Japanese group Sumitomo Metals and French steel tube maker Vallourec have agreed to set up a joint venture to make high grade seamless pipes in the Brazilian state of Minas Gerais for about $1.6 billion.
The joint venture plans to start operations in the middle of 2010 and will have an annual production capacity of 600,000 mt of seamless pipes. The project will include a steel mill with annual production capacity of 1.0 million tons of round billets, of which 700,000 tons will be used for the pipe plant. Construction is set to start in the fourth quarter of 2007.
In a separate statement, Sumitomo Metal said it and Sumitomo Corp. will buy a total 49 percent stake in Vallourec's seamless pipe processing unit in China. The mill will start operations in mid-2007 with an annual production capacity of 50,000 tons of steel tubing and casing products. Sumitomo Corp. plans to acquire a 15 percent stake with Sumitomo Metal taking a 34 percent stake, leaving the remaining 51 percent with Vallourec for the China unit.