Brazilian mining and metals giant Companhia Vale do Rio Doce (CVRD) has announced that it is currently in negotiations with South Korean steelmaker Dongkuk Steel for the construction of an integrated steel slab plant in the Industrial District of Pecém, in the Brazilian State of Ceará. The MoU regarding the project is foreseen to be concluded on November 20, 2007, whereas the viability study is expected to be completed in the coming months.
The project in question comprises the construction of an integrated coal-based slab mill, which will have an initial annual production capacity of 2.5 million mt, with the possibility of doubling this capacity. Initially, the plant was expected to use natural gas instead of coal; however, disagreement with state energy company Petrobras has altered the plans. The investment for the first phase of the project is expected to be $2 billion and the mill is scheduled to commence production operations in 2010-2011.
In a statement regarding the planned mill, CVRD said that the initiative is in line with CVRD's strategy of attracting new investments to the Brazilian steel industry through the channel of minority stakes, thus increasing iron ore consumption in the country.
The project in question is the third largest steel project in Brazil that CVRD has been involved in over the past three years, including its project with ThyssenKrupp CSA in the State of Rio de Janeiro and also that with Baosteel CSV in the State of Espirito Santo, contributing to a combined increase of 12.5 million mt in the country's steel production, with total investments worth around $10 billion.