2ndUPDATE:ArcelorMittal Brazil Steel Project Suspension Temporary
03 Novembre 2011 - 7:41PM
Dow Jones News
The chief executive of ArcelorMittal (MT), the world's largest
steelmaker, said the suspension of its Brazilian steel expansion
projects is temporary and more a reflection of slower-than-expected
Brazilian steel demand growth than a change in the company's
Brazilian investment strategy.
"Brazil continues to be [the] most important business for us,"
Lakshmi Mittal told analysts ins a conference call Thursday. "Our
suspension of [the] Monlevade project we believe is temporary," he
added.
The Luxembourg-based steelmaker on Thursday announced that it
has put on hold expansion plans for its long-products Joao
Monlevade steel plant in Minas Gerais and its flat-products Vega Do
Sul steel plant in Santa Catarina.
The suspension reflects ArcelorMittal's desire to calibrate its
steel growth projects to evolving demand situations. As a result
the steelmaker lowered its 2011 capital-expenditure plan to around
$5 billion from $5.5 billion after suspending the Monlevade
project, Chief Financial Officer Aditya Mittal said Thursday.
"The money on infrastructure is not being spent as much as
expected," CEO Mittal said. "We would have to resort to higher
exports which doesn't create value for us" if the expansion plan on
Monlevade were to be completed in 2012.
"We are waiting for the Brazilian economy to accelerate again"
to restart the project, he added.
ArcelorMittal was planning to increase Monlevade's wire rod
production by boosting the plant's finished products capacity by
1.15 million metric tons a year.
ArcelorMittal has also suspended its plans to increase Vega Do
Sul's hot dipped galvanized steel production capacity by 0.6
million tons a year and cold rolling steel production capacity by
0.7 million tons a year. The expansion was due to be completed in
2014.
Aditya Mittal said the steelmaker will continue to invest in
maintenance capital expenditure, which is forecast at about $3
billion for 2011. It will also continue to invest in its mining
operations where its sees more attractive growth returns, he
added.
The steelmaker expects to spend roughly the same amount or less
on capital expenditure in 2012 as in 2011, CFO Mittal said.
"Our core projects are not dependent on strong economic
conditions to" deliver return to shareholders, Lakshmi Mittal said.
They're "transcendent [of] near-term market uncertainties," he
added.
-By Alex MacDonald, Dow Jones Newswires; +44 (0)20 7842 9328;
alex.macdonald@dowjones.com
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