Brazilian mining company Vale has announced the sale of its complete 26.87% stake in the troubled Companhia Siderúrgica do Atlantico (CSA) steel plant in Rio de Janeiro to Germany-based ThyssenKrupp in a bid to focus on core mining businesses.
Vale's latest move is part of its initiative to streamline its asset portfolio.
Following the transaction, Thyssenkrupp will become the sole owner of the CSA plant. The deal will not result in any financing requirements for the company.
Vale will be entitled to future income in case ThyssenKrupp sells a controlling stake in CSA to a third party.
Thyssenkrupp said in a statement: "In connection with the acquisition, existing shareholder agreements and other operating contracts between Vale and CSA will be renegotiated or cancelled.
"Thyssenkrupp will thus reduce complexity and risks and increase its room for maneuver for the further development of CSA."
Vale's latest decision comes due to weak iron ore prices and as the company plans to exit the steel venture.
The Wall Street Journal reported Vale as saying that the rights to sell iron ore to the CSA plant under existing agreement terms, will be retained.
Upon completion of the transaction, Vale´s minority and other participating rights at CSA will cease to apply.
The completion of the transaction is subject to various approvals, including by the Conselho Administrativo de Defesa Econômica (CADE).
Image: Corporate Headquarter of ThyssenKrupp, building Q1. Photo: courtesy of Tuxyso.