Gerdau signs up to US$240mn in financing for Ouro Branco upgrade

Acominas, a unit of Brazilian long steel producer Gerdau (NYSE: GGB), has signed an agreement with Japan's state credit agency Nippon Export & Investment Insurance (NEXI) for a US$240mn loan to modernize its Ouro Branco steel plant in the southeastern state of Minas Gerais, the company said in a statement. NEXI will cover 97.5% of political and 95% of commercial risk. The loan will be financed by Dutch bank ABN AMRO Bank NV, Japan's Tokyo Bank-Mitsubishi and the UFJ Bank Limited. The loan has a five-year payback period with a two-year grace period. Acominas will expand the plant's capacity to 6Mt/y from 3Mt/y in two stages. In the first stage, which is already under way, it will ramp up to 4.5Mt. Gerdau recently announced it would build the group's first steel plant in Sao Paulo state, at Araçariguama, some 50km from Sao Paulo city. The group will invest 750mn reais (US$262mn) in the project, which will be completed in two stages. Gerdau, which is based in Porto Alegre, is the largest long steel producer in the Americas and the Sao Paulo plant will increase its capacity by close to 8% to 18Mt/y. The group also has plants in North America, Argentina, Chile and Uruguay.