Vale said in a statement , "The global economic crisis, which affected the chain leading steelmakers worldwide to a strong reduction in steel production, as well as a change in scenarios for the CSV project, led Baosteel to propose the cancellation of the project."
According to Vale, the two companies decide to dissolve the project, Companhia Siderurgica Vitoria (CSV), which was to be built in Brazil's southeastern Espirito Santo state, after "intense negotiations and analysis of alternatives."
The joint-venture agreement to build the plant, which would have produced an estimated 5 million tons of steel annually, was initially signed in August 2007.
Vale said that it will continue to look for potential projects and other ways to strengthen Brazil's steel industry despite the cancellation of the CSV project.