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CSN’s Iron-Ore Partner Itochu Vows to Retain Namisa Stake

Itochu Corp., Japan’s third-largest trading house, plans to retain its stake in a Brazilian iron-ore venture with Cia. Siderurgica Nacional SA after a failed expansion plan led partners to renegotiate terms.

Itochu, which together with other Asian companies including JFE Holding Inc. control 40 percent of Nacional Minerios SA, won’t sell its stake in the joint venture, Chief Executive Officer Masahiro Okafuji told investors in Tokyo today. An option that partners are discussing with CSN, as the company that controls the remaining 60 percent of the venture is known, is to merge the asset with its Casa de Pedra unit, Itochu Senior Managing Executive Koji Takayanagi said at the same event.

CSN, based in Sao Paulo, said on May 17 that it was negotiating divergences in the Namisa mining venture with partners and that the partnership may be dissolved if differences couldn’t be bridged. The partners, which in 2008 paid $3.08 billion for 40 percent of the unit, have an option to sell the stake back in the second half of the year, CSN said in May.

“There’s no talk of selling,” Okafuji said today at the meeting at company headquarters. “We’d like to strengthen our commodity business, not sell assets.”

CSN declined to comment in an e-mailed statement. The stock rose 2.5 percent, the biggest gain in a week, to close at 12.81 reais in Sao Paulo today.

Same Capacity

As part of the deal, CSN agreed to boost Namisa’s iron-ore production capacity more than six-fold to 33 million by 2015, in addition to building two plants for pellets, a processed form of the steelmaking ingredient. Since then, the company has only invested $100 million in the venture, which still has the same shipment capacity as it did at the time of the agreement, according to an April 4 note by Goldman Sachs Group Inc.

CSN expects to conclude negotiations with partners at its Namisa iron-ore unit “soon” after having a “good evolution” in the discussions, Investors Relations Executive Director David Salama said on an Aug. 7 conference call, without elaborating.

Itochu holds about 22 percent of Namisa, the largest stake after CSN, and the investment is one of the biggest the trader has ever undertaken, according to company’s website. Other partners of NAMISA include Tokyo-based JFE, Kobe Steel Ltd., Nisshin Steel Co., South Korea’s POSCO and China Steel Corp., Taiwan’s biggest steelmaker.

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