Brazil CSP, POSCO's Joint Venture in Brazil, Suffering from Capital Erosion

POSCO said on April 25 that the capital erosion at Brazil CSP, a steel mill in Brazil jointly set up by POSCO and Dongkuk Steel of Korea and Brazilian mining company Vale, will be resolved through a capital increase by its largest shareholders.

“The joint venture steel mill in Brazil is in a state of capital erosion due to the plunge in the value of the Brazilian currency," said Jeon Joong-sun, vice president of POSCO at the first-quarter earnings conference on April 25. "We are discussing ways to increase capital with Vale, which is the largest shareholder, and second-largest shareholder Dongkuk Steel Mill."

Brazil CSP is a mammoth steel plant complex with an annual capacity of 3 million tons. It sits in the Pecem industrial complex in the state of Ceara, located in the northeastern region of Brazil.

The joint venture, which cost US$4.34 billion, started operating its first blast furnace in June 2016. POSCO has a 20 percent stake in the joint venture, while Vale has a 50 percent stake and Dongkuk Steel 30 percent.