Brazilian flat steel producer Companhia Siderurgica de Tubaro (CST) foresees to increase its annual steel
slab production to 7.5 million tons from the current 5 million ton level, under the framework of expansion plan approved by the board on April 22, 2003.
The expansion plan is estimated to cost around $600 million. According to a statement by company officials, no capital injection from the shareholders will be received and the expansion program will be 70% financed by outside resources. The maturities of the lendings will be longer than the estimated return of investment.
The national social and economic development bank BNDES is expected to supply 30% of the total financing with foreign suppliers, and development banks will kick in a portion of the other 40% depending on the mix of local and foreign content of supplied machinery.
The expansion plan calls for
construction of a blast furnace no.3 , converter no.3, RH-vacuum degasser no.2, continuous casting machine no.3 and peripheral equipment as well as externalizing of a new coking unit, oxygen plants and slag granulators.
CST plans to start operations at the new unit at the beginning of 2006. In line with such schedule the company will receive offers from equipment and machinery suppliers and conclude a contract with the winner at the end of this year.
Company capital expenditure in the first quarter totalled $31 million, of which $17 million was for strategic
investments and major reforms, including the current
production optimization project and the balance due of payments on CST's new hot-strip mill.
Vitoria, Espirito Santo-based CST, controlled by Brazilian mining giant CVRD and European steel group Arcelor, is the world's largest producer of steel slabs.