Desperate to carve out profits again, German steel giant ThyssenKrupp plans to shed its lossmaking operations in the US and Brazil. The company says initial hopes for profitable business have not materialized.
ThyssenKrupp's board of directors has decided to explore all options for its steelworks in the US and Brazil, including a sell-off of the loss-making plants, the German steel company's management said Tuesday.
Noting that there was "no precise deadline" by which a decision would have to made, ThyssenKrupp Chief Executive Heinrich Hiesinger said that management "is not under time pressure to reach a decision."
Hiesinger refused to say for what price ThyssenKrupp would offer its Steel Americas units, but added that he was going to talk first with Brazil's raw materials giant Vale which already owned a 27 percent stake in a ThyssenKrupp steelworks in that country.
ThyssenKrupp's Steel Americas unit includes steelworks in Mobile, United States, as well as in Rio de Janeiro, Brazil. Set up in 2007, the projects have run up building and operating costs of 12 billion euros ($15.4 billion), contributing to an overall loss of 1.8 billion euros for ThyssenKrupp last year.
Investment gone awry
In the first six months of the company's current fiscal year starting in October, Steel Americas brought losses of half a billion euros to the books of the German steel giant, causing "headaches," Hiesinger said.
Insisting that the two projects were at the cutting edge of steelmaking technology, Hiesinger pointed out that "framework conditions for a profitable steel business" had changed in the two countries.
Originally, ThyssenKrupp has planned to produce steel at low cost in minerals-rich Brazil for further processing in the United States and use in the country's auto industry.
"While the US economy has lost its dynamic in recent years, Brazil has been growing rapidly, upsetting our original cost and demand estimates," Hiesinger said.
Hiesinger added that the company had no plans to shed its European steel business, arguing that ThyssenKrupp didn't have a "problem with steel, but a problem with Steel Americas."
However, in January the German steelmaker sold its loss-making stainless steel unit Inoxium to Finland's Outokumpu, in a deal seen by analysts as part of a ThyssenKrupp strategy to seek profit outside the steel business.
uhe/mll (dpa, AFP)