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Vale said to be talking with Baosteel on steel venture

Dow Jones reported that Brazilian mining giant Vale SA has informally resumed talks with Baosteel Group Corporation on a possible partnership to develop USD 6 billion steelworks project in Espirito Santo state in southeast Brazil.

The officials said that they are just corridor level talks at the moment, not formal negotiations, but BaoSteel is still in the running.

In early 2009, Vale and Baosteel canceled a steel mill they had planned to build in Espirito Santo state after failing to secure approval from Brazil's environmental authorities. Espirito Santo authorities said that the project would create a drain on local water resources and create too much air pollution.

Vale has since redesigned the project on a smaller scale, cutting capacity in half to 5 million tonnes per year of steel slabs. The project will be located at Anchieta on the Espirito Santo coast.

Last week, Mr Jose Carlos marketing, sales and strategy director of Martins Vale said that Vale will proceed alone with the project until it gains all the licences it needs and will then bring in partners for the project, called Companhia Siderurgica Ubu. The search for the partner is now starting. Vale gained a preliminary license for the Ubu mill in March and hopes to gain a construction license in the third quarter of 2012.

According to Nucor officials attending the Brazilian Steel Institute IABr annual congress in Sao Paulo last week, US steelmaker Nucor Corporation may also be interested in talking to Vale about joint projects. Mr Chris Goebel Nucor's business development director said that "We have a certain level of focus on Brazil. We could consider a partnership with Vale.”

(Sourced from Dow Jones)

Vale said to be talking with Baosteel on steel venture