Japan, Korea Steels, Trader to Get Brazil Iron Ore Equity

Itochu Corporation and Japanese major 5 steel makers including Nippon Steel and JFE Steel announced on Friday they and POSCO of South Korea reached basic agreement with Companhia Sider?rgica Nacional (CSN) of Brazil to purchase 40% share in Nacional Min?rios S.A. (NAMISA), which is wholly owned iron ore mining subsidiary of CSN, for around US$ 3.12 billion. They will sign the agreement on Tuesday. The Japanese and South Korean steel makers agreed with NAMISA for long term iron ore purchase. Through participation in NAMISA, which plans to expand the output to annual 38 million tonnes in 2013, the steel makers improve the stable procurement while Itochu expands the iron ore business.

Under the agreement, Itochu holds 16% in NAMISA while Nippon Steel, JFE Steel and POSCO have 6.48% each. Sumitomo Metal Industries has 2.628%, Kobe Steel has 1.232% and Nisshin Steel has 0.7% in NAMISA. The steel makers purchase maximum 13.7 million tonnes per year from NAMISA after the expansion. Itochu supports the long term supply from NAMISA to the steel makers.

NAMISA, which plans 18 million tonnes of iron ore sales in 2009, expands the mining operation and build 2 new pellet plants for expansion. The Japanese and South Korean companies will pay 40% of estimated US$ 2.2 billion expansion. NAMISA acquires 10% share of railway transportation company, MRS Log?stica S.A. from CSA to secure long term access to the rail.

Senior managing director Yoichi Kobayashi of Itochu said at press conference on Friday NAMISA has cost competitiveness with easy expansion potential due to access for existing infrastructure.