Steel Mills
October 13, 2013
Bank of America Brazil Analyst Believes TK Deal Near
Written by Sandy Williams
SMU learned in a recent conference call held by Bank of America Merrill Lynch analysts that CSN is no longer interested in the ThyssenKrupp Brazil assets. Thiago Lofiego, senior Latin American Mining & Steel analyst at BofAML said CSN now appears to be interested in purchasing only the TK Alabama assets for a price in the range of $1-$1.5 billion dollars. Rumors have been indicating an announcement of a deal may be forthcoming this week or next said Lofiego.
According to the analyst, the Brazilian slab plant is currently operating on essentially a zero margin due to the high cost of making slab in Brazil ($500-$550 per metric ton). The mill has been plagued with operating problems that even if fixed would still leave the operation unprofitable. A buyer would need to add a hot rolling mill in Brazil or shut down, said Lofiego, because the plant is making zero or negative EBITDA.
