Japan's fourth largest steelmaker Sumitomo Metal Industries Ltd (SMI) and French seamless steel tubes producer Vallourec Group have signed an agreement to set up a JV facility in Brazil for the manufacture of 600,000 mt of seamless pipes annually. The Japanese and French sides will have respective 44 and 56 percent shares in the JV called Vallourec & Sumitomo Tubos do Brasil Ltda, which will cost a total of US$16 billion to build. Both parties, however, will function as equal partners in the pipe manufacturer.
SMI and Vallourec will each sell 300,000 mt of the planned 600,000-mt annual production of the new JV, which will be located in Brazil's Minas Gerais state. Vallourec & Sumitomo Tubos do Brasil Ltda will manufacture one million mt of crude steel annually. Of this amount, 700,000 mt will be used for the new pipe plant, while 300,000 mt will be used by Vallourec to reduce its external steel supply. Production is planned to be started by mid-2010.