German industrial and technology group ThyssenKrupp has sold its CSA Siderúrgica do Atlântico (CSA) steel plant in Brazil for €1.5 billion.

“We now generate over 75% of our sales with our profitable capital goods and services businesses,” commented Dr. Heinrich Hiesinger, CEO of ThyssenKrupp AG.

Hiesigner said that the sale of CSA meant that ThyssenKrupp was parting with Steel Americas. He claimed that the sale was ‘an important milestone’ in the company’s transformation into a strong industrial group. The sale brings to a close the German industrial giant’s loss-making venture in the Americas.

ThyssenKrupp’s original plan was to produce slabs at low cost in Brazil and process and sell them in the USA and Europe. It didn’t work. Significant increases in construction costs for facilities in Brazil and the USA, technical problems with plant ramp-ups and high start-up losses placed the entire project under review as soon as Hiesinger was appointed CEO.

Hiesinger said that the economic parameters changed significantly leading to the sale of both plants.

Costs to date have reached €12 billion in capital expenditure and start-up losses and even after deducting the proceeds from the divestment of the plants in the USA and Brazil – and Vale’s share in the financing – a net loss of around €8 billion remains.

ThyssenKrupp sold the processing plant in the USA in 2014 to a consortium of ArcelorMittal and Nippon Steel when it was not possible to divest CSA due to complex contractual ties with former co-shareholder Vale. Those ties ended in May last year, leaving ThyssenKrupp the sole owner.

ThyssenKrupp has recently optimised the CSA plant’s facilities and operational performance and succeeded in turning a profit.

“Step by step we created the conditions for a good solution in Brazil, making CSA attractive to a buyer. This is also reflected in the purchase price,” said CFO Guido Kerkhoff.

Ternium operates production facilities in Mexico, Argentina, Colombia, the southern United States and Guatemala and ships 9.8Mt/yr of finished steel products.

Last year Ternium purchased approximately 3.7Mt of steel slabs from third parties. With the purchase of CSA, it will acquire additional production capacity of up to 5Mt of slabs/yr. There is also a slab supply contract agreed up to 2019, involving the annual delivery of 2Mt to an ArcelorMittal/Nippon Steel plant in the USA.