MercoPress. South Atlantic News Agency

Brazil opens steel mill, largest private sector investment in 15 years

Full production capacity is expected to reach 5 million metric tons of slabs

Brazilian President Lula da Silva, mining giant Vale Doce CEO Roger Agnelli and ThyssenKrupp CEO Ekkehard Schulz inaugurated on Friday Brazil's newest steel mill, Cia Siderurgica do Atlantico (CSA).

The mill, which is located in a suburb of Rio de Janeiro, cost 6.5 billion US dollars, the largest privates-sector investment in Brazil in 15 years, and is jointly owned by ThyssenKrupp (73.13%) and Vale (26.87%).

It will reach its full capacity of 5 million metric tons of slabs within three to four years, with 3 million metric tons destined for ThyssenKrupp's carbon steel operation in Alabama and 2 million to the company's European plants. It is forecasted to increase Brazilian steel exports by 40%.

“The mill will reach full capacity just at the time when US and European demand recovers” said Schulz.

Of the two blast furnaces in the facility, one will start up this year with the other to follow in 2011. Friday's opening involved the sinter plant, and the first slabs are expected to be produced later in the summer.

Friday’s inauguration was also seen as another electoral boost for President Lula da Silva’s ruling coalition. Presidential elections are scheduled 3 October and Lula da Silva is doing every thing possible to boost his chosen successor hopeful Dilma Rousseff with his own personal prestige and popular standing with record approval ratings above 80%.

The new steel mill is located next to the port of Itaguaí one of several port/industrial complexes growing along the Brazilian coastline, which have helped increase the overall rate of investment to 18.5% of GDP this year, up from the average 16.6% of the last eight years of Lula da Silva.

However according to economic think tanks including the prestigious Getulio Vargas Institute it is not enough to support the country’s current rate of growth: a more compatible rate would be in the range of 20% to 25%.