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Brazil CSP, POSCO's Joint Venture in Brazil, Suffering from Capital Erosion
POSCO Promoting Capital Increase with Vale, Dongkuk Steel
Brazil CSP, POSCO's Joint Venture in Brazil, Suffering from Capital Erosion
  • By Jung Min-hee
  • April 25, 2019, 16:10
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Brazil CSP, a steel mill in Brazil jointly set up by POSCO and Dongkuk Steel of Korea and Brazilian mining company Vale, is 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.