Dongkuk joins Brazil Plant Project-2

Dongkuk Steel Mill Company will sign a memorandum of understanding with Brazilian partners including iron ore mining giant Companhia Vale do Rio Doce (CVRD), to participate in a $750 million steel plant project in Brazil.

Dongkuk, South Korea’s second-largest steel plate producer after Posco, will have about 10% stake in the planned plant, which will produce 1.5 million tonnes of steel slab a year. The company, however, didn’t elaborate on the amount of its investment. “With this project, we’ve secured a stable slab supply source and it will boost our global competitiveness in the steel plate business,” Dongkuk said in a statement. South Korean steel makers have been facing difficulties in meeting surging demand from the shipbuilding industry. Dongkuk consumes roughly 2.7 million tonnes of slab annually for its own production, and 90% of its slab needs are met by imports.

The construction of the Brazilian plant will be completed by the end of 2007, and Dongkuk Steel plans to import more than half of the slab produced there to South Korea.

Brazil’s state-run development bank BNDES and another bank, BNB, will also participate in the project along with Italian steel plant and equipment provider Danieli & C.SpA.

The world’s fifth-largest steel maker Posco (PKX) said last year that it was conducting a preliminary feasibility study to build a steel plant in Brazil together with CVRD, but it hasn’t come up with any concrete plans yet. South Korean steel makers are aggressively working to expand their operation abroad, where they can have easier access to raw materials like coking coal and iron ore.

Posco is negotiating with India’s Orissa state government to build a 12-million-tonne-a-year steel plant and is also looking into China for possible investment.