CSN Falls After CEO Comments on Possible Plant Bid: Rio Mover

Cia. Siderurgica Nacional SA (CSNA3), Brazil’s third-largest steelmaker by output, fell to the lowest since 2008 after the company said it may consider bidding for a ThyssenKrupp AG (TKA) steel plant in Rio de Janeiro state.

CSN, as the company is known, dropped 2.6 percent to 12.22 reais at the close in Sao Paulo, the lowest level since December 5, 2008. The stock declined 18 percent this year, more than the 1 percent fall of the Brazilian Bovespa Index. (IBOV)

CSN is waiting for Germany’s ThyssenKrupp to disclose further details about its Brazilian plant before considering a bid, Chief Executive Officer Benjamin Steinbruch told reporters June 16. The company’s potential interest isn’t optimal given CSN’s high leverage ratios, poor allocation of capital and low returns on the project, Barclays Plc analysts led by Leonardo Correa in Sao Paulo said in a note to customers today.

“We would prefer management to remain focused on delivering its iron-ore expansion, which is several years delayed,” the analysts said.

ThyssenKrupp, Germany’s biggest steelmaker, said May 15 a sale of its Brazilian and U.S. plants is among “strategic options” for its unprofitable Americas unit. The company, which in 2010 began operating its CSA steel-slabs plant in Rio after a 5.2 billion-euro ($6.6 billion) investment, faces output costs in Brazil that are rising “disproportionately,” it said.

ThyssenKrupp built the facility, with a capacity of 5 million metric tons a year, to supply an estimated 3 million tons of steel slabs to its mills in Calvert, near Mobile, Alabama, and the rest to Germany.

‘On the Table’

The plant “is on the table, it’s clear that we will analyze it as the rest will do,” Steinbruch said. “Whenever they disclose the details, something that still hasn’t happened, we will certainly be interested in studying it.”

Delays at the CSA plant contributed to impairment charges of 2.9 billion euros in the last fiscal year, when it reported a loss. ThyssenKrupp owns a 73.1 percent stake in CSA, while Vale SA owns the remaining 26.9 percent.

Separately, Steinbruch said today that CSN’s Transnordestina project, which involves the 1,728-kilometer (1,071-mile) extension of a railway in Northeastern Brazil, will require 7.5 billion reais ($3.66 billion) of investment. That’s 39 percent more than the 5.4 billion reais previously disclosed by CSN.

To contact the reporter on this story: Juan Pablo Spinetto in Rio de Janeiro at jspinetto@bloomberg.net

To contact the editor responsible for this story: James Attwood at jattwood3@bloomberg.net

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