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11. PROPERTY, PLANT AND EQUIPMENT
 12 Months Ended
Dec. 31, 2020
Property, plant and equipment [abstract]  
PROPERTY, PLANT AND EQUIPMENT
11. PROPERTY, PLANT AND EQUIPMENT

 

                              Consolidated
  Land   Buildings and Infrastructure   Machinery, equipment and facilities   Furniture and fixtures   Construction in progress   Right of use (i)   Other (*)   Total
Balance at December 31, 2019   226,949    3,062,238     12,603,619     28,455   3,217,052   472,345     90,286   19,700,944
Cost   226,949    4,250,471     24,372,514   170,229   3,217,052   531,044   386,144   33,154,403
Accumulated depreciation     (1,188,233)   (11,768,895)    (141,774)        (58,699)    (295,858)     (13,453,459)
Balance at December 31, 2019   226,949    3,062,238     12,603,619     28,455   3,217,052   472,345     90,286   19,700,944
Effect of foreign exchange differences  30,271   57,838    186,591    2,416    4,727    4,329    1,823   287,995
Acquisitions 654     865    122,744    874   1,583,054     49,934    4,156   1,762,281
Capitalized interest (1) (notes 28 and 33)                    92,506               92,506
Write-offs (note 27)  (188)       (3,073)    (33)    (9)     (7,318)     (2,377)    (12,998)
Depreciation (note 26)  (458)   (780,395)     (1,564,525)     (6,747)        (62,680)   (24,517)     (2,439,322)
Transfers to other asset categories 458   67,574    1,112,024    1,338     (1,212,373)          30,979     
Transfers to intangible assets                  (4,633)             (4,633)
Right of use - Remesurement                         60,058          60,058
Update of the ARO (Asset retirement obligation)      269,445                           269,445
Others         3   (6)    (2)         (48)     (53)
Balance at December 31, 2020   257,686    2,677,565     12,457,383     26,297   3,680,322   516,668   100,302   19,716,223
Cost   257,686    4,752,412     26,213,225   182,974   3,680,322   634,786   414,705   36,136,110
Accumulated depreciation     (2,074,847)   (13,755,842)    (156,677)         (118,118)    (314,403)     (16,419,887)
Balance at December 31, 2020   257,686    2,677,565     12,457,383     26,297   3,680,322   516,668   100,302   19,716,223

 

Consolidated
Land Buildings and Infrastructure Machinery, equipment and facilities Furniture and fixtures Construction in progress Right of use (i) Other (*) Total
Balance at December 31, 2018  287,854 2,678,638  11,687,271 30,530 3,282,436   - 80,135 18,046,864
Cost  287,854 3,751,429  22,426,782   165,331 3,282,436   -   355,768 30,269,600
Accumulated depreciation   (1,072,791) (10,739,511)  (134,801)      (275,633)   (12,222,736)
Balance at December 31, 2018  287,854 2,678,638  11,687,271 30,530 3,282,436   - 80,135 18,046,864
Effect of foreign exchange differences  1,499  2,978 8,033   106 2,464    56 15,136
Acquisitions  6,125   16,116   459,460   1,763 1,924,520  43,111 41,574  2,492,669
Capitalized interest (1) (notes 28 and 33)   13.0     117,176   -  117,189
Write-offs (note 27) (2,143)   (130) (80,426)  (1) (30,400)   (1,354)  (149) (114,603)
Depreciation (note 26)   (135,313)   (1,241,026)  (5,999)   (58,843)   (25,038) (1,466,219)
Transfers to other asset categories  790 294,872 1,766,047   2,629   (2,053,290)   -   (11,048)  -
Transfers to intangible assets  (31)   -  - (11,865)   -  -   (11,896)
Right of use - initial recognition   -  -   -   640,989  -  640,989
Right of use - Remesurement   -  -   -  (151,558)  - (151,558)
Update of the ARO (Asset retirement obligation) 225,125   -  -   -   -  -  225,125
Transfers to investment property   (67,176)  (20,030)   -  - (13,989)   -  - (101,195)
Consolidation CBSI 4,940  (573)   -   -   4,756   9,123
Others   (680)  -   -   -  - (680)
Balance at December 31, 2019  226,949 3,062,238  12,603,619 28,455 3,217,052   472,345 90,286 19,700,944
Cost  226,949 4,250,471  24,372,514   170,229 3,217,052   531,044   386,144 33,154,403
Accumulated depreciation   (1,188,233) (11,768,895)  (141,774)   (58,699.0)  (295,858)   (13,453,459)
Balance at December 31, 2019  226,949 3,062,238  12,603,619 28,455 3,217,052   472,345 90,286 19,700,944

 

 

(*) Refer substantially to: i) in the consolidated picture: assets for railway use, such as yards, rails, mines and dormant;

 

(1) The cost of capitalized interest is calculated, basically, for Mining projects that substantially refer to the expansion of Casa de Pedra (MG) and TECAR (RJ) - see notes 28 and 33. The average rate used for the capitalization of interest on non-specific projects in the period ended December 31 2020 was 5.62% per year (6.58% per year as of December 31, 2019).

