Race begins for CSN iron ore unit Namisa

July 22, 2008

July 22nd (Steel Guru) – Reuters reported that Severstal, Essar, BaoSteel Shougang, Shagang and a Japanese consortium are among the groups that are in the second round of bidding for CSN’s iron ore unit Namisa in Brazil.

As per report, the Japanese consortium is led by a trading house and includes domestic steelmakers. Two sources confirmed that a Japanese group was bidding, but did not identify the companies.

Two separate Chinese consortia are also bidding. One is a steel consortium of Baosteel Group and Shougang Group and the other is top private steelmaker Shagang Group, which could potentially team up with a trading house, smaller steel mills and sovereign wealth fund CIC.

The second round of bids is expected in the next few weeks, although several sources described a somewhat fluid process. One said some potential bidders, such as Anglo American, had yet to commit but could still make a late entry to the bidding.

CSN hired Goldman Sachs earlier this year to sell some or all of it’s Namisa subsidiary, taking advantage of raging demand for iron ore. Goldman had put a USD 10 billion price tag on the asset, the top end of analysts’ range of values, although several investment bankers mentioned a value of USD 7 billion to USD 8 billion.

CSN has plans to boost Namisa’s annual production capacity from 7.5 million tonnes this year to 42 million tonnes. That aspiration, combined with an enterprise value of USD 250 per tonne of iron ore, could justify a price of USD 10 billion or more.

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