Talks between the Brazilian state of Maranhao and CBSteel to build a mill in the city of Bacabeira, in the northern state, are said to have advanced, according to a media report.
CBSteel is expected to invest $3.5 billion in the first phase of the project, and then an additional $4.5 billion, as the mill reaches a 10 million mt/year capacity in longs. Officials from the state of Maranhao believe a final deal to build the mill could be signed by the end of 2016. The Chinese investors are expected to meet Maranhao state officials later in October, as talks advance.
Looking to attract the Chinese investors, the state of Maranhao expects to make the mill area an Export Processing Zone (EPZ), just like Vale’s co-owned slab producer Companhia Siderurgica do Pecem, located in the state of Ceara. If it becomes an EPZ zone, the CBSteel-owned mill should need to export 80 percent of its output.
However, Simplicio Araujo, state secretary for industry and commerce, expects rules currently regulating the EPZ zones could change the percentage of output that needs to be exported to 70 or 60 percent, allowing 30 or 40 percent of production to supply the domestic market.
“We’re still negotiating it all, but we believe a 60-70 percent export percentage is feasible,” Araujo told newspaper Valor.
The mill is expected to be built in 2018 and start operations by 2022, initially producing 3 million mt of wire rod. Rebar production will commence later.
Other benefits offered to CBSteel by the Maranhao state to establish its mill in Bacabeira include a 20,000 square-meter site to build the plant, plus a 95 percent discount over the ICMS tax.