Company News

Costs rise for ThyssenKrupp Brazil plant - paper

FRANKFURT, Jan 19 (Reuters) - The cost of ThyssenKrupp's TKAG.DE new steel plant in Brazil will be significantly higher than what the company has so far announced, a German newspaper reported on Tuesday, adding to concerns about cost overruns. Handelsblatt, citing company sources, said spending on the plant would total 5.96 billion euros ($8.6 billion) compared with the 4.7 billion previously disclosed by Germany's biggest steelmaker.

A spokesman for ThyssenKrupp declined comment on the report, saying only chief executive Ekkehard Schulz would touch on the company’s investment in Brazil at the annual meeting on Jan. 21.

ThyssenKrupp said in September the capital expenditure budget for the plant had risen to 4.7 billion euros from 4.5 billion.

It said the additional 200 million euros stemmed from an increase in interest rates due to the project’s delay.

ThyssenKrupp’s plant, which is expected to come on line in the first half of this year, will turn out 5 million tonnes of steel slabs annually to underpin the company’s ambitious growth strategies in Europe and North America.

Cost overruns have dogged the plant, whose original 3 billion euro budget was raised in 2008 to around 4.5 billion just before a worldwide recession set in and steel demand shrank.

ThyssenKrupp is also building a stainless steel plant in Alabama, which it said would cost at $1.4 billion.

Handelsblatt said there would be extra spending on top of the $1.4 billion and this amount was undetermined as yet. (Reporting by Marilyn Gerlach) ($1 = 0.6949 euro)