Brazilian units strategic for Arcelor's future

Brazil is considered a strategic country in the 2006-2010 action plan of European steel group Arcelor, AE-Setorial news service reported. Brazilian production will be essentially aimed at export markets. Currently, around 40% of output from Brazilian steelmakers partly owned by Arcelor is sold abroad. Company officials say that its assets in Brazil are some of the most competitive in the world due to the availability of low-cost, high-quality iron ore, ports geared to serve the sector and relatively cheap labor. The company aims to concentrate on more-valued added processes and research and development in countries like Europe and on more lower-end steel production in developing countries such as Brazil. Arcelor holds 28% of the total capital of Belo Horizonte-based stainless steelmaker Acesita; 56% of Belo Horizonte-based long steelmaker Belgo-Mineira; 69% of Sao Francisco do Sul, Santa Catarina-based flat steelmaker Vega do Sul; and 30% of Vitoria-based flat steelmaker CST. Arcelor is expected to become a majority shareholder in CST in 2006. The company would not comment on reports about a possible partnership with China's Baosteel and Rio de Janeiro-based mining giant CVRD (NYSE: RIO) to set up a slab mill in north Brazil. Luxembourg-based Arcelor is the world's largest steel company with installed capacity of over 40Mt/y.