Brazil's No.1 steelmaker Gerdau to invest $1.4 billion in Peru

02 September 2008

Brazilian steel company Gerdau SA, the region's biggest steelmaker and the 13th largest in the world, has announced plans to invest $1.4 billion in its Peruvian subsidiary in an effort to transform Peru into a regional steel powerhouse that can profit from Brazil's own building boom.

The investment will boost yearly production at Gerdau's Siderperu unit more than six-fold to 3 million metric tons by 2013, enabling it to increase exports across Latin America and ultimately to Asia, Gerdau CEO Andre Gerdau Johannpeter said yesterday. Initially, output would be increased to 1.5 million tonnes by 2011.

''Peru will be one of South America's three-largest steel producers,'' Johannpeter told reporters after meeting with Peruvian President Alan Garcia in Lima. ''Siderperu will export to Chile and Colombia, and later to Asia and the rest of Latin America.''

"These 3 million tonnes will be sufficient to supply the local market of Peru, which today imports about 50 per cent of its steel," he added.

Garcia is seeking to attract more foreign investments to the country in exchange for allowing companies such as Porto Alegre, Brazil-based Gerdau to ship to Asian buyers through Peruvian ports. Brazilian companies Petroleo Brasileiro SA, Braskem SA and Centrais Eletricas Brasileiras SA are studying investments in Peru, and Odebrecht SA is building an $800 million highway between the two countries.

Gerdau acquired an 83-per cent stake in Siderperu for $203 million in 2006. The unit now produces 450,000 metric tons of steel annually at its main complex in the coastal fishing town of Chimbote - about 17 per cent of Gerdau's yearly output.