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Who will eventually sing with Corus?
CNBC-TV18 has learnt that CSN has completed its due diligence of Corus over the weekend and may come out with a firm offer during the week. In the meantime, the Corus group has postponed its EGM until December 20 to allow CSN more time to satisfy pre-conditions.
Now the mine that CSN has is the Casa De Pedro belt has reserves of 16 million tonnes per annum and is mainly used for CSN's own steel mills. These reserves are likely to go up to 21 million tonnes by the end of 2007 and 45 million tonnes by the end of 2008.
In comparison, Tata Steel's mines produce around 9 million tonnes of iron ore, which is mainly used for Tata Steel's production, which is increasing. It is expanding capacities and it will need more iron ore. Also, Tata Steel has limited capacity to export iron ore.
But the main problem is with CSN's Casa De Pedro Mines. The merger, which was to happen in 2002, did not come through as the talks fell through due to the CVRD-CSN dispute.
CVRD continues to hold a preferential right to all the excess output from the Casa De Pedro Mines. Therefore, CSN will not have much iron ore to export to Corus. This dispute has been long standing between CVRD-CSN since 2000 and it is currently between the anti-trust divisions of the Justice Ministry of CADE.
So one will have to see how this turns out - how this dispute actually does in favor, whether CVRD has the preferential rights through the excess iron ore from Casa De Pedro Mines, which is CSN's mine or whether the right goes to CSN. CVRD's Chief Financial Officer has said that, 'We had a contract and we have a contract and this right should be upheld'. So one will have to see how this dispute turns around and who actually has the upper hand - Tata Steel or CSN.
