Brazilian steel tube maker V&M has placed a US$65mn loan request with federal development bank BNDES. It is the first time the company has approached the bank for financing.
The loan would help pay for the first phase of an expansion project, which includes a new re-heating oven for the company’s continuous mandrel mill. A mandrel mill employs a massive rod that pierces steel bars, boring a hole in them and making them into pipes.
Italian steel equipment maker Danieli is rumoured to be at the top of the list of possible suppliers.
V&M is expanding capacity of the mill to 550,000t/y from 420,000t/y for tubes of up to 7 inch diameter in a two-phase expansion with a total price tag of US$100mn.
The expansion also includes other investments from the melting shop to the finishing and processing of the tubes, is slated for completion in 2005.
V&M posted a net profit of R221mn (US$76mn) in 2003 on the back of strong demand for its tubes. Brazil’s domestic steel tube market has been growing at an average of 8-15% a year.
Meanwhile, V&M is considering the purchase of a pig iron plant in the region. The goal would be to export the pig iron to other foreign units of the group to substitute of scrap metal, which has become increasingly costly.
Belo Horizonte-based V&M is 55%-owned by France’s Vallourec and 45% by Germany’s Mannesmann.