ArcelorMittal and Nippon Steel & Sumitomo Metal Corporation are into 50-50 joint venture, likely to buy ThyssenKrupp US-based Steel plant.
German-based largest steelmaker, ThyssenKrupp is selling its US Steel finishing plant located in Calvert, Alabama to the steel giants. This will help the company increase its capital by 10 per cent, reduce its debt’s burden and boost up the balance sheet.
The company has been seeking for a buyer from more than a year for its Steel America’s unit comprising US Steel Finish plant and Steel slab mill Companhia Siderurgica do Atlantico (CSA) in Brazil. The company suffered a huge loss owing to the Steel plants which were hurdle in raising fresh funds.
According to Heinrich Hiesinger, Chief Executive Officer (CEO) of ThyssenKrupp, “the company will still not be benefitted much by selling the steel plant. It will still be left with its 73 per cent stake in Brazil’s CSA, which accounts for almost Euro 13 billion spent on steel plant by the company.”
In order to avoid further business losses at the mill, which contributes its production share to the Calvert plant, the deal with ArcelorMittal and Nippon Steel includes an agreement of 6 year. The agreement says that they will buy 2 MnT Steel slab annually from CSA or 40 per cent of the Brazilian mills capacity.
The plant will sell half of its total output to the North American automotive industry. The other half will be sold to the energy sector whose demand for steel tubes and pipes have increased recently. The increased demand is on account of recent growth in gas exploration in the North American region.
Nippon Steel is also looking forward towards global expansion. It considers expanding its business in North America, Indonesia, India and the regions where Japanese automakers are boosting their productions.