Chinese steel mill scraps Brazil factory plan

BEIJING, Tuesday
A major Chinese steelmaker has scrapped a plan to build a five-billion-dollar factory in Brazil due to high costs and a slump in prices for the metal, state media has said.

Wuhan Iron and Steel (Wisco) and Brazil’s LLX, a subsidiary of the EBX group controlled by Brazil’s richest man, Mr Eike Batista, signed the deal to build the facility in Rio de Janeiro state in 2010.

Under the agreement, Wisco was to own 70 per cent of the plant, with the Brazilian firm to take the remaining stake. The plant was expected to come online this year with an annual production capacity of five million tonnes.

The project, if realised, would have been China’s biggest investment in Brazil as well as the largest Chinese investment in an overseas plant, then Brazilian President Luiz Inácio Lula da Silva said at the time.

But the Chinese company decided to shelve the project after feasibility studies showed the risks were overwhelmingly high, the 21st Century Business Herald reported, citing two unnamed sources close to the matter.