Market analysts have labeled as positive the indication that Brazilian steelmaker Companhia Siderurgica Nacional (CSN) might sell its iron ore business through an initial public offering (IPO), a media report from Exame said.
Reach Capital analyst Pedro de Marco said steel mills will demand more and more high-quality iron ore, which should favor CSN’s willingness to sell an attractive asset.
“There’s a proper window to make such an IPO and obtain and attractive (selling) price,” de Marco said, adding an iron ore business might not be as much attractive in 10 years as it is now.
“Ten years from now, all developed countries – including the US, Japan and Europe – will see diminished steel consumption demand per capita, with a GDP more aimed at services, which would reduce the attractiveness of such (an iron ore) company.”
Adriano Cantreva, partner at Portofino Investments, said CSN CEO, Benjamin Steinbruch, should likely make a “smaller” IPO to “test the market’s interest.”
Analysts said the situation of CSN’s Casa de Pedra mine might be a challenge. The Casa de Pedra mine has a high-risk dam structure, similar to that of Brumadinho, which collapsed killing 259 people.
Marco said, however, the market’s interest for a CSN mining IPO should not impact current dam concerns. Despite concerns, he said the Casa de Pedra mine has just one dam, which is easier to oversee.