CSN says iron ore dispute won't hurt Corus bid

London, Jan 25: Brazilian steelmaker Companhia Siderurgica Nacional rejected reports on Thursday that a domestic iron ore dispute might damage its chances of winning a bid battle for Anglo-Dutch rival Corus Group Plc .

Companhia Siderurgica Nacional (CSN) has made a 4.9-billion-pound (.7 billion) recommended cash bid for Corus, trumping two earlier offers from India's Tata Steel . But many analysts expect Tata to raise its bid again ahead of a Jan. 30 deadline for offers set by Britain's takeover regulator.

The Financial Times reported on Thursday that Brazilian miner Companhia Vale do Rio Doce (CVRD) plans to challenge CSN's ability to supply iron ore to Corus, and that this could damage CSN's chances in the bid battle.

''There is no basis for this story,'' CSN said in an emailed statement. ''There is no change to our position or our commitment to acquire Corus.'' Corus declined to comment.

At 0920 GMT, Corus shares were down 0.1 percent at 551-1/2 pence, off an earlier low of 544-1/2 pence and still well above CSN's offer of 515 pence a share, signalling investors think the bid battle has further to run.

The Financial Times quoted Jose Martins, CVRD's director for ferrous operations, saying that CVRD would question CSN's ability to ship iron ore under the terms of a 2001 contract signed between the firms. CSN's rights to the iron ore supply are key to its merger plans with Corus, the paper said.

''If CSN buys Corus, we will look closely at how the deal is done to see if our right (to the ore) remains in force,'' Martins was quoted in the newspaper as saying.

CSN said there was no risk to the iron ore supplies.

''Should CSN acquire Corus, it will exercise its rights to supply iron ore from its Casa de Pedra mine to all its operations, including those in Europe,'' its statement said.

A takeover of Corus by either CSN or Tata Steel would create the world's fifth-biggest steelmaker.

It would also mark the latest acquisition in the steel sector as companies look for global reach, economies of scale and to secure valuable raw material supplies. Earlier this year, Dutch-based Mittal Steel bought Luxembourg's Arcelor to create Arcelor Mittal , the world's biggest steelmaker.

REUTERS