 

(i) Right of use

 

Below the movements of the right of use recognized on December 31, 2020 and 2019:

 

                  Consolidated
  Land   Buildings and Infrastructure   Machinery, equipment and facilities   Others   Total
Balance at December 31, 2019   380,566   64,154   24,144    3,481    472,345
Cost   401,746   73,344   39,455     16,499    531,044
Accumulated depreciation   (21,180)    (9,190)    (15,311)   (13,018)    (58,699)
Balance at December 31, 2019   380,566   64,154   24,144    3,481    472,345
Effect of foreign exchange differences       988     294    3,047     4,329
Addition 9,039     4,561   23,720     12,614   49,934
Remesurement  34,645     3,827   21,557   29   60,058
Depreciation    (24,467)    (983)    (14,211)   (23,019)    (62,680)
Write-offs  (6,580)    (399)         (339)   (7,318)
Transfers to other asset categories  (188)    (6,062)   (3,558)    9,808    
Balance at December 31, 2020   393,015   66,086   51,946    5,621    516,668
Cost  434,689     75,882     81,598    42,617   634,786
Accumulated depreciation  (41,674)   (9,796)   (29,652)     (36,996)    (118,118)
Balance at December 31, 2020   393,015   66,086   51,946    5,621    516,668

 

                  Consolidated
  Land   Buildings and Infrastructure   Machinery, equipment and facilities   Other   Total
Initial recognition – Rights of use   556,133   54,513     9,783    20,560   640,989
Addition       6,719   34,197   2,195     43,111
Remeasurement  (152,915)   12,112   (4,525)     (6,230)    (151,558)
Depreciation (21,314)    (9,190)    (15,311)   (13,028)   (58,843)
Write-off   (1,338)            (16)     (1,354)
Balance at December 31, 2019   380,566   64,154   24,144   3,481   472,345
Cost  401,746     73,344     39,455   16,499     531,044
Accumulated depreciation   (21,180)   (9,190)   (15,311)     (13,018)     (58,699)
Balance at December 31, 2019   380,566   64,154   24,144   3,481   472,345

 

The average estimated useful lives for the years are as follows (in years):

 

      Consolidated
  12/31/2020   12/31/2019
Buildings and Infrastructure(1) 34   38
Machinery, equipment and facilities 20   21
Furniture and fixtures 12   12
Others 10   14

(1) The decrease was caused by the review of the useful lives of dams infrastructure as a result of technical and functional obsolescence recorded in 2020 as a result of the use of filter and stack dry tailings in our iron ore production.

 

Accounting Policy

 

Property, plant and equipment are carried at cost of acquisition, formation or construction, less accumulated depreciation or depletion and any impairment loss. Depreciation is calculated under the straight-line method based on the remaining economic useful economic lives of assets, as mentioned in note 9. The depletion of mines is calculated based on the quantity of ore mined. Land is not depreciated since their useful life is considered indefinite. However, if the tangible assets are mine-specific, that is, used in the mining activity, they are depreciated over the shorter between the normal useful lives of such assets and the useful life of the mine. The Company recognizes in the carrying amount of property, plant and equipment the cost of replacement, and consequently reducing the carrying amount of the part that is replaced if it is probable that future economic benefits embodied therein will revert to the Company, and if the cost of the asset can be reliably measured. All other disbursements are expensed as incurred.

 

  • Capitalized interest

 

Borrowing costs directly attributable to the acquisition, construction and or production of qualifying assets are capitalized as part of the cost of the asset when it is probable that they will result in future economic benefits and until these projects are completed.

 

  • Development Costs of New Ore Deposits

 

Costs for the development of new ore deposits, or for the expansion of the capacity of the mines in operation are capitalized and amortized by the method of units produced (extracted) based on the probable and proven quantities of ore.

 

  • Operating Expenses

 

Exploration expenses are recognized as expenses until the viability of the mining activity is established; after that period, subsequent costs are capitalized.

 

  • Waste Removal Costs

 

Expenses incurred during the development phase of a mine, prior to the production phase, are accounted for as part of the depreciable development costs. Subsequently, these costs are amortized over the useful life of the mine based on probable and proven reserves.

 

  • Sterile Costs

 

The waste disposal costs incurred in the production phase are added to the stock value, except when a specific extraction campaign is carried out to access deeper deposits of the deposit. In this case, costs are capitalized and classified in non-current assets and are amortized over the useful life of the deposit.