Essar Steel to set up slab unit in Brazil

New Delhi: Essar Steel Holdings is considering setting up a 6-million-tonne a year slab making facility in Brazil, one of the fastest growing markets for steel, a senior company official has said.

According to industry estimates, setting up a 6-million-tonne steel slab plant is likely to cost about $5 billion.

The Brazilian steel industry is driven by its booming automobile market.

Around 2.5 million cars were sold in Brazil in 2007, up 28 per cent year-on-year.

A study of the South American market indicates Essar may not restrict itself to slab-making and may eventually go for finished products such as hot-rolled and cold-rolled coils to feed the growing market.

All leading steel players in Brazil, such as CSN, USIMINAS and ArcelorMittal have integrated plants and most of the surplus slab has to be exported to Asia and Europe, incurring large logistics costs.

Essar has also applied for iron ore mines in Brazil, which has about three times the commodity's reserves than India.

The company intends to use the extract from these mines for its proposed plants in Brazil and in Trinidad and Tobago, where it plans to start construction in three months.

'We have got all the necessary clearances and we have already begun placing orders for Trinidad,' the official said.

The proposal had long been embroiled in environmental issues, which have been resolved now, the official said.