Deal marks shift for Japanese steel group amid Brazil’s tightening market and end of strained partnership
11/06/2025
Ternium’s purchase of the remaining stakes held by Nippon Steel and Mitsubishi in Usiminas consolidates a long-anticipated power shift in Brazil’s steel industry. The deal stems from three converging factors: Nippon’s global strategy to redirect capital toward higher-growth markets such as the United States, India, and Southeast Asia; the adverse dynamics of Brazil’s steel sector, pressured by rising imports, especially from China; and the breakdown of a partnership long marred by conflict and gridlock.
The transaction, valued at $315.2 million, covers 153.1 million common shares and raises Ternium’s stake in Usiminas’ controlling group from 51.5% to 83.1%. Usiminas shares closed Thursday (5) at R$5.55, up 0.73%. The move did not catch the market off guard, as Ternium had already increased its stake in the controlling group in 2023.
The 2018 peace agreement between Ternium and Nippon allowed five years of relative coexistence, but Nippon had been seeking opportunities elsewhere, a strategy underscored by its recent acquisition of U.S. Steel. Analysts had noted that Brazil had become a lower priority, and Nippon’s exit reduces its exposure to a challenging market.
In Brazil, steel imports have risen despite quota and tariff measures. According to Instituto Aço Brasil, an industry think tank, 5.1 million tonnes of steel entered the country between January and September 2025. The impact has been felt through falling prices, squeezed margins, and operational cutbacks, such as the shutdown of blast furnaces. Usiminas announced that it would reduce its 2025 investments to a range between R$1.2 billion and R$1.4 billion, down from a previous projection of R$1.4 billion to R$1.6 billion.
Internally, Usiminas faces the challenge of resuming investments to maintain industrial competitiveness. Its focus is on refurbishing coke batteries, a critical project for ensuring self-sufficiency in steelmaking inputs and cutting energy costs. At the same time, its mining arm requires strategic decisions, as current reserves are expected to supply its steel operations only until 2031.
“The sale of Usiminas shares aims to mitigate the risk of further devaluation, as no significant recovery in Brazil is expected in the near term,” said Nippon Steel Vice President Takahiro Mori during a conference call.
The announcement brings an end to the long-running conflict between the Italian-Argentine group and the Japanese shareholders. The new structure unifies decision-making, shortens approval times, and facilitates industrial planning, investment, and capacity optimization.
Relations between Nippon and Ternium had long been tense. “There was a cultural clash in management styles. The financial strain at Usiminas, struggling plants, and differing responses to the crisis likely accelerated the end of this partnership,” said a source familiar with the matter.
Ternium declined to comment, while Usiminas stated it does not discuss matters related to its shareholders. With consolidated control, Ternium is expected to accelerate synergies, boost cost efficiency, and focus on higher value-added products—moves that also protect the asset from potential acquisition by competitors.
Market reactions have been largely positive, though not without caution. Citi analysts described the deal as neutral to positive for Usiminas, noting that Ternium already held control and no major management changes are expected. However, the transaction simplifies governance and may allow faster strategic execution under a single controlling shareholder.
“The main risk for minority shareholders is the possibility of delisting without tag-along rights,” wrote analysts Gabriel Barra, Pedro Ferreira De Mello, and Stefan Weskott.
According to Artur Bontempo Filho, a steel and iron ore analyst at Wood Mackenzie, Ternium’s consolidation is likely to streamline governance, a process already underway since 2023 with key leadership changes. One example was the appointment of Marcelo Chara as CEO, aligning Usiminas more closely with the management model and strategic direction of the Italo-Argentine group.
“The extension of the contract with Porto Sudeste represents an important step for Mineração Usiminas SA (MUSA)’s logistics strategy, securing seven additional years of operations with options to expand volume and duration if ore production increases. The company also expects to supply its steel plant with existing reserves at least until 2031, with some flexibility for extension,” Mr. Bontempo said.
Ownership shifts have been a recurring theme for Usiminas. Eleven years after Brazil’s antitrust regulator, Cade, ordered Companhia Siderúrgica Nacional (CSN) to sell its stake in Usiminas, businessman Benjamin Steinbruch finally bowed to regulatory pressure, selling 4.99% of his shares to Globe, a company controlled by the Batista brothers (owners of J&F), for R$263.3 million. Even so, a court ruled that antitrust watchdog CADE must set a fine for the delay in complying with the order. CSN did not immediately respond to requests for comment.
*By Robson Rodrigues — São Paulo
Source: Valor International
https://valorinternational.globo.com