With the sale of non-strategic assets, Gerdau will define the allocation of new investments
19/01/2024
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Gustavo Werneck — Foto: Carol Carquejeiro/Valor
In a move to focus on strategic assets, particularly in Brazil, the U.S., Mexico and Canada, Gerdau announced on Wednesday (16) the sale of its stake in the Diaco and Gerdau Metaldom joint ventures to Inicia, a group that was already a partner in these two companies, for $325 million.
“We want to be in relevant countries for the long term. Gerdau has been in 13 countries and is now in seven,” said Gustavo Werneck, Gerdau’s chairman. With operations in Colombia, the Dominican Republic, Panama, and Costa Rica, the divested companies have long steel production units with production capacities of 360,000 tonnes in the melt shop and 1,250,000 tonnes in the rolling mill, a business considered of little relevance to the company’s overall results.
“The funds [from the sale] will be used for the company to look for other investment alternatives. In our opinion, these funds should be better invested in Brazil, Mexico, the United States and Canada,” the executive said.
In that sense, the steelmaker’s board of directors has asked the management team to define the future allocation of Gerdau’s investments. “The question is: where is the best place to invest? Brazil or Mexico, which is growing very fast and is part of the nearshoring movement? I think Brazil is missing that opportunity.”
With Chinese steel imports, Brazil has also lost competitiveness in the steel sector, and this scenario has worried the chain, according to the executive. “Investors looking at the sector have questioned what the country’s growth path will be.”
The sector has been highly critical of the Brazilian government for not erecting barriers to protect domestic steel. “Brazil used to be a major aluminum producer, but that important segment of the industry has been destroyed. Will Brazil destroy its steel industry as well?”
With operations in Argentina, the Brazilian steelmaker doesn’t intend to leave the neighboring country despite its economic instability. “There are countries, like Argentina and Peru itself, that have experienced great political difficulties in recent years that are very relevant to us.”
On his first visit to the World Economic Forum in Davos, the executive offered a positive assessment of the event for the company’s networking, but shares the opinion of businesspeople attending the forum that the Brazilian delegation fell short this year due to the lack of representatives from the country’s economic team.
“I think we missed an important opportunity. Brazil is the largest delegation in South America, it has the largest number of companies, so it’s contradictory to be the largest delegation and not have the largest representation. The Argentine government attended the event with its economic team.”
For the executive, the country was praised in the environmental field. “Minister Marina Silva is a global reference in sustainability.”
Mr. Werneck believes that the energy transition, a banner that Brazil is defending, is an important issue, but it is still necessary to understand how to finance the investments planned for this new industrial movement.
*Por Mônica Scaramuzzo — Davos
Source: Valor International