Reuters reported that Brazilian mining giant Vale is losing its dominant position as a supplier of iron ore to Brazil's steelmakers, a loss of market share it hopes to check buy building its own mills at home.
Mr Jose Carlos Martins director of marketing, sales and strategy said that Rio de Janeiro based Vale, the world's second largest mining company, supplies about half the iron ore used by steel mills in its home market, an amount expected to slip to 30% by 2015. In 2004, 70% of all steel made in Brazil was made with ore from Vale's mines. Vale's largest market is China.
To regain Brazilian iron ore market share, Vale is investing in local steel production by taking minority stakes in Brazilian mills, partially abandoning a decade old policy aimed at avoiding competition with its steelmaking clients.
Mr Martins said that "Vale needs to pay attention to this loss of market share in Brazil. To participate in this market, you have to produce steel."
Mr Martins said that part of the decline has resulted from large local steel makers such as Gerdau and CSN boosting their own production of iron ore.
Vale, which has seen profit and volumes soar as it expanded exports to China and got into new businesses in Canada, Africa and the Middle East, expects to see its domestic iron ore share rise again as new mills come on line.
Government complaints that Vale was not doing enough to spur the steel industry were a key part of a state led campaign to push former CEO Mr Roger Agnelli from office and replace him with former Vale executive Murilo Ferreira, who began last month.
Vale is a partner with Germany's ThyssenKrupp in the CSA mill in Rio de Janeiro, with capacity to produce 5 million tonnes per year of steel slab. It originally owned 10% of the project and now owns about 26%.
In coming years it plans to open three new steel mills, including two it is pursuing entirely on its own: the 5 million tonne a year Cia Siderurgica de Ubu in Espirito Santo state and the Acos Longos de Para mill in Para, with a capacity of 2.5 million tonnes per year.
It is also building the Cia Siderurgica de Pecem JV with Korea's POSCO in the northeastern state of Ceara. CSP, as its known, is designed to produce 3 million tonnes per year of slabs in its first phase, most for export to Korea.
(Sourced from www.reuters.com)
