ArcelorMittal, Bekaert swap stakes in Latin America wire ventures
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[May 01, 2014]
By Alberto Alerigi and Guillermo
SAO PAULO (Reuters) — ArcelorMittal SA,
the world's largest steelmaker, and Bekaert Group on Wednesday
agreed to swap their stakes in their Brazil, Costa Rica and Ecuador
ventures, part of a broader plan to extend a four-decade partnership
in fast-growing markets, an executive said.
Under terms of the plan, ArcelorMittal will transfer its 55 percent
stake in a rope-producing venture to Bekaert, allowing the latter to
control all of Bekaert Cimaf Cabos Ltda in exchange for steady
supply of wire, said Augusto Espeschit, president of Belgo Bekaert
Arames — the Brazil-based venture between Bekaert and ArcelorMittal
known as BBA.
In addition, ArcelorMittal will have a minority shareholding in
Bekaert-controlled wire producer Ideal Alambrec in Ecuador, taking
advantage of rapid expansion in the country's civil construction
sector, he added.
In Costa Rica, both companies agreed to split their share in a steel
wire plant, with Bekaert taking a 73 percent stake and agreeing to
leave the steelmaking business all under ArcelorMittal's control.
The companies are currently building a steel fiber manufacturing
plant in the Orotina industrial site at a cost of $20 million over
two years, he said.
"This move will improve our competitiveness and help us add more
value to our products," Espeschit told Reuters. BBA output of steel
wire and related products is targeted at about 750,000 tonnes in
Brazil this year, although production might end the year closer to
700,000 metric tons.
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The deal, which involved no cash disbursement, maintains
ArcelorMittal's control of BBA, which both companies set up in 1997
to develop Brazil's steel wire market. Bekaert, the world's top
producer of steel cord, and rivals have in recent years grappled
with price cuts in Asia, weak demand for some types of wire and
narrowing margins in Europe.
The move will allow the venture to reach more customers in
Central and South America, especially in the agribusiness,
construction, fencing and industrial markets, Espeschit noted. "In
the mid- to long-term we see a very promising outlook for the
(Reporting by Guillermo Parra-Bernal and Alberto Alerigi Jr.;
editing by Cynthia Osterman)
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