ArcelorMittal has agreed to purchase Brazilian steelmaking firm Companhia Siderurgica do Pecem (CSP), a joint venture between Vale, Dongkuk Steel Mill and Posco, for an enterprise value of $2.2bn.

Brazilian mining firm Vale holds a 50% stake in CSP while South Korea-based steelmakers Dongkuk Steel Mill and Posco respectively own 30% and 20% stakes.

CSP forms part of the Industrial and Port Complex of Pecém (IPCP), in Ceará, inside Brazil’s first Export Processing Zone (EPZ).

Equipped to produce high-quality rolled steel products, the mill has access to the Port of Pecém via conveyors.

This facility has an annual production capacity of three million tonnes of steel slabs, at a ‘globally competitive cost’, ArcelorMittal said.

The firm expects the acquisition to expand its position in the Brazilian steel industry.

Subject to certain corporate and regulatory approvals, including that of Brazilian antitrust authority CADE, the deal is expected to close by the end of this year.

ArcelorMittal CEO Aditya Mittal said: “In CSP, we are acquiring a modern, efficient, established and profitable business, which further enhances our position in Brazil and adds immediate value to ArcelorMittal.

“There is significant potential to decarbonise the asset given the state of Ceará’s ambition to develop a low-cost green hydrogen hub and the huge potential the region holds for solar and wind power generation.”

In the short-term, the steel production company plans to continue to supply high-quality slabs from CSP to the latter’s existing customers in North and South America.

Mittal added: “As we continue to develop the downstream capabilities of our NAFTA and Brazilian businesses over the medium-term, we have the option for CSP to become an important intra-group slab supplier.

“Over the longer term, there is also the option to significantly increase its slab capacity and add rolling and finishing capabilities on a low-carbon emissions basis.”

The sale forms part of Vale’s efforts to focus on its core operations and growth opportunities.