Brazil's Gerdau SA, Latin America's largest steelmaker, is talking with Chinese steel makers about possible acquisitions or new plant constructions in the nation, which is vigorously consolidating the fragmented steel sector.

 

"We are looking at opportunities in China," Claudio Gerdau Johannpeter, executive vice-president of the company, told China Daily yesterday. "It could be acquisitions, or building green-filed plants through partnership with a Chinese company."

 

Johannpeter said the company is talking with the local firms in China for possible deals, but no concrete project has been secured.

 

The vice-president refused to disclose which Chinese firms are being considered, saying, "it might take a while" to hammer out a deal.

 

China produces a third of the world's steel and is the world's biggest consumer of the metal.

 

The Chinese Government in July announced a plan to force select mills to merge and shut small, polluting furnaces to curb expansion.

 

By 2010, the country wants to have two major steelmakers, each with a capacity of more than 30 million metric tons a year, and a few others that can each produce 10 million tons a year.

 

Industry analysts have said the government's target could garner tremendous opportunities for foreign steel makers to take over local counterparts, as China is seeking new technologies and scale production.

 

The world's biggest steelmaker Mittal last year took 36.7 percent of Hunan Valin Steel Tube & Wire Co Ltd, the listed arm of China's eighth-largest mill, for US$338 million.

 

Its global rival Arcelor SA, the world's second-largest steelmaker, is in talks with China's Laiwu Steel Corp for its first acquisition in the country.

 

Through facility upgrading, Gerdau, the world's 13th biggest steel producer, plans to expand production by 50 percent to 4.5 million tons a year.

 

China Minmetals Corp, the country's biggest metal trading company, and China Metallurgical Construction Group yesterday secured US$236.5 million in loans to supply Gerdau with a plant and equipment.

 

BNP Paribas SA and Industrial & Commercial Bank of China are loan arrangers for the project. China Export & Credit Insurance Corp is the insurer.

 

(China Daily January 10, 2006)