Sumitomo Metals, Vallourec to Build Seamless Pipe Plant in Brazil

Sumitomo Metal Industries announced on Wednesday the firm and Vallourec of France agreed to establish joint venture to make seamless pipe in Brazil. They build integrated seamless pipe plant with annual 1 million tonnes of raw steel output capacity to make annual 600,000 tonnes of seamless pipe in 2010. They sell 300,000 tonnes of the products each. They keep studying for state of the art high valued seamless pipe mill in Brazil to serve world market along with the low cost for raw materials and energy. It is the first integrated steel plant joint venture for Japanese steel maker.They will build integrated steel plant with blast furnace, steel making shop, seamless pipe mill with 168.3-406.4 millimeters diameter and related facilities in State of Minas Gerais. Vallourec purchases 300,000 tonnes of the 1 million tonnes of raw steel output and the joint venture uses the 700,000 tonnes to make seamless pipe. Sumitomo Metals, Sumitomo Corporation and Vallourec join the venture and Vallourec will control the majority subject to the rate of purchase volume of the products. They will decide the detail in the end of June 2007 and Sumitomo group and Vallourec send half of the directors each. Sumitomo Metals and Vallourec have partnership in VAM premium joint for seamless pipe of oil and gas development since 1976. World oil well pipe demand is expected to expand to 10.1 million tonnes in 2015 under growing energy demand from current 8.4 million tonnes. Sumitomo Metals establishes annual 1.6 million tonnes of seamless pipe supply ability including the joint venture to meet high valued seamless pipe from super major oil companies. The firm tries to shift to higher valued products worldwide. Sumitomo Metals’ pipe unit targets 147 billion yen of consolidated operating profit in fiscal 2008 ending March 2009 under the 3-year plan. The vice president Tsutomu Ando said the unit will expand the profit to 184 billion yen by improving the profitability through the joint venture and better products mix at Wakayama works.