It is reported that CSN consolidated iron ore sales reached a quarterly record after climbing 42% sequentially in the third quarter, more than offsetting a slight decline in domestic steel sales. The mining side of the business continues to drive profitability with unconsolidated EBITDA margins at 44% for the third quarter.

The company expects iron ore shipments to strengthen further in the fourth quarter on higher Chinese steel production and less iron ore is expected to be exported by India due to the monsoon season. This puts the company on track to achieve consolidated iron ore sales of 27 million tons in 2010 and its preliminary guidance is for 31 million and 40 million tons in 2011 and 2012 respectively.

This greatly exceeds the growth expected from the steel business, and as mining continues to comprise a larger portion of sales and demand a greater share of capital expenditure to meet growth targets, management is moving forward with its plan to spin-off the mining business in an IPO, although the exact timing remains unclear. We are lowering our 2010 assumptions to reflect weaker steel sales and pricing for the latter half of 2010 but we maintain our fair value estimate.

(Sourced from torontostar.morningstar.ca)