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China's JAC Motors to build vehicle plant in Brazil

  From Dow JonesJuly 03, 2009

China's JAC Motors (Jianghuai Automobile Co., Ltd) ) is to build a vehicle plant at the Acu port complex in Rio de Janeiro State, the Rio state government said in a statement.

The announcement came shortly after confirmation Wednesday China's Wuhan Iron & Steel Co. Ltd, or Wisco would build a steel mill at the greenfield site in the north of Rio de Janeiro State.

JAC Motors is China's leading bus chassis manufacturer. It produces 450,000 vehicles a year including light trucks and multipurpose vehicles.

State governor Sergio Cabral revealed the JAC deal during an official visit to China this week.

Cabral said the steel mill would attract other industries to the port complex now under construction.

"The steel mill is an anchor for new investment at Port Acu. From shipyards and equipment for the sub-salt, to automotive investment. They can set up there with the guarantee they'll have quality steel," Cabral explained.

Sub-salt refers to Brazil's recently discovered huge deepsea oil finds.

Porto Acu is well-placed to serve the oil equipment market as most of Brazil's oil reserves are off the coast of Rio de Janeiro.

The steel mill deal facilitated JAC Motors' decision to build a plant at the site in partnership with EBX, the statement said.

"We're going to have a steel mill the size of CSN in the north of the state," said State Economic Development Secretary, Julio Bueno.

CSN is Brazil's largest and oldest steel mill. It is located between the cities of Rio de Janeiro and Sao Paulo.

Bueno told the local O Globo newspaper Thursday JAC wanted to produce trucks and budget cars at Acu.

Wisco has told Cabral that they want the study for the new mill completed within three months, O Globo said.

According to the report, Cabral has suggested to Wisco that it contract the same team for the steel mill viability study who drew up a similar plan for China's Baosteel.

Baosteel had planned to build a steel mill in Espirito Santo State with Brazilian miner Vale SA (VALE) but the project was canceled owing to environmental obstacles.

The Wuhan steel mill is part of a wider iron ore mining and steel project partnership with Grupo EBX, owned by Brazilian billionaire and mining entrepreneur, Eike Batista.

On May 19, Grupo EBX mining subsidiary, MMX Mineracao e Metalicos SA signed a memorandum of understanding with Wuhan to create the partnership.

Under the accord, Wuhan had the option of investing jointly with MMX and sister logistics company LLX Logistica S/A in the 5 million metric tons a year steel mill.

Local sources have estimated the mill would cost around $4 billion.

The steel mill will be supplied with iron ore from mines in neighboring Minas Gerais State.


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