Ternium to acquire CSA in Brazil

Ternium, a Luxembourg-based steel company with a significant presence in South America, has reached an agreement with Germany-based ThyssenKrupp to acquire a 100% stake in ThyssenKrupp Slab International and its wholly owned subsidiary CSA Siderúrgica do Atlântico Ltda. (CSA) in Brazil for €1.5 billion ($1.58 billion).

“Upon completion of this transaction, Ternium is adding another state-of-the-art facility into its industrial system,” says Daniel Novegil, Ternium CEO. “This will enable us to enhance our differentiation. The facility’s specialization in high-end steel slabs, combined with a coordinated product development and supply chain management effort with our high-end steel capacity in Mexico and Argentina, will support new integration opportunities for the manufacturing of sophisticated finished steel products for our customers. This, in turn, will strengthen our business in strategic industrial sectors across Latin America.”

Dr. Heinrich Hieseinger, CEO of ThyssenKrupp AG, says, “With the sale of CSA we are parting fully with Steel Americas. This is an important milestone in the transformation of ThyssenKrupp into a strong industrial group.”

As part of the deal, ThyssenKrupp will assign to Ternium a 2-million-short-tons-per-year agreement to supply slabs to the company’s former rerolling facility in Calvert, Alabama.

The transaction, which will require antitrust clearance in several jurisdictions, including Brazil, Germany and the United States, and other conditions, is expected to close on or before 30 September 2017 Ternium says.

ThyssenKrupp notes that the deal will end the company’s Steel in the Americas efforts, which began when it decided to expand its steel business into the Americas. ThyssenKrupp’s initial plan was to produce steel slabs at low cost in Brazil and process and sell the slabs in the United States and Europe. However, the company notes that following a significant increase in construction costs for the facilities in Brazil and Alabama, as well as technical problems with the ramp-up of the plants and high startup losses, the company decided to sell off the assets.

Ternium produces around 6 million short tons of crude steel a year. The purchase of CSA is expected to add up to 5 million metric tons of steel slabs per year for the company. Ternium also purchased from third parties about 3.7 million short tons of steel slabs in 2016, which were processed at its downstream facilities to obtain finished steel products.

With the sale of SCA, ThyssenKrupp says that it will now be generated more than 75% of its sales with its capital goods and services businesses.