Thyssenkrupp exits metallurgical production

The German industrial giant seeks to reorient its business and sells its last steel mill in the Americas. In addition, ThyssenKrupp AG will finally be able to sever relations with its European steel heritage.

The multi-tiered manufacturing firm, which has its roots in the early 19th century, took a big step away from its once-main steel business when it unexpectedly announced the sale of the last of its North and South American steel assets to a Brazilian facility late last month. “This is the most concrete sign to date for the transformation of the company,” said CEO Heinrich Hiesinger.

Investors are watching to see if Hiesinger can implement the next part of its strategy: divestiture of the European steel business into ThyssenKrupp. The venture has been in the grip of a lingering steel glut and low-cost steel imports from China, amid continuing industry consolidation.

Hiesinger said he wants to focus ThyssenKrupp around high-yield investment goods such as elevators, complex automotive components and submarines. But his efforts to get rid of the Brazilian plant had been thwarted earlier by difficult market conditions in the region.

The company plans to sell its Ternium SA plant with a strong presence in Latin America for EUR1.26 billion ($ 1.33 billion). The deal will lead to a depreciation of the company by EUR 900 million, but also to a significant decrease in net debt.

European metallurgy has cut thousands of jobs in closed loss-making factories in recent years, although steel prices have risen since the beginning of 2016. Thyssenkrupp is in talks with India's Tata Steel Ltd. to form a European steel products joint venture that would allow the German firm to separate steel from its operations. But a potential deal has stalled over a controversy over pension liabilities. Thyssenkrupp said consolidation in the European steel industry is needed and that he is in talks with Tata and other companies.