Brazil Ministry Seeks Halt At Ternium Acu Steel Mill Project
April 16 2012 - 12:16PM
Dow Jones News
Rio de Janeiro State's Public Ministry has filed legal action
with a state court calling for the suspension of work on Latin
American steelmaker Ternium SA (TX)'s Acu steel project in Rio de
Janeiro, southeast Brazil.
Public ministry prosecutors allege there were irregularities in
the process that resulted in an installation license being granted
to Ternium for the steel plant on March 27 by Rio de Janeiro
state's environmental authorities, Public Ministry spokesmen said
Monday. The process didn't complete in-depth studies on the
possible environmental impact of the works, said the prosecutors,
adding that less-polluting technology could be adopted at the
works.
Ternium gained a preliminary license last year to set up a steel
slabs plant at Acu port with a capacity to produce up to 8.4
million metric tons a year of steel slabs at a 1,300-hectare site.
The works has been designed to use coal as a raw material, which
the ministry says would be highly polluting. According to people
with knowledge of the situation, Ternium has been seeking supplies
of natural gas to use as a substitute for coal in a less-polluting
process, but gas supplies haven't yet been confirmed.
Ternium had no immediate comment on the technology to be used at
the works, nor on the ministry's action, when contacted by Dow
Jones Newswires.
The ministry action calls for a suspension of work on the
project until the alleged irregularities in the licensing process
can be corrected. The action will be judged by a Rio de Janeiro
state court, which will rule whether or not work can continue on
the Ternium steelworks project, the ministry spokesmen said. No
date has yet been fixed for the hearing in the state court, they
said.
According to LLX Logistica SA (LLXL3.BR), the company building
Acu port, construction work on the Ternium steel mill project
hasn't yet started. The mill will source iron ore for its steel
production from the Minas-Rio iron ore project being developed by
Anglo American PLC (AA.LN) in Brazil.
Barclays Capital said in a research note Monday it expects the
start of construction at Ternium's Acu steel mill may "take longer
than expected...the development of the project is still subject to
some factors, such as the availability of natural gas at
competitive prices and the entrance of potential partners (i.e.
Usiminas, Nippon (Steel), Tenaris)."
"Problems in obtaining licenses for mineral/steel projects in
Brazil have been a constant and a key source of delays," Barclays
said in the note to clients.
-By Diana Kinch, Dow Jones Newswires, 55 21 2586 6086
diana.kinch@dowjones.com
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