Bloomberg News

Gerdau Said to Seek Sale of Mine Unit Stake for $2.5 Billion

February 09, 2012

(Updates with CEO comments in third paragraph and iron-ore reserve in fourth.)

Feb. 1 (Bloomberg) -- Gerdau SA, Latin America’s largest steelmaker, is seeking to sell 40 percent of its mining unit for about $2.5 billion, a person familiar with the matter said.

Gerdau, based in Porto Alegre, Brazil, hired Goldman Sachs Group Inc. to handle the transaction, said the person, who asked not to be identified because the matter is private. International companies including Chinese and Japanese firms are interested in buying the stake, according to the person.

Chief Executive Officer Andre Gerdau Johannpeter said Nov. 10 that the company was studying a plan to “monetize” its iron-ore assets, and was considering whether to seek a partner, sell shares of the mining business or develop deposits with its own resources.

Gerdau’s iron-ore mining unit has a total reserve of 2.9 billion tons and the company plans to end this year with a production of 7 million tons, or 100 percent of its needs, according to Pedro Galdi, an equity strategist at brokerage firm SLW Corretora. The company now produces about 60 percent of its own needs, he said.

“Prospects for iron-ore prices are great,” Galdi, who has a “buy” rating for Gerdau’s shares, said in a telephone interview.

A Gerdau press official said in an e-mailed statement that the company couldn’t comment because it’s in a so-called quiet period before earnings are released. A representative of Goldman Sachs declined to comment.

Gerdau announced on Jan. 11 that it approved the repurchase of as many as 2.69 million preferred shares from Jan. 12 to Jan. 20, according to a regulatory filing.

Gerdau rose 4.5 percent today in Sao Paulo trading, the most since Oct. 27, and has gained 20 percent this year. The steelmaker’s shares lost 22 percent in 2010 and 36 percent in 2011.

--Editors: Steve Dickson, William Ahearn

To contact the reporter on this story: Cristiane Lucchesi in Sao Paulo at clucchesi5@bloomberg.net

To contact the editors responsible for this story: Jennifer Sondag at jsondag@bloomberg.net; David Scheer at dscheer@bloomberg.net


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