The Brazilian steel scrap sector expects that Brazil’s anti-trust authority, Cade, may reject a proposed merger between long steelmakers ArcelorMittal Brazil and Votorantim Siderurgia, according to a media report from Reuters.
Cade said earlier this year the merger between ArcelorMittal and Votorantim Siderurgia in Brazil was “complex.”
Leonardo Palhares, the director of institutional relations at Inesfa, the country’s association of iron and steel scrap companies, said Cade has already signaled it will not take too long to make a decision on the deal, which should occur by September this year.
“It’s a David versus Goliath fight, but we think there’s a big chance [Cade] will reject it,” said Palhares.
If the deal is approved, there would be a strong concentration in the Brazilian longs market, Palhares said.
Palhares’ comments echoed CSN’s arguments, which asked Cade to reject the ArcelorMittal-Votorantim Siderurgia deal, arguing that with the exception of longs producer Gerdau, there would be the elimination of the “only competitor” capable of equally competing with ArcelorMittal: Votorantim Siderurgia.
Brazilian steelmakers ArcelorMittal Brazil and Votorantim Siderurgia announced in February they would combine their long steel operations in the country. Under the terms of the deal, Votorantim Siderurgia’s assets in Brazil would be part of ArcelorMittal Brazil’s portfolio. Votorantim’s mills in Argentina (Acerbrag) and Colombia (Acerias Paz del Rio) were not included in the deal.
The combined portfolio of the two companies would include ArcelorMittal’s mills in the cities of Monlevade, Cariacica, Juiz de Fora, Piracicaba and Itauna, as well as Votorantim Siderurgia’s mills in Barra Mansa and Resende, in addition to its participation in Sitrel, which is located in the city of Tres Lagoas. As a result, the merger would create a “long product steel producer with annual crude steel capacity of 5.6 million mt and annual rolling capacity of 5.4 million mt,” ArcelorMittal Brazil said at the time.