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China steel mill scraps US$5 billion Brazil plant on high costs, low prices

BEIJING -- A major Chinese steelmaker has scrapped a plan to build a US$5 billion factory in Brazil due to high costs and a slump in global prices for the metal, state media said Tuesday.

Wuhan Iron and Steel (Wisco) and Brazil's LLX, a subsidiary of the EBX group controlled by Brazil's richest man, Eike Batista, signed the deal to build the facility in Rio de Janeiro state in 2010.

Under the agreement, Wisco was to own 70 percent of the plant, with the Brazilian firm to take the remaining stake. The plant was expected to come online this year with an annual production capacity of five million tons.

The project, if realized, would have been China's biggest investment in Brazil as well as the largest Chinese investment in an overseas plant, then Brazilian president Luiz Inacio Lula da Silva said at the time.

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