Brazil’s multinational metals and mining group Vale has signed a $2.1 billion agreement with the Export-Import Bank of Korea, the Korean Trade Insurance Corporation and commercial lenders, to build a joint-venture steel mill in northeast Brazil—the largest South Korean financing ever in the country.
Vale’s cash flow has been crimped by low prices for iron ore and other commodities, forcing it to seek outside financing for the Pecém Steel project. Construction of the plant began in 2012, and the mill is expected to begin operating in 2016. Posco and Dongkuk Steel of South Korea are partners with Vale in the project.
“The scale of the project and such major support from both domestic and international lenders and credit agencies demonstrates continued faith in Brazil as a commodity producer,” says Daniel Bartfeld, partner at Milbank Tweed Hadley & McCloy, which represented the Korean government agencies in the financing. The project is the largest steel plant construction order ever won overseas by Korean companies.