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PROPERTY, PLANT AND EQUIPMENT
 12 Months Ended
Dec. 31, 2021
PROPERTY, PLANT AND EQUIPMENT

 

12.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 29 and 34)                92,506           92,506
Write-offs (note 28)   (188)      (3,073)     (33)    (9)   (7,318)   (2,377)     (12,998)
Depreciation (note 27)   (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
Effect of foreign exchange differences   (932)     (6,402)    (2,627)    1,418     2,076   26     (22)    (6,463)
Acquisitions      22,441     367,050    6,756     2,527,722   62,106    7,197    2,993,272
Capitalized interest (1) (notes 29 and 34)                87,414           87,414
Write-offs (note 28)       (5,051)     (62,606)   (194)    (5,468)     (38,017)   (1,550)   (112,886)
Depreciation (note 27)      (163,911)    (1,845,757)   (7,043)          (68,068)     (27,878)   (2,112,657)
Transfers to other asset categories (3,683)     265,307     2,347,346    925    (2,634,947)       25,052     
Transfers to intangible assets                  (29,840)             (29,840)
Right of use - Remesurement                      109,109        109,109
Update of the ARO (Asset retirement obligation)     2,357                           2,357
Transfers to fixed assets to investment property without cash effect (4,065)     (1)                          (4,066)
Acquisition of Elizabeth  100,489   227,629     278,576     878    16,400          3,173    627,145
Transfers to inventory           261,504                     261,504
Others        19         3           22
Balance at December 31, 2021 349,495   3,019,934   13,800,888   29,037     3,643,682    581,824    106,274     21,531,134
Cost 349,495   5,358,388   29,348,048    190,847     3,643,682    754,606    445,870     40,090,936
Accumulated depreciation       (2,338,454)     (15,547,160)   (161,810)        (172,782)   (339,596)    (18,559,802)
Balance at December 31, 2021 349,495   3,019,934   13,800,888   29,037     3,643,682    581,824    106,274     21,531,134
(*)Refer substantially to assets for railway use, such as yards, rails, mines, and sleepers.

 

(1)The cost of capitalized interest is calculated, basically, for the projects in the Steel and Mining which refer, substantially, to:

- Steel: Technological updates and acquisition of new equipment for maintenance of the production capacity of Presidente Vargas Plant (RJ);

- Mining: Expansion of Casa de Pedra (MG) and TECAR (RJ).

 

(i)Right of use

 

Below the movements of the right of use recognized on December 31, 2021:

 

 

 

                  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
Effect of foreign exchange differences     3    (6)   29    26
Addition 1,195     178   40,503     20,230   62,106
Remesurement  63,120    18,031   27,958       109,109
Depreciation  (23,424)   (10,343)     (25,472)   (8,829)     (68,068)
Write-offs (16,940)          (20,944)   (133)     (38,017)
Transfers to other asset categories  22,319     (5,810)     (20,226)    3,717  
Balance at December 31, 2021   439,285    68,145   53,759     20,635     581,824
Cost   500,826    94,196   99,103     60,483     754,608
Accumulated depreciation (61,541)   (26,051)     (45,344)    (39,848)    (172,784)
Balance at December 31, 2021   439,285    68,145   53,759     20,635     581,824

 

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

 

      Consolidated
  12/31/2021   12/31/2020
Buildings and Infrastructure  34   34
Machinery, equipment and facilities 18   20
Furniture and fixtures 12   12
Others 10   10

 

 

Accounting Policy

 

Property, plant and equipment are carried at cost of acquisition, formation or construction, minus 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.