By Richard Mann, Contributing Reporter
RIO DE JANEIRO, BRAZIL – Chinese engineering and construction group China Communications Construction Company (CCCC), in partnership with Vale, is initiating the first step to install a steel rolling mill in Marabá, southeast Pará.
CCCC controls Concremat in Brazil, which, together with the Chinese, will be responsible for setting up the venture. Helder Barbalho (MDB), the Governor of Pará state, said that expected investment in the plant is R$1.5 billion (US$366 million).
With an annual production capacity of 300,000 tons of rolled steel, the mill will be installed in the industrial district of Marabá.
According to Barbalho, the executive project and licensing will be completed by 2020, paving the way for the start of works.
“The plan is to have it operational by 2023. Production will be directed to the domestic market and will be the first step towards a new agenda for aggregating value to iron ore in the state, which may encourage other investors,” he said.
Concremat and CCCC will carry out the plant’s economic feasibility studies and will count on Vale’s financial support for the project. The mining company will provide the required collateral for financing.
Sources close to the project added that Vale wants to develop a metal-mechanical pole in Marabá. Concremat will develop feasibility studies and seek a partner to operate the rolling mill after signing the protocol.
The mill will buy steel plate, from which it will produce coils for sale in the domestic market.
Vale will have the option of converting its financial collateral into equity if this option proves necessary in the future. The first step, however, is for the project to be feasible from an economic perspective.
Plant investment should be financed almost entirely by banks. It is not clear, however, whether the CCCC and the operator will be able to contribute a portion of their resources to the project.
Vale will join by providing financial collateral only. There will be no firm iron ore supply contract since the rolling mill will be supplied with steel slabs purchased in the domestic market.
CCCC has been in Brazil since 2016 when it acquired 80 percent of Concremat’s capital for R$350 million. The following year, together with WTorre, it took over 51 percent of a port terminal construction project in Maranhão.
The group, with a global turnover of US$70 billion, is interested in investing in infrastructure projects, such as railways and ports.