TKAMY Thyssenkrupp AG (PK)

By Paul Kiernan and Jenny Busche 

RIO DE JANEIRO -- Brazilian mining company Vale SA said Monday it plans to sell its 27% stake in a beleaguered steel plant to partner ThyssenKrupp AG for a "symbolic price."

Vale said it will retain its rights to sell iron ore to the plant, known as Companhia Siderúrgica do Atlantico or CSA, under an existing shareholder agreement. Other contracts and agreements between the two companies will be extinguished as ThyssenKrupp, which already owns 73% of the plant, takes full ownership.

The Brazilian company will, however, be entitled to future income if ThyssenKrupp eventually sells a controlling stake in CSA to a third party.

ThyssenKrupp inaugurated CSA in 2010 as part of an effort to grow its steel business in the Americas that since has proved a costly drain on the German company. The firm had to write down a large part of the approximately EUR12 billion ($13.7 billion) it had invested in Brazil and in another plant in Alabama. It sold the U.S. plant in 2014 and had expressed an interest in selling CSA as well.

More recently, a deep economic recession combined with a global glut of steel have ratcheted up price pressure in the Brazilian steel business. In the first quarter of fiscal year 2016, CSA posted an operating loss of EUR74 million.

Vale said it made the decision to sell its stake "as part of its initiatives to streamline its asset portfolio."

Write to Paul Kiernan at paul.kiernan@wsj.com and Jenny Busche at jenny.busche@wsj.com

(END) Dow Jones Newswires

April 04, 2016 18:25 ET (22:25 GMT)

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