Dongkuk Steel, POSCO, Vale Sign MOA for Brazil Slab Plant

Dongkuk Steel of South Korea announced on Thursday the firm, POSCO of South Korea and Vale of Brazil signed memorandum of agreement for slab making integrated steel joint venture in Brazil. They will fix the joint venture detail in January-March 2011 after confirmation of the detail and approval of the boards. The venture builds blast furnace based steel plant with annual 3 million tonnes of annual output capacity as the first phase. JFE Steel also keeps studying possibility to join the project. Dongkuk Steel tries to realize the long awaited project eyeing the second phase to add 3 million tonnes of capacity.

They agreed to make integrated steel plant in Pecem industrial park in Ceara, Brazil through joint venture, in which Vale has 50% interest with 30% share by Dongkuk Steel and 20% share by POSCO. Dongkuk Steel secures own slab for plate mill operations through the project with Vale’s iron ore supply and POSCO’s technology.

JFE Steel, which also studies the possibility to join the project, provided comment on Thursday the firm keeps studying the possibility including participation in the first phase while the firm recognizes the agreement allows POSCO’s participation in CSP, which is joint venture of Vale and Dongkuk Steel, without fixed plan for the construction.

Dongkuk Steel and Vale already started land preparation work at the 980 hectares site in December 2009 and now build belt conveyer from berth to the plant. Dongkuk Steel tries to start the piling and construction stage as early as possible after the series of the procedures in early 2011. The investment could take more than US$ 4 billion, according to Dongkuk Steel’s official.

Dongkuk Steel tries to secure the own slab through the project to improve the quality and grade of the plate products. The project is the key for the growth strategy to expand the annual output capacity to 10 million tonnes by 2015.

POSCO announced in July the firm decided the intention to have around 20% share in the project and after talk with Vale and Dongkuk Steel the firm will get the board approval to go forward. POSCO eyes potential slab sales to USA and builds the base to follow growing Brazilian market.