ArcelorMittal announces BRL 4.6 billion in investments in Brazil

The ArcelorMittal steel company announced this Thursday (11) investments of US$ 850 million (R$ 4.6 billion, at the current exchange rate) to expand the production capacity of its Brazilian operations. The resources will be destined to the expansion of a mine and an industrial unit in Minas Gerais.

According to the president of the company in Brazil, Jeferson De Paula, the projects are justified by the expectation of growth in domestic sales in a scenario with a less favorable exchange rate for imports and prospects for high investments in infrastructure.

“We are optimistic about future demand from industries that work with our steel,” said the executive, who forecasts steel sales growing 5% a year in the coming years. This year, the company had already approved another R$1.9 billion in investments in Santa Catarina.

Of the total approved, US$ 350 million (R$ 1.9 billion, at the current exchange rate) will be spent in the Serra Azul mine, in Itatiaiuçu, 75 kilometers from Belo Horizonte. The company will build a pellet feed (super fine ore) production unit, expanding the mine’s capacity by 4.5 million tons per year.

The objective is to supply high quality ore to ArcelorMittal’s operations in Mexico, which will also have investments in capacity expansion. The forecast is for the new unit to start producing in the second half of 2023.

The other US$ 500 million (R$ 2.7 billion) will be invested in the completion of a new production line at the João Monlevade plant, 115 kilometers from the capital of Minas Gerais, with the construction of a sintering unit, a blast furnace and a steel shop.

The expansion of the Monlevade project was approved by the company in 2008 and started in 2011, but it was suspended after the economic crisis that started in 2014. With the recovery of the market, the works will resume in 2021.

The goal is to increase by one million tons per year the steel production capacity at the unit, which had already received a new rolling mill before the investment was suspended. Operations are expected to start in the second half of 2024.

Based on the average exchange rate projection for the period of construction, the company says that the total investment should be around R$4.3 billion: R$1.8 billion in Serra Azul and R$2.5 billion in the Monlevade project.

Arcelor expects that the expansions will generate 1,350 permanent jobs, which will be recruited and trained in the regions where the projects are located. During the peak of the works, says De Paulo, up to eight thousand workers will be needed.

The investment was announced during the release of ArcelorMittal’s balance sheet, which posted a profit of US$ 4.6 billion (R$ 25 billion) in the third quarter, the best quarterly result for the steelmaker since 2008.

The performance was boosted by the increase in premiums paid for steel, even at a time of falling sales. The company’s revenue in Brazil more than doubled, growing 122% compared to the third quarter of 2020.

In the country, ArcelorMittal produced 3.1 million tons, an increase of 35.3% over the same period last year. Shipments grew 16.6%, to 2.8 million tons.

The growth of sales in the country after the pandemic, says the company, is atypical, as a result of the injection of public money and aid programs and the search for appliances during the period of confinement. “Without being able to leave, the person bought a refrigerator. And that has steel”, says the President of Arcelor.

In 2020, while GDP plummeted, steel sales grew 5%. In 2021, the increase has already reached 24%. De Paula says that the undervalued exchange rate helps in this process, by giving competitiveness to machines and equipment manufactured in Brazil.

He also sees a movement to encourage local production after the pandemic, which led to major bottlenecks in global supply chains. In addition, he says, China has been restricting the operations of older steelmakers to limit pollution, which reduces the global oversupply of steel.

De Paula says that the current scenario of political and fiscal insecurity did not weigh on the decision, as these are long-term projects. He recalls that the company was the first to build a steel plant in the country and this is celebrating the centenary of its Brazilian operations.

“We know Brazil, we’ve been through many strong crises, more or less crises and excellent years,” he says. “Brazil is not a stable country, it is fickle, but we think that on average it will grow. So we are ready for the next 100 years.”