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Vale wants Thyssen to reimburse it, CSA for $550 mln in extra costs -report
May 29, 2013 / 12:16 PM / 4 years ago

Vale wants Thyssen to reimburse it, CSA for $550 mln in extra costs -report

* Thyssen’s ‘mistakes’ sparked losses in CSA, Estado says

* Claim creates hurdles for sale of money-losing CSA mill

* Thyssen owns 73 pct of slabmaker CSA; Vale holds 27 pct

SAO PAULO, May 29 (Reuters) - Vale SA wants ThyssenKrupp AG to partially reimburse it for some of the $550 million in extra costs that their CSA slabmaking partnership in Brazil incurred over the past four years, adding a potential hurdle to the sale of the money-losing steel mill, O Estado de S. Paulo said on Wednesday.

According to Estado, which did not cite any source for the information, Vale said “mistakes” by ThyssenKrupp executives managing CSA had led to significant energy and raw material purchases as well as unnecessary capital spending since 2009. The newspaper said the CSA partnership contract allowed Vale to receive compensation when “bad administration” led to management mistakes and losses.

Thyssen owns 73 percent of CSA, while Vale holds the rest.

The partners’ rift may complicate ThyssenKrupp’s plans to sell CSA, Brazil’s biggest foreign investment project to date. ThyssenKrupp, Germany’s No. 1 steelmaker, spent more than $8 billion in its Brazilian foray, which has been plagued by a weak global economy and increasing operating losses.

Spokespeople for Vale in Rio de Janeiro and ThyssenKrupp in Essen, Germany, declined to comment on the Estado report.

Brazil’s Cia Siderúrgica Nacional SA, or CSN, and a consortium led by ArcelorMittal SA have emerged as leading bidders for the steel mills that ThyssenKrupp is trying to sell in both the United States and Brazil, sources told Reuters recently.

Of the total in compensation, Vale is seeking about 300 million reais, or 27 percent of the total, for itself and the rest for CSA, which is known as Cia Siderúrgida do Atlántico SA, Estado said.

Thyssen reported losses in 2011 and 2012 because of delays and cost overruns at CSA. Like other steelmakers in Brazil, the German company has also faced rising raw materials costs and a glut of slab that have sapped margins and hindered factory usage.

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