Nippon Steel to buy into Brazil's Usiminas: Paper

Tokyo, Nov 5: Japan's Nippon Steel Corp. is planning to buy a 1.7 percent stake in Brazil's largest steelmaker, Usinas Siderurgicas de Minas Gerais SA (Usiminas), the Nihon Keizai Shimbun said on Sunday.

The Japanese firm, the world's third largest steelmaker, plans to purchase the stake by the end of the year in a move aimed at boosting its supply capacity amid a global realignment of the industry, the paper said.

Details on the price and conditions of the deal have yet to be decided, the Nikkei said, adding that the deal would be officially announced this week.

Shares in Usiminas, which has a market capitalisation of about US$8.6 billion, last closed at 75.45 reais.

Nippon Steel is also considering taking part in a blast furnace project planned by the Brazilian firm, the report said.

''We are considering the merits of various measures in cooperation with Usiminas,'' Nippon Steel said in a statement on Sunday. ''Nothing has been decided.'' Usiminas is a joint venture between Japanese and Brazilian firms and is a major supplier of steel to the Brazilian auto industry.

Tokyo-based Nippon Usiminas Co, itself set up by several Japanese steelmakers and other companies, is a major shareholder, with a 19.4 percent stake, the paper said.

Nippon Steel uses materials supplied by Usiminas to manufacture sheet steel in Brazil for sale to Japanese and other automakers.

Usiminas plans to spend up to 400 billion yen ($3.39 billion) on a new blast furnace with an annual production capacity of 5 million tons, in a plan to boost its crude steel output by 50 percent by 2010, the Nikkei said.

REUTERS