| RIO DE JANEIRO
RIO DE JANEIRO Aug 29 Brazilian steelmaker CSN
may call off plans to buy ThyssenKrupp's money-losing CSA mill
in Rio de Janeiro if the German steelmaker does not include a
U.S. sister plant in the deal, a source with knowledge of the
Companhia Siderúrgica Nacional SA, as Brazil's
No. 2 flat steel producer is known, is pushing ahead in
negotiations to buy Steel Americas - comprised of the CSA slab
mill in Rio and a processing plant in the U.S. state of Alabama
- from ThyssenKrupp AG, said the source, who declined
to be named because the talks are private.
ThyssenKrupp has struggled to sell its 73 percent stake in
CSA, into which it poured more than $8 billion. The remainder of
CSA is owned by Brazilian iron ore miner Vale SA.
"Without the Alabama plant, CSN is not interested in the
deal," the source said.
Spokesmen for CSN and ThyssenKrupp declined to comment.
A purchase of ThyssenKrupp assets is seen as having negative
implications for CSN, whose stock is down 35 percent since news
of the bid emerged last September. Some analysts say the
purchase would hurt CSN's earnings before interest, tax,
depreciation and amortization, boost debt and distract
management from undertaking more profitable projects.
According to a second source with knowledge of the
situation, CSA could help CSN raise its steelmaking and port
capacity, but such gains would make no sense without the Alabama
plant. CSA has the capacity to produce up to 5 million tonnes of
slab a year, part of which is sold to the Alabama mill for
processing into flat products shipped mostly to carmakers.
Since the 1990s, when CSN's higher-value rolled steel
products faced anti-dumping duties and tariffs in the United
States and other countries, the company has sought to increase
its capacity to process raw steel slabs outside Brazil.
In 2002 CSN bought a rolling mill in Terre Haute, Indiana.
The mill receives slabs shipped from CSN's Presidente Vargas
mill outside Rio and transforms the slabs into higher-value
rolled products for the auto industry in the U.S. Midwest and
The CSA mill in Rio de Janeiro is also a slab mill. With the
Alabama mill, it has sought to operate on a system similar to
the Presidente Vargas-Terre Haute model.
While the first source said CSN expects to clinch a deal for
the two plants by the end of September, the second source said
talks have "cooled," though there are chances of progress in the
Vale wants ThyssenKrupp to partially reimburse it for some
of the $550 million in extra costs that CSA has incurred over
the past four years.
The sale of CSA to CSN hinges on a successful resolution of
the Vale-ThyssenKrupp issues, the first source said.
CSA, whose construction cost $10 billion and which began
operations in 2009, is Brazil's largest foreign investment
project to date.