ThyssenKrupp nears sale of Brazilian steel plant to CSN
17 Jul 2013
Germany's largest steelmaker ThyssenKrupp AG is close to selling a majority stake in its struggling steel mill in Brazil to, Companhia Siderurgica Nacional (CSN), Brazilian daily O Estado de S. Paulo yesterday reported, without disclosing its source.
The news sent Essen-based ThyssenKrupp's stock price surging by as much as 3.8 per cent to €15.95, valuing the German industrial conglomerate at €8.19 billion ($10.7 billion).
ThyssenKrupp holds a 73.13-per cent stake in the Brazilian plant known as CSA, while the remaining 26.87-per cent is held by Brazilian mining giant Vale SA.
In May, ThyssenKrupp was reported to have been in talks with CSN after the Brazilian steelmaker emerged as the lead bidder.
O Estado de S. Paulo said that ThyssenKrupp would retain a minority stake, while CSN will acquire a 66 per cent stake in CSA in a deal that values the plant at around $1.8 billion.
The report added that the deal requires approval from Vale, which wants assurances that its exclusive iron-ore supplies on a long-term-contract basis continues.
A joint venture between ArcelorMittal and Nippon Steel & Sumitomo Metal Corp is the lead bidder for ThyssenKrupp's Alabama plant although CSN is also in the race.
ThyssenKrupp started operating its CSA steel-slabs plant in Rio de Janeiro in 2010, which has a capacity to produce five million tonnes of steel annually.
The construction of the plant in Alabama was one of the company's biggest ever foreign investments in the US. It spent $5 billion in 2010 in the overall complex, including $3.6 billion on the carbon flat steel facilities and $1.4 billion on the stainless area.
Due to cost overruns, the overall cost of building the plants in Brazil and Alabama was nearly €10 billion, much above its original estimates of €8.3 billion.
The company took a €2.9-billion ($3.7 billion) impairment charge in the Q4 fiscal of 2011 attributable to both mills when it reported a loss.
In 2007, the steelmaker had developed a strategy for Steel Americas based on two basic premises - slabs were to be produced at low cost in Brazil and shipped with cost advantages to the US. After processing they would then be sold in the North American market.
But global steelmakers have recently come under pressure to cut costs with demand slowing faster than expected, especially in Europe and China.
.webp)
