Bloomberg News

ThyssenKrupp Weighs Sale or Partner for U.S., Brazil Plants

May 15, 2012

ThyssenKrupp AG (TKA), Germany’s largest steelmaker, may seek a partner or sell its U.S. and Brazilian plants as expenses rise and North American demand slows.

Brazil output costs are rising “disproportionately,” while the U.S. economy is showing no “major momentum,” the Essen-based steelmaker said in an e-mailed statement today announcing the review. The company didn’t provide a deadline for the possible partnership or sale of the steel units.

“Since the plans for the project were made, the economic parameters both in Brazil and in the USA have changed from our original assumptions,” Chief Executive Officer Heinrich Hiesinger said in the statement. “There are clear reasons that now call this strategy into question.”

ThyssenKrupp in 2010 started operating its CSA steel-slabs plant, where it has a 73.1 percent stake, in Rio de Janeiro state. The company built the facility, with a capacity of 5 million metric tons a year, to supply an estimated 3 million tons of steel slabs a year to its mills in Calvert near Mobile, Alabama, and the rest to Germany.

Delays at the CSA contributed to impairment charges of 2.9 billion euros ($3.7 billion) in the last fiscal year, when it reported a loss. Vale SA owns the remaining 26.9 percent.

“The viability of an integrated strategy with slab production in Brazil and high-margin marketing in the USA is therefore exposed to considerable risks,” ThyssenKrupp said.

ThyssenKrupp rose 2.9 percent to 16.28 euros at 4:39 p.m. in Frankfurt. The stock has fallen about 9 percent this year.

To contact the reporter on this story: Juan Pablo Spinetto in Rio de Janeiro at jspinetto@bloomberg.net

To contact the editor responsible for this story: Dale Crofts at dcrofts@bloomberg.net


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