Brazil's CSN could see Asian partners exit Namisa unit -report

Tue May 21, 2013 8:06am EDT

* Asian partners could exercise put option this July

* JFE, Kobe, Posco-led group paid $3.1 bln for stake

* CSN declines to comment on Valor report on Namisa

SAO PAULO, May 21 (Reuters) - A group of Asian steelmakers that owns 40 percent of Brazilian iron ore producer Namisa could exercise an option to sell their stake to majority shareholder CSN as early as July, Valor Econômico newspaper reported on Tuesday.

Benjamin Steinbruch, chief executive officer and the largest shareholder in CSN, as Cia Siderúrgica Nacional SA is known, will meet with executives of Japan's Itochu Corp, which owns 22 percent of Namisa and the company that leads the consortium, to discuss the situation, Valor said, without saying how it obtained the information.

The group led by Itochu includes Japan's JFE Holdings Inc and Kobe Steel Ltd, as well as South Korea's Posco and Taiwan's China Steel Corp, Valor reported. Two members that were in the original consortium that paid $3.1 billion for the Namisa stake, Nippon Steel Corp and Sumitomo Metal Mining Co, have exited the partnership, the paper added.

A spokesman for CSN in São Paulo declined to comment on the report.

According to the article, the group wants out of Namisa because CSN, which has a 60 percent stake in the mining company, has delayed expansion and logistic projects that were included in a shareholders' accord for years. With the exercising of the put option, Steinbruch's CSN would have to pay compensation to the Asian partners, the newspaper reported.

This highlights the many challenges facing CSN as Steinbruch seeks to grow Brazil's largest diversified steelmaker into ore, cement, steel and logistics through takeovers. For years, CSN has failed to bulk up ore output capacity and instead invested in low-return projects to gain size, even as iron ore-related activities represent most of the company's operational profit.

Currently, CSN is in the race to buy ThyssenKrupp AG's money-losing Steel Americas unit, Reuters reported recently, citing people with direct knowledge of the situation. Suitors for the asset, including CSN and a consortium of ArcelorMittal SA and Nippon Steel, have offered north of $3 billion for the Thyssen mills, both located in the United States and Brazil.

Namisa, as Nacional de Minerios SA is known, has for years been touted for a merger with CSN's Casa de Pedra ore mining compound, a deal that could create the world's fourth-largest producer of the key ingredient for steel. According to Valor, part of the impasse with the Asian partners is the unwillingness of CSN to ramp up output to 13 million tonnes by the end of this year.

Currently Namisa is producing close to 7 million tonnes annually.

Efforts to reach representatives for Itochu, JFE, China Steel and Posco in Brazil were unsuccessful.