments     Available for sale   VJR   2,222,479
               
Liabilities              
Current              
Borrowings and financing     Amortized cost   Amortized cost   6,551,764
Derivative financial instruments     VJR   VJR    
Trade payables     Amortized cost   Amortized cost   2,460,774
Dividends and interest on capital     Amortized cost   Amortized cost   510,692
               
Non-current              
Borrowings and financing     Amortized cost   Amortized cost   23,017,953
Financial instruments at fair value through profit or loss

                            Consolidated
            12/31/2018       12/31/2017
  Notes   Fair value through profit or loss   Measured at amortized cost   Balances   Fair value through profit or loss   Measured at amortized cost   Balances
             
Assets                            
Current                            
Cash and cash equivalents          4             2,248,004      2,248,004             3,411,572      3,411,572
Financial investments          5                895,713         895,713                735,712         735,712
Trade receivables          6             2,078,182      2,078,182             2,197,078      2,197,078
Dividends receivable          8                  46,171           46,171                  41,528           41,528
Derivative financial instruments          8                351                    351            
Trading securities          8             4,503                 4,503             2,952                 2,952
Loans - related parties          8       2,675             2,675       2,441             2,441
Total                 4,854         5,270,745      5,275,599             2,952         6,388,331      6,391,283
                                                                   
Non-current                                                                  
Financial investments          5                    7,772             7,772            
Other trade receivables          8                820,879         820,879                804,765         804,765
Investments          9      2,279,189          2,279,189      2,222,433          2,222,433
Loans - related parties          8       706,605         706,605                554,694         554,694
Total          2,279,189         1,535,256      3,814,445      2,222,433         1,359,459      3,581,892
                             
Total Assets          2,284,043         6,806,001      9,090,044      2,225,385         7,747,790      9,973,175
                             
Liabilities                                                                  
Current                                                                  
Borrowings and financing        12             5,681,797      5,681,797             6,551,764      6,551,764
Trade payables                 3,473,822      3,473,822             2,505,695      2,505,695
Dividends and interest on capital        14                932,005         932,005                510,692         510,692
Total               10,087,624    10,087,624             9,568,151      9,568,151
                             
Non-current                                                                  
Borrowings and financing         12           23,260,945    23,260,945           23,017,953    23,017,953
Total               23,260,945    23,260,945           23,017,953    23,017,953
                             
Total Liabilities               33,348,569    33,348,569           32,586,104    32,586,104
Investments in financial instruments classified as available-for-sale
Consolidated   12/31/2018       12/31/2017
  Level 1   Level 2   Balance   Level 1   Balance  
Assets                      
Current                      
Financial assets at fair value through profit or loss                  
Derivative financial instruments       351   351          
Trading securities   4,503       4,503   2,952   2,952  
Non-current                      
Available-for-sale financial assets                      
Investments   2,279,189       2,279,189   2,222,433   2,222,433  
Total Assets   2,283,692   351   2,284,043   2,225,385   2,225,385  
                         
Foreign exchange exposure
        12/31/2018
Foreign Exchange Exposure   (Amounts in US$’000)   (Amounts in €’000)
Cash and cash equivalents overseas                  376,581                    3,387
Trade receivables                  358,283                    1,124
 Other assets                      8,623                    4,594
Total Assets                  743,487                    9,105
Borrowings and financing             (4,116,508)                (48,791)
Trade payables                (175,404)                  (7,946)
Other liabilities                    (3,529)                     (920)
Total Liabilities             (4,295,441)                (57,657)
Foreign exchange exposure             (3,551,954)                (48,552)
Cash flow hedge accounting               2,076,045    
Net Investment hedge accounting                      48,000
Net foreign exchange exposure             (1,475,909)                     (552)
Perpetual bonds               1,000,000    
Net foreign exchange exposure excluding perpetual bonds                (475,909)                     (552)
Dollar x Euro swap
                       

 

 

Consolidated

                            12/31/2018
                Appreciation (R$)   Fair value
(market)		   Impact on financial income (expenses) in 2018
Counterparties   Maturity   Functional Currency   Notional amount   Asset
position		   Liability
position		   Amounts receivable / (payable)  
BCP   03/08/2019   Dollar   18,563   71,967   (71,616)   351   (1)
Total dollar-to-euro swap       18,563   71,967   (71,616)   351   (1)
                             
                71,967   (71,616)   351   (1)
Hedging instruments

 

