Brazil talks over possiblity of Usiminas - CST merger
CVRD is putting together an international alliance to merge CST and Usiminas. It is expected that Brazilian groups will end up with more than 50% of the new company.
CVRD's CEO Roger Agnelli was quoted in the South American press, saying that a merger between Espirito Santo-based
slab maker CST and Belo Horizonte-based flat steel maker Usiminas would be in the interests of Brazilian
iron ore giant CVRD. "What is necessary is to see if this is workable, since there are different interests in play. It is necessary to study this map of the steel sector. What interests us is to stimulate the sale of
iron ore, helping to strengthen our clients," the head of the Rio de Janeiro-based company said.
As per Mr Agnelli, the Brazilian steel sector still does not have sufficient scale to compete globally, and the domestic mills should consolidate. Agnelli said the proposed merger between CSN and Corus is one way to do it, but if the Europeans are more interested in obtaining cheap
iron ore then it is not the right driver.
"The objective of Corus is clear: it is to buy a mine, buy cheap
iron ore, the price that it is going to pay for the
iron ore from CSN's Casa de Pedra mine will lead to a distortion in the market. It is not good to do this," he said.
CVRD does not plan to take any action at the moment but it keeps reviewing the proposed merger to determine whether CSN will be in control of the new-look Corus or itself will be controlled.