Brazilian company Vale S.A. and ThyssenKrupp Steel AG signed Thursday a memorandum of understanding that Vale will increase its stake in a new steel plant being built by ThyssenKrupp in Sepetiba Bay, 37 miles south of Rio de Janeiro.
As part of the deal, Vale S.A. will raise its stake in ThyssenKrupp CSA Siderurgica do Atlantico Ltd. to 26.87 percent from its current 10 percent interest, ThyssenKrupp said.
A ThyssenKrupp news release about the memorandum said Vale will raise its stake through a capital infusion of about $1.371 million.
The decision is still subject to, among other conditions, the approval of the board of directors of Vale and supervisory boards of ThyssenKrupp, the German steelmaker said.
CSA is building an integrated steel slab plant, with a nominal capacity of 5 million metric tons of slab per year, in Sepetiba Bay, already home to heavy industry. The currently expected start-up is the first half of 2010. As a strategic partner of ThyssenKrupp, Vale is the sole and exclusive supplier of iron ore to CSA.
A ThyssenKrupp spokesman told United Press International via e-mail that 40 percent of the steel produced at CSA will be delivered to ThyssenKrupp's German plants for processing to finished flat products for European customers.
The remaining 60 percent is earmarked for processing in a new plant in Alabama, which is also under construction, the spokesman said.
Through this additional capital contribution, Vale confirms its engagement in the largest industrial investment under construction in Brazil in the last 10 years and the first large steel mill built in the country since the mid-1980, providing a strong support to the project completion, the announcement said.
CSA said the company was building a steel mill that will produce 5 million tons of steel per year beginning in December.
It said the plant will have a workforce of 3,500 people and create 10,000 jobs indirectly. "For ThyssenKrupp Steel the new mill is a once-in-a-century event — and the key to a forward strategy which will lead the company into a successful future," CSA said.
ThyssenKrupp Steel is a global player holding leading positions worldwide and accounts for around 20 percent of ThyssenKrupp's consolidated sales.
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