Arcelor SA, the world's No. 2 steelmaker, is in ``advanced'' talks to buy a stake in China's Laiwu Steel Corp. as the company seeks to expand in Asian countries and in Brazil, where production costs are low, Chief Executive Guy Dolle said.
Arcelor May Buy China Stake, Plans Brazil Expansion (Update1)
July 29 (Bloomberg) -- Arcelor SA, the world's No. 2 steelmaker, is in ``advanced'' talks to buy a stake in China's Laiwu Steel Corp. as the company seeks to expand in Asian countries and in Brazil, where production costs are low, Chief Executive Guy Dolle said.
Luxembourg-based Arcelor is also in talks with other Chinese steelmakers for a possible stake purchase, Dolle said. Arcelor expects to reach an agreement with a Chinese company in two or three months, he said.
``This is not the only one,'' Dolle said, in reference to Laiwu Steel, in an interview in Sao Paulo. ``We have discussed with two or three companies, but discussions are much advanced with this one.''
Arcelor is seeking to increase profit by expanding in Brazil, India and Russia, where iron ore used to produce steel is abundant. The company expects to invest $4 billion through 2010 in its Brazilian unit as the company seeks to boost output.
The company may also buy minority stakes in iron-ore miners in India, Russia or the Ukraine ``if we become active'' in those countries, Dolle said.
``We prefer to enlarge our exposure to steel, investing in some new regions, but if we were active in the former Soviet Union, in Ukraine or Russia, or if we were active in India, it would be mandatory to have access to raw materials because it is too difficult if this was not the case,'' Dolle said. ``In this case, we would be either shareholders of the mine, owners of the mine or having a strong partnership, or some other formula to have access to the iron ore.''
Arcelor expects that the merger of its Brazilian units to create Arcelor Brasil will save the company at least $70 million a year, Dolle said. Arcelor said yesterday it plans to create a holding company for its Brazilian assets, by merging stakes in Cia. Siderurgica de Tubarao, Vega do Sul into Cia. Siderurgica Belgo-Mineira.
Arcelor's shares fell 22 cents, or 1.2 percent, to close at 17.78 euros in Paris.
To contact the reporter on this story:
Elzio Barreto in Sao Paulo at ebarreto@Bloomberg.net
Last Updated: July 29, 2005 15:07 EDT |
