MRS Logística S A : Annual Sustainability Report 2020

Message from the CEO

GRI 102-14

Guilherme Mello

Chief Executive Officer

2020 was a particularly challenging year. The pandemic of the new coronavirus required the company and its employees to make more efforts so that MRS operation could be maintained, while measures such as strict health protocols ensured safety for the teams to perform their activities. We fulfill our role as a company classified as an essential service, maintaining operations at a fast pace and delivering a high quality logistics service to customers and partners, without neglecting the health of our employees and, consequently, of the members of the communities where we are inserted.

The actions related to preventing the infection of the teams by the new coronavirus ranging from a group of actions that included the dissemination of qualified information about self-care to the availability of specific PPE (Personal Protective Equipment). In relationship with society, MRS maintained a leading position and understood that its role, as a large company present in more than 100 municipalities in the states of Minas Gerais, Rio de Janeiro and São Paulo, was to support the communities most affected by pandemic and who live close to the railway, with the distribution of kits with personal hygiene products and basic food baskets, in addition to support for Fiocruz's initiatives in the development of rapid tests for Covid-19 diagnosis. Funds surpassing R$ 11 million were invested in these and further actions.

The company's overall results indicate that the strategy was successful. The company transported 159.8

million tons, 8.8% higher than in 2019. The transport of iron ore, a commodity which undergone a strong appreciation throughout the year, is the main reason for this growth.

Transportation was positively benefited from a project linked to MRS innovative DNA: the operation of the Unmanned Train (Trem Não Tripulado - TNT acronym in Portuguese). The initiative was entirely developed by MRS professionals and meets a series of safety requirements for the traffic of railway trains in the Self- Rescue Zone, in the region of Brumadinho, where our trains cannot travel with train drivers. We are proud to have several other innovative initiatives developed in 2020. During the year, we signed a relevant agreement for pulp transportation between Pederneiras Terminal and Santos Port and the works on the multimodal terminal was started, which will make this operation feasible.

MRS remains committed to its ESG (Environmental, Social and Governance) practices and, to this end, we defined, with the support of consulting company, the strategic focuses for the next two years (2021-2022). We have 62 actions scheduled in governance, strategy, risk management and transparency, and some already started to be implemented in 2020, such as the review and improvement of our Corporate Governance practices, which brought us a gain in adherence with the new standards. We extend the commitment to sustainability goals to our suppliers and we are engaged to analyze carefully each almost two thousand service providers that work with us. In addition, for the second consecutive year, we present our main indicators through a Sustainability Report developed in compliance with GRI (Global Reporting Initiative) guidelines.

In the analysis of some very specific topics and also related to the sustainable business management, we highlight the improvement in the energy efficiency indicator, measured by the fuel consumption of the trains: there was a reduction of 0.7%, an efficiency gain, even considering the volume increase. That is, we transport more using less diesel. This indicator is measured by the quantity of liters consumed in transporting 1,000 gross tons per kilometer.

In 2020, MRS invested approximately R$ 12 million in funds for environmental control, projects and improvements. Among the actions developed, we highlight the treatment of liquid waste for industrial use or washing yards, in some railroad maintenance and operation sites; the planting of 13,000 native seedlings from the Atlantic Forest biome in a municipal park in Juiz de Fora (MG), in a planted area equivalent to 7 soccer fields; and destination of almost 20% of our solid waste for recycling or reuse. Our first emissions inventory using GHG (Greenhouse Gases) Protocol was also carried out, evidencing our concern to contribute to minimizing climate change, with survey and monitoring of data, and our commitment to the implementation of actions to reduce greenhouse gas emissions.

As mentioned above, 2020 was not a conventional year. It had new and never experienced complexities. The certainty that we are on the right path and that we have adopted the right measures is reflected in the results of the climate survey carried out with employees at the end of the year. The "Climate Favorability" item, which measures the level of overall satisfaction of professionals, recorded a growth of almost 5 percentage points compared to the level of 2019, reaching 87.6%. The result points to a high level of satisfaction, and this demonstrates that the efforts to keep the teams active, ensuring the safety of all, have contributed to the outstanding result.

This climate survey included, for the first time, questions about how employees perceive the Company's attitude regarding issues such as harassment, diversity and inclusion, already signaling which will be some of the priorities to be worked on in the future in people management. We have programs and actions to discuss and strengthening of the diversity on the railroad. For example, one of the actions is focused on increasing the presence of women at MRS, which has already been growing over the past few years.

2020 was a year of great challenges. We achieved a good result, despite the many variables that we dealt with. These results were only possible due to the dedication and effort of MRS team, a team formed by highly qualified professionals, who are committed not only to the company, but also to continuous improvement.