Japanese, Korean consortium to acquire stake in CSN's Brazilian iron ore mining business
04 November 2008
JFE Steel Corporation, Nippon Steel Corporation, Sumitomo Metal Industries, Ltd., Kobe Steel Limited, and Nisssin Steel Co., Ltd. today announced having reached a basic agreement with Brazilian fully-integrated steel producer Companhia Siderurgica Nacional (CSN) to acquire 40 per cent share in CSN's wholly-owned iron ore mining and sales subsidiary, Nacional Minérios S.A. (Namisa).
The transaction will be executed by an investor group consisting of Itochu Corporation, Korean steel producer Posco, and five Japanese steel producers (JFE Steel Corporation, Nippon Steel Corporation, Sumitomo Metal Industries, Ltd., Kobe Steel, Ltd. and Nisshin Steel Co., Ltd --- collectively, referred to as the consortium).
Though the definitive agreement is yet to be signed, the consortium is expected to acquire a 40-per cent stake in NAMISA for approximately $3,120 million (approximately ¥312 billion).
Namisa, located in the state of Minas Gerais, Brazil, operates an iron ore project through self-owned mines and beneficiation plants. Nanisa is scheduled to sell 18 million tons per annum of iron ore in year 2009 and expand sales amount to 38 million tons per annum by 2013 through the course of its expansion plan.
In addition, CSN is scheduled to transfer a 10-per cent stake in MRS Logística S.A, a railway transportation company connecting the mines and port, to Namisa as part of the transaction. The transfer of MRS shares into Namisa will further ensure Namis's access to transportation infrastructure for the long-term participation in the project.
The deal was processed through a global auction in which the consortium was selected by CSN as the best partner to jointly develop the Namisa project into a stable and profitable business. The selection was understood as a result of the Japanese and Korean steel producers' outstanding reputation as stable iron ore purchasers and Itochu's substantial experience in the operation of iron ore businesses as well as trading of iron ore in Australia and Brazil.
In addition to the acquisition of Namisa shares, the five Japanese steel producers and Posco are expected to enter into long-term iron ore purchase agreements with Namisa.
Composition within the consortium (ratio of capital contribution): Itochu Corporation 40.00 per cent; JFE Steel Corporation 16.20 per cent; Nippon Steel Corporation 16.20 per cent; Sumitomo Metal Industries, Ltd. 6.57 per cent; Kobe Steel, Ltd. 3.08 petr cent; Nisshin Steel Co., Ltd. 1.75 per cent; Posco 16.20 per cent .