Chinese group Wuhan Iron & Steel gives up project to build steel works in Brazil

12 November 2012

China’s Wuhan Iron and Steel, the country’s fourth-largest steel producer, has suspended its plans to be a steel plant in Brazil after negotiations with its Brazilian partners broke down, the group’s chairman said in Beijing.

Speaking to financial news agency Reuters, Den Qilin noted that the Brazilian partner – the EBX group – was not able to guarantee the necessary conditions for the group to invest in the country.

“Railroad, port terminals (…) they have not built anything, so we decided to halt negotiations,” Den said.

LLX Logística, one of the Brazilian partners, said last week that negotiations for the project involving 5 million tons of steel at the port of Açu were now “inactive” and that the two sides had not met for months.

Last July Chinese newspaper the 21st Century Business Herald announced that Wuhan Iron & Steel had given up on its project to build a steel works in Brazil in partnership with Brazilian group EBX, owned by businessman Eike Batista, and expected to cost US$5 billion.

Citing unidentified sources the newspaper said that the decision had been made after a number of feasibility studies had shown that the risk was too high, specifically due to logistics problems such as supply and transport of coking coal to feed the furnaces.

The steel works, which was to have been built in the industrial area of the port of Açu, which is being built by the LLX Logística group, which is controlled by EBX, in Rio de Janeiro, required construction of a 300-kilometre railroad to transport raw materials to the factory. (macauhub)