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Ternium Set To Take Control of Brazilian Steelmaker Usiminas

March 30, 2023

Ternium SA and its affiliates aim to take a majority stake in Brazilian flat-rolled steelmaker Usinas Siderúrgicas de Minas Gerais SA (Usiminas).

The Latin American flat-rolled steelmaker said it and related companies had agreed to pay $111 million in cash for 57.7 million in ordinary shares of Usiminas.

The shares will be purchased from Japan’s Nippon Steel Corp., Mitsubishi, and MetalOne. The deal remains subject to approval from Brazilian anti-trust authorities, Ternium said in a press release on Thursday, March 30.

The agreement is expected to give Ternium a 51.5% stake in the group that controls Usiminas. Ternium and its affiliates, including steel pipe and tube maker Tenaris SA, will have a 61.3% stake in the Brazilian flat-rolled steelmaker.

Under the new deal, Ternium will nominate five members of the executive board, including the CEO, and Nippon Steel will nominate one member.

Recall that Ternium and Tenaris are both part of Argentinian conglomerate Techint Group. Usiminas is based in Belo Horizonte, in the Brazilian state of Minas Gerais.

Once the deal closes, the group led by Nippon Steel will have a 31.7% stake in Usiminas and the Usiminas employees’ pension fund a 7.1% stake.

“Ternium will continue working to take Usiminas to its full potential,” the company said in a statement, noting that all involved parties were “committed to enhance the company’s competitiveness and value.”

“Considering the tough business environment surrounding Usiminas, Nippon Steel and Ternium share the common understanding that stronger leadership by either shareholder in management would be required for further growth,” Nippon Steel said in a statement on Thursday.

Ternium and its affiliates will have the option to buy the remaining stake held by Nippon and its affiliates on the second anniversary of the deal closing. Nippon will also have the right to sell its shares on the open market at any time after the deal closes.

Ternium has aggressive expansion plans across both North and South America. It has been expanding in Brazil. And in February, Ternium announced plans to spend $2.2 billion to build an electric-arc furnace (EAF) and direct-reduced iron (DRI) module in North America. A location has not yet been disclosed.

The EAF will support Ternium’s new hot-rolling mill and related downstream facilities in Pesquería, outside of Monterrey, Mexico.

Ternium has said it wants to add an EAF to meet more stringent USMCA regional content rules, which kick in in 2027. Namely, that 70% of steel and aluminum used in vehicles be sourced within North America.

By Michael Cowden, michael@steelmarketupdate.com

Michael Cowden

Michael Cowden is editor-in-chief for Steel Market Update. Cowden has covered the steel industry since 2007. He specializes in flat-rolled steel but has also reported on steel long products, steel pipe and tube, and aluminum. Before joining SMU, Cowden held reporting jobs at Fastmarkets AMM in Chicago, the Associated Press in Pittsburgh, and the Cambodia Daily in Phnom Penh. He has also worked as a copy editor and in marketing at the University of Chicago Press. Cowden has a BA in English from the University of Chicago and an MSJ journalism from Northwestern University’s Medill School of Journalism. Contact him at michael@steelmarketupdate.com or 724-759-7872.