                                    12/31/2018
Designation Date   Hedging Instrument   Hedged item   Type of hedged risk   Hedged period   Exchange rate on designation   Designated amounts (US$’000)   Amortizated part (USD'000)   Effect on Result
(*) (R$'000)		   Impact on
Shareholders'
equity (R$'000)
11/03/2014   Export prepayments in US$ to third parties   Part of the highly probable future monthly iron ore exports   Foreign exchange - R$ vs. US$ spot rate    October 2016 -
September 2019 		   2.4442              500,000            (250,003)              171,983                 (357,649)
12/01/2014   Export prepayments in US$ to third parties   Part of the highly probable future monthly iron ore exports   Foreign exchange - R$ vs. US$ spot rate   October 2015 -
February 2019		   2.5601              175,000            (154,999)                36,766                   (26,295)
12/18/2014   Export prepayments in US$ to third parties   Part of the highly probable future monthly iron ore exports   Foreign exchange - R$ vs. US$ spot rate    May 2020    2.6781              100,000                                                                         (119,670)
07/21/2015   Export prepayments in US$ to third parties   Part of the highly probable future monthly iron ore exports   Foreign exchange - R$ vs. US$ spot rate    July 2019 - March
2021 		   3.1813                60,000                                                                           (41,610)
07/23/2015   Export prepayments in US$ to third parties   Part of the highly probable future monthly iron ore exports   Foreign exchange - R$ vs. US$ spot rate    July 2019 - March
2021 		   3.2850              100,000                                                                           (58,980)
07/23/2015   Export prepayments in US$ to third parties   Part of the highly probable future monthly iron ore exports   Foreign exchange - R$ vs. US$ spot rate    October 2018 -
October 2022 		   3.285                30,000                (6,000)                  5,102                   (14,155)
07/24/2015   Export prepayments in US$ to third parties   Part of the highly probable future monthly iron ore exports   Foreign exchange - R$ vs. US$ spot rate    October 2018 -
October 2022 		   3.3254              100,000              (20,000)                16,198                   (43,952)
07/27/2015   Export prepayments in US$ to third parties   Part of the highly probable future monthly iron ore exports   Foreign exchange - R$ vs. US$ spot rate    October 2018 -
October 2022 		   3.3557                25,000                (5,000)                  3,898                   (10,382)
07/27/2015   Export prepayments in US$ to third parties   Part of the highly probable future monthly iron ore exports   Foreign exchange - R$ vs. US$ spot rate    October 2018 -
October 2022 		   3.3557                70,000              (14,000)                10,914                   (29,070)
07/27/2015   Export prepayments in US$ to third parties   Part of the highly probable future monthly iron ore exports   Foreign exchange - R$ vs. US$ spot rate    October 2018 -
October 2022 		   3.3557                30,000                (6,000)                  4,677                   (12,458)
07/28/2015   Export prepayments in US$ to third parties   Part of the highly probable future monthly iron ore exports   Foreign exchange - R$ vs. US$ spot rate    October 2018 -
October 2022 		   3.3815                30,000                (6,000)                  4,523                   (11,839)
3/8/2015   Export prepayments in US$ to third parties   Part of the highly probable future monthly iron ore exports   Foreign exchange - R$ vs. US$ spot rate    October 2018 -
October 2022 		   3.3940              355,000              (11,998)                  6,179                 (164,915)
04/02/2018    Bonds   Part of the highly probable future monthly iron ore exports   Foreign exchange - R$ vs. US$ spot rate    July 2018 - February 2023
   3.3104           1,170,045            (195,000)              109,951                 (550,320)
Total                               2,745,045            (669,000)              370,191              (1,441,295)
Changes in hedge accounting
  12/31/2017   Movement   Realization   12/31/2018
Cash flow hedge accounting            395,524           1,415,962             (370,191)           1,441,295
Fair value of cash flow hedge, net of taxes            395,524           1,415,962             (370,191)           1,441,295
Non-derivative financial liabilities
                        12/31/2018
Designation Date   Hedging Instrument   Hedged item   Type of hedged risk   Exchange rate on designation   Designated amounts (EUR'000)   Amortized part (USD’000) Impact on shareholders' equity
09/01/2015   Non-derivative financial liabilities in EUR – Debt contract   Investments in subsidiaries which EUR is the functional currency   Foreign exchange - R$ vs. EUR spot rate   4.0825   120,000   (72,000) 3,941
Total                   120,000   (72,000)         3,941
                           
Changes in net investment hedge
               
  12/31/2017   Movement     12/31/2018  
Net Investment hedge accounting (17,911)   21,852     3,941  
Fair value of net investment hedge in foreign operations (17,911)   21,852     3,941  
               
Currencies used in sensitivity analysis
                12/31/2018
Currency   Exchange rate   Probable scenario   Scenario 1   Scenario 2
USD   3,8748   3,7626   4,8435   5,8122
EUR   4,4390   4,2833   5,5488   6,6585
USD x EUR   1,1456   1,1346   1,4320   1,7184
                 
                 
   

 

 

 

 

            
            12/31/2018    
Interest   Interest rate   Scenario 1   Scenario 2    
CDI   6,40%   8,00%   9,60%    
TJLP   6,98%   8,73%   10,47%    
Libor   2,88%   3,60%   4,32%    
Sensitivity analysis effects on income statement

 

                    12/31/2018
Instruments   Notional   Risk   Probable scenario (*)   Scenario 1   Scenario 2
                     
Hedge accounting of exports   2,076,045   Dollar   (232,932)   2,011,065   4,022,130
                     
Natural currency position   (3,551,954)   Dollar   398,529   (3,440,778)   (6,881,556)
(not including exchange derivatives above)                    
                     
Consolidated exchange position   (1,475,909)   Dollar   165,597   (1,429,713)   (2,859,426)
(including exchange derivatives above)                    
                     
Net Investment hedge accounting   48,000   Euro   (7,474)   53,268   106,536
                     
Natural currency position   (48,552)   Euro   7,560   (53,881)   (107,762)
                     
Consolidated exchange position   (552)   Euro   86   (613)   (1,226)
(including exchange derivatives above)                    
                     
Dollar-to-euro swap   18,563   Dollar   (1,011)   14,072   23,663
Sensitivity analysis of interest rate swaps
                        Consolidated
                    Impact on profit or loss
Changes in interest rates   % p.a   Assets   Liabilities   Probable scenario (*)   Scenario 1   Scenario 2
TJLP   6,98       (954,635)   (2,793)   (16,658)   (33,316)
Libor   2.88       (4,799,586)   (47,391)   (34,505)   (69,010)
CDI   6.40   609,480   (11,667,006)   (53,528)   (176,924)   (353,848)
Contractual maturities of financial liabilities
                  Consolidated
At December 31, 2018 Less than one year   From one to two years   From two to five years   Over five years   Total
Borrowings, financing and debentures 5,681,797   10,192,606   8,608,664   4,459,675   28,942,742
Trade payables 3,473,822               3,473,822
Dividends and interest on capital 932,005               932,005