Vale signs MoU with ThyssenKrupp to up stake in Brazilian project

Thursday, 23 July 2009 11:44:22 (GMT+3)   |  
       

On June 22, Brazilian mining giant Vale S.A. (Vale) signed a memorandum of understanding (MoU) with German industrial conglomerate ThyssenKrupp Steel AG to increase its stake in the latter's new Brazil-based integrated steel slab plant, ThyssenKrupp CSA Siderúrgica do Atlântico Ltda. (CSA), to 26.87 percent from its current 10 percent interest, through a capital infusion of €965 million.

According to separate statements released by the companies, the decision in question is still subject to, among other conditions, the approval of the board of directors of Vale and the supervisory boards of ThyssenKrupp.

As SteelOrbis reported on July 6, Vale was considering the purchase of an additional stake in the new integrated steel slab plant, by invitation of ThyssenKrupp.

The new plant, in the state of Rio de Janeiro, Brazil, is planned to have a nominal capacity of five million mt of slab per year, while its startup is currently expected in the first half of 2010.

As a strategic partner of ThyssenKrupp, Vale will be the sole and exclusive supplier of iron ore to CSA.

Through this additional capital contribution, Vale has confirmed its engagement in the largest industrial investment under construction in Brazil in the last ten years and the first large steel mill built in the country since the mid-eighties, providing strong support for the project's completion.

On July 20, Vale and ThyssenKrupp reached agreement in their iron ore and pellet price negotiations for 2009. As the outcome of these negotiations, Vale's iron ore prices for ThyssenKrupp have decreased by 28.2 percent for fines, by 44.47 percent for lumps and by 48.3 percent for pellets, relative to the 2008 benchmark prices - the same percentage price decreases Vale has agreed with other steelmakers this year.


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