Brazilian group plans to produce 1 million tons of special steel in China

7 July 2006

Sao Paulo, Brazil, 07 July – Brazilian group Gerdau, the largest producer of long steel on the American continent, said Thursday it planned to produce 1 million tons of special steel per year in China.

The production of special steel at the Group’s new unit, the project for which is in the final stages of negotiation, will be carried out in partnership with a Chinese company, Gerdau’s chairman, José Gerdau Johannpeter said.

Speaking to Brazilian financial newspaper Valor Económico, on the sidelines of a seminar attended by sector specialists, the chairman said that there was no set deadline for concluding negotiations and that they could take between, “three to nine months.”

The delay in setting up the Brazilian group’s first unit in China was due to the “complexity” of the operation, Johannpeter said.

The decision to invest in China was made by the Brazilian group “over a year ago,” after a strategic study for future action was carried out.

In the last few years, on of the Gerdau group’s strategy has been to acquire steelworks overseas in order to deal with demand from those countries.

The Gerdau group is currently the 14th largest in the world in the sector with factories in Brazil, Argentina, Canada, Chile, Colombia, the United States and Uruguay.

Gerdau, which also owns 40 percent of Spain’s Sidenor, was founded 105 years ago, with a nail factory in Porto Alegre, the capital of the state of Rio Grande do Sul.

The Group currently exports steel products, namely plates and blocks to the Chinese market.

Exports are carried out through subsidiary Açominas, in the state of Minas Gerais, which was acquired by the group in 2001.

At the end of June, Gerdau said Açominas would carry out new investments to deal with demand from international markets, particularly China.

The US$1.5 billion investment will make it possible to increase the group’s production from the current 19 million tons to 20.5 million tons of steel per year.

Last year, the Gerdau group posted net profit of 3.245 billion reals (US$1.616 billion), a rise of 0.3 percent against 2004.

The company’s turnover totalled 25.5 billion reals (US$12.03 billion) in 2005, or an increase of 8.9 percent on 2004. (macauhub)