Thyssenkrupp can save its Brazilian steel factory

The German steel company Thyssenkrupp ultimately decided not to sell its unprofitable Brazilian steel plant, as reported by sources familiar with the negotiations. Negotiations that have not given any results for a month are complicated by the fact that the Brazilian Vale Shakhtar, which owns 27 percent of the Brazilian CSA plant, must approve any transactions, as well as the Brazilian state institutions participate in the negotiations.

In accordance with the new plan, Thyssenkrupp decided that the plant in the American state of Alabam would sell. Brazilian CIA Siderurgica Nacional (CSN) is considered as the most likely buyer of Steel Americas, but the price has become a stumbling block. According to analysts, it can be sold for only 2.3 billion euros, which is much less than the balance cost of 3.4 billion euros. CSN would agree to purchase 3 million tons of steel per year from the Brazilian plant, which will remain under the control of Thyssenkrupp.

Executive Director Henry Hisenger will probably face many problems when selling Steel Americas. He must convince investors to take part in increasing capital, which is expected to be from 750 million to 1 billion euros before steel factories are sold.

Thyssenkrupp began to build Brazilian factories about seven years ago, striving for cheap production in the largest economic zone of Latin America. Nevertheless, inflation, rising prices for iron ore and the Brazilian currency exchange made products much more expensive than expected, at the same time the demand for steel was reduced in the United States.

Thyssenkrupp emphasized that it still has 8 billion euros of funds and unused credit lines, but analysts say that the results of the third quarter can show this state of affairs.