CSN to Spend $2.5 Billion to Boost Iron-Ore Output (Update1)
June 12, 2008
June 12th (Bloomberg) – Cia. Siderurgica Nacional SA, Brazil’s third-largest steelmaker, will invest $2.5 billion in the next two years to boost iron-ore output and become a global supplier of the main ingredient used to make steel.
The company will start an iron-ore pellet plant able to produce 6 million metric tons a year near its Casa de Pedra mine by 2010, Mining Director Juarez Saliba said today in a Bloomberg Television interview. CSN, as the Rio de Janeiro-based company is known, is also prospecting at three other sites outside Brazil’s Minas Gerais state and a fourth location in Africa.
CSN will focus on expanding iron-ore output in coming years after it won its legal battle with industry leader Cia. Vale do Rio Doce over exports from Casa de Pedra, Brazil’s third-biggest iron-ore mine. CSN this week signed a 25-year supply contract with Bahrain-based Gulf Industrial Investment Co., a former Vale customer.
Within two to three years, “CSN will be as much a mining company as a steel company,” Saliba said in the interview in Sao Paulo. The company is “looking at very interesting mining targets, both within Brazil and Africa, which offers great mining and natural-resource opportunities.”
CSN is seeking to sign more global iron-ore supply contracts after prices for the raw material rose to a record for a sixth straight year. Folha de S. Paulo newspaper reported yesterday that the value of the contract signed with Gulf Industrial is worth $14 billion.
The company will sell more than 30 million metric tons of iron ore this year from Casa de Pedra and its Nacional Minerios SA unit, known as Namisa, Saliba said. Sales will rise to 40 million tons in 2009 and reach 100 million tons by 2012, he said.
Earlier this year, CSN said it hired Goldman Sachs Group Inc. to evaluate a possible sale of Namisa.
“Ideally, we would sell part of Namisa,” Saliba said. “We have many proposals from interested parties and the sale should be confirmed by late August.”
CSN is still considering selling shares in Casa de Pedra in an initial public offering, he said.