As Reuters reports from Sao Paulo, Brazil, 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 per cent 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 per cent 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,” Mr 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 tonnes.
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, Mr Espeschit noted.
“In the mid- to long-term we see a very promising outlook for the markets.”