Steel Mills
Vale May Divest California Steel Industries
Written by Sandy Williams
December 12, 2019
Changes may be coming for two joint ventures held by Brazilian mining giant Vale, including California Steel Industries. Vale is looking to trim costs as it continues to make reparations stemming from the Brumadinho tailings dam collapse that took 270 lives and caused major environmental damage to the region.
At Vale Day on Dec. 2 in New York, the company alluded to the possibility of divesting its non-core assets, which include joint ventures Companhia Siderúrgica do Pecém in Brazil and California Steel Industries in the U.S.
California Steel Industries is a 50/50 joint venture held by Vale and Japan’s JFE Steel. The company rerolls steel slab imported primarily from Brazil, Japan and Mexico into finished products. Since last year, slabs from Brazil have been restricted by quotas under the Trump administration’s Section 232 measures on steel and aluminum imports. Last week, the president tweeted that effective immediately steel exported from Brazil to the United States would be subject to a tariff of 25 percent. To date, the tariff has not been formalized, and there has been no word on the fate of the quota. But if actually imposed, the tariff could impact steel production at CSI. The company did not respond to SMU’s request for comment.
A spokesperson for Vale declined to offer further details on the divesture, but said in an email: “Vale has a stake in two steel JVs: California Steel Industries and Companhia Siderúrgica do Pecém, in Brazil. As we have said before, these are non-core assets that are under evaluation.”
California Steel industries produces a broad range of products, including hot rolled, cold rolled, and galvanized sheet, and electric-resistance welded pipe. The company is located 50 miles east of Los Angeles in Fontana, Calif., and employs about 1,000 full-time workers.
Sandy Williams
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