BNDES may fund CSN's plan to buy Thyssen's Brazil assets-report
* BNDES may provide funding in exchange for stake
* Valor says CSN is in talks to get BNDES involved
* Brazil gov't prefers local bidder for CSA plant
SAO PAULO, Sept 28 (Reuters) - The Brazilian government may finance a plan by local steelmaker CSN to buy ThyssenKrupp's assets in Brazil and the United States, newspaper Valor Econômico said on Friday.
CSN is trying to convince BNDES, Brazil's state development bank, to finance ThyssenKrupp's money-losing slab-making mill CSA in Rio de Janeiro and a lamination plant in Alabama, Valor said, citing a source close to the deal.
BNDES could, as part of the deal, become a shareholder in CSA, the newspaper said. CSN would likely offer about 2 billion reais ($982 million) worth of shares it owns of rival Usiminas as collateral for any lending transaction with the BNDES, Valor said.
Capital allocation issues at CSN, especially Chief Executive Benjamin Steinbruch's unsuccessful efforts in the past to expand the company globally through mergers and acquisitions, have worried investors that it would overpay for assets.
The report underscores the government's growing clout in deciding the fate of strategic sectors such as steel, which are witnessing a wave of mergers and acquisitions. Government officials have voiced their preference for a local steel producer to buy CSA.
The eventual buyer of CSA will need to negotiate with local iron ore producer Vale, which holds an almost 30 percent stake in the company and holds certain first rights over the sale of control of CSA.
Spokespeople for CSN and BNDES declined to comment on the story.
Analysts have valued ThyssenKrupp's Steel Americas unit between $4 billion and $5 billion. The German company hired Goldman Sachs Group and Morgan Stanley & Co to gauge options for the unit, including finding a buyer.
CSA, which is 73 percent-owned by ThyssenKrupp, is up for sale after overhead eroded profitability.
The mill, which opened in 2009, has a capacity of up to 5 million tonnes of slab, part of which is sold to the company's cutting-edge U.S. plant in Calvert, Alabama, for processing into flat steel products used mostly by carmakers.
($1 = 2.04 Brazilian reais) (Reporting by Reese Ewing; Editing by Guillermo Parra-Bernal & Theodore d'Afflisio) (email@example.com; +5511 5644 7721; Reuters Messaging: firstname.lastname@example.org)