A Japanese and Korean investor group has bought controlling shares of a Brazilian niobium producer.
The investor group consisting of JFE Steel Corporation (JFE), Nippon Steel Corporation (NSC), Sojitz Corporation (Sojitz) and Japan Oil, Gas and Metals National Corporation (JOGMEC) and a Korean groups Posco and National Pension Service (NPS) bought 15% of Companhia Brasileira de Metalurgia e Mineração (CBMM).
Niobium is a critical alloying additive in the production of high-grade steel products. CBMM is in a position to secure a continuous supply system of the metal as the need for high-grade steel products grows.
The four Japanese companies will use two special purpose companies to acquire a 10% stake and the two Korean companies will use a separate Special Services Company to acquire a 5% stake in CBMM.
The Japan consortium will spend $103bn and the Korean consortium $650M. Each of the six consortium partners will indirectly hold a 2.5% stake in CBMM (for a combined total of 15%).
JFE, NSC, Posco and Sojitz also entered into a long-term niobium supply agreement with CBMM.
Niobium enhances the strength, durability, and heat resistance of steel products with the addition of only trace amounts.
High-grade and special steel products and superalloy products containing niobium include pipelines, automotive steel, large-scale construction steel, turbines, aircraft engines, including the ones used in space shuttles, and other machinery.
CBMM, a Brazilian company established in 1955, owns a niobium mine, refining plant and metallurgical production facilities in the Araxá area of Minas Gerais State.
Brazil holds the largest part of total known niobium reserves in the world according to data from official agencies, and CBMM is thought to hold rights to the best niobium reserves in Brazil.