In the latest stark example of the export of American jobs, ThyssenKrupp of Germany and Vale of Brazil held the inauguration ceremony for a five million ton steel slab mill in a suburb of Rio de Janeiro. The mill is 73.13% owned by ThyssenKrupp and 26.87% owned by Vale, who will also supply the iron ore on a 15 year contract, the longest the company has ever signed. The ThyssenKrupp CSA SiderÃƒÂºrgica do AtlÃƒÂ¢ntico (TKCSA) represents the largest private investment undertaken in Brazil in the last 15 years. More than 30,000 workers constructed the mill, making it one of the largest mobilizations of manpower ever witnessed in the history of Brazil according to a Latin Business Chronicle article this week. It breaks many firsts for Brazil. At US$ 6.5bn it will be the largest private sector investment in the country in 15 years and will itself consume some 110,000 tons of steel in making the structures such as building, blast furnaces etc. Of the two blast furnaces in the facility, one will start up this year with the other to follow in 2011 said a MercoPress report. Friday’s opening involved the sinter plant, and the first slabs are expected to be produced later in the summer. Eventually all five million tons of slabs will be exported, three million metric tons destined for ThyssenKrupp’s carbon steel operation in Alabama and two million to the company’s European plants. It is forecast to increase Brazilian steel exports by 40%. As steel consumption in both the US and European markets is not forecast to rise this decade much above pre-crisis levels that suggests primary production capacity in those markets will be cut back to make way for the new supply source. Although not linked to the impending supplies from Brazil, Sparrow Point’s decision to temporarily close down of their L blast furnace due to excess local supply of slabs reported this week on MetalMiner is perhaps a harbinger of a longer term decline in US domestic steel production we could see over the coming years.
Some would argue it makes more sense both economically and ecologically to be producing primary steel products in places like Brazil, close to the iron ore and coking coal reserves, and shipping a refined semi finished product like steel slabs thousands of miles rather than 62% purity iron ore. ThyssenKrupp shows every intention of running the plant to the same standards as their European operations. According to a China Daily report, the TKCSA complex also includes a 490 MW-capacity power plant fueled by gases produced during steel-making so as to reduce greenhouse gas emissions for example. But this plant is arguably not representative of most production facilities in emerging markets which are not run so responsibly. Slab mills in Russia, China and India are almost certainly operating under different environmental rules to those in the US.