CSN integrates mining and logistics assets approved

The Board of Directors of Brazil's National Black Metallurgical Corporation (CSN) approved on December 12 the terms of integrating its mining company Namisa, which is a joint venture with an Asian consortium, and its own mining and logistics assets into the newly established Congonhas Mining Company.

According to CSN, an Asian consortium consisting of Japan's ITOCHU Corporation, JFE Steel, Kobe Steel, Nisshin Steel, South Korea’s Pohang and China National Taiwan Steel will merge its 40% stake in Namisa with the new company. At the same time, CSN will contribute to the new company its 60% stake in Namisa, the Casade Pedra iron mine, a 8.63% stake in the logistics company MRS, and management and operation rights in Itaguaí, Rio de Janeiro state. The Congonhas Mining Company will be controlled by CSN with an 88.25% stake and the Asian Consortium holds the remaining 11.75%.

The transaction also requires the cooperation of all partners to reach a consensus on the business plan, and obtain the regulatory approval of the anti-monopoly agency and the Brazilian mining sector's administrative approval.

CSN and Asian partners will sign a long-term supply contract with the new entity, Congonhas Mining, to purchase part of its iron ore production. Congonhas Mining Company will form a complete mining-railway-port operating system.

The decision of CSN to establish a new company began at the end of November this year, and before that the company had a year-long negotiation with Namisa's Asian partners. The Asian consortium acquired shares of Namisa in December 2008 and has so far invested a total of US$3.1 billion in the company. Namisa's mining operations are located in the “Iron Four Corners” area in the state of Minas Gerais in the southeast. The initial goal of the partner was to expand the annual production capacity of Namisa’s iron ore to 33 million tons. However, CSN has never invested sufficient funds into Namisa, so its annual iron ore production capacity remains at 7 million tons. Brazilian industry analysts had previously stated that CSN should agree to integrate Namisa to avoid paying more than $3 billion in liquidated damages to its Asian partners for failing to achieve the original agreed expansion targets. The CSN said last year that if the two sides can not reach a settlement on the differences, the partnership will be lifted.

CSN's Casade Pedra mine can produce 21 million tons of iron ore annually. In 2012, Namisa shipped a total of 14 million tons of 25.8 million tons of iron ore shipped by CSN. In 2013, 10.3 million tons of 25.7 million tons were shipped.