ArcelorMittal starts operations of US$345mn Brazil steelworks expansion

Steelmaker ArcelorMittal started operations of a new steel galvanizing and continuous annealing line at its Vega unit in São Francisco do Sul, in Brazil’s Santa Catarina state.

Called CMC Project, the firm invested 2bn reais (US$345mn) to increase installed capacity from 1.6Mt/y to 2.2Mt/y.

The project also expands the product portfolio in the high value-added flat coated and cold-rolled steel segment.

"This expansion project reflects the group's strategic decision to increase production in the country, develop technological and competitive steels, and add value to our portfolio," Jorge Oliveira, CEO of ArcelorMittal flat steel Latin America, said in a statement.

The investment is among the biggest ArcelorMittal is making in Brazil. Under its 2022-28 plan, the company will invest 25bn reais in expansions, modernizations, acquisitions and renewable energy.

But the investments are also coming as competition with steel from China is intensifying.

Recently, Brazilian steelmaker Gerdau called for more tariffs on steel imports from China, while more trade barriers are likely to go up following the US elections.

“Our domestic steel market has been impacted by excessive imports of Chinese steel. The recent tariffs imposed by the Brazilian government were not sufficient to prevent the continued entry of Chinese products at unreasonable prices,” Gerdau CEO Gustavo Werneck said during the recent press conference to present the company’s Q3 results.

Earlier this year, the government imposed a 25% tariff on steel imports from China to protect steel mills from external competition.

Werneck said the tariff should be increased urgently to at least 35% and applied to all steel products.

“With the results of the elections in the US, more domestic barriers against Chinese products are expected there, and due to this, China is likely to bring even more imported products to Brazil,” he added.

The winner of the election, Republican Party candidate Donald Trump, has repeatedly advocated for trade tariffs against imported products, particularly from China.

Yet, China is Brazil’s biggest trade partner and leftist President Luiz Inácio Lula da Silva may conclude that relations may grow tense with Washington, causing negative effects on investment and trade balance, which Beijing could help mitigate.