SAO PAULO (Reuters) - Brazilian miner Vale SA said on Monday it will sell its entire 26.87 percent stake in the struggling CSA steel plant to Germany’s ThyssenKrupp for a token value, in a bid to focus on core mining businesses with commodity prices at historic lows.
Vale’s announcement confirmed a Reuters report on Friday which said the world’s largest iron ore producer was planning to exit the steel venture.
By selling the plant for a purely symbolic amount, Vale will be free of the heavy debts linked to the mill. It will also be entitled to a slice of earnings from any future sale by ThyssenKrupp over a certain period of time, though Vale did not say how long.
The CSA plant cost $10 billion to build and was Brazil’s most expensive ever foreign investment project. It reported 2.6 billion euros in total liabilities at the end of the 2015 fiscal year.
Once considered a showpiece for Brazil’s steel industry, the mill saw production costs soar amid high inflation, currency volatility and a deep recession.
The plant, which has total production capacity of 5 million tonnes a year, exports slabs that are further processed at ThyssenKrupp’s sister plant in Alabama.
The exit from CSA comes as Vale wrestles with the impact of slumping iron ore prices. Chief Executive Officer Murilo Ferreira said in February the firm is looking to sell about $10 billion of assets as it battles to reduce debt.
Reporting by Tatiana Bautzer and Guillermo Parra-Bernal; Editing by Chris Reese and Bernard Orr