Brazil's CSA steel mill joint-venture owned by Vale S.A. (VALE) and ThyssenKrupp (TKA.XE) will likely start production in the first half of 2010, the Valor newspaper reported Monday.

"We were working fast so that the mill would be ready to produce steel plate in December, but we now prefer to wait for an improvement in the market in 2010. Now we're working at a slower pace," said Heyno Michael Smith, CSA operation's vice president.

Smith told Valor he believed next year's steel market may be better than this year.

"We've seen some signals of recovery, but it doesn't seem it will be very fast. But we're observing the market to gauge its pace," said Smith.

According to Smith, the new steel mill is being built with flexibility in mind.

The plant's two blast furnaces will give CSA room for maneuver to adapt to the market, he said. If demand is weak, then only one furnace will be lit, he said.

Originally, CSA planned to send the steel plate to ThyssenKrupp's Alabama rolling mill, now under construction, as well as German rolling mills.

However, owing to the crisis, Smith said, the plan is being reviewed.

"At the moment, the numbers show that 3 million tons of plate from CSA will be exported to Alabama and the other 2 million tons to Germany. This decision could be changed owing to the market and 4 million tons sent to one plant and one million to the other," he said.

"There's a team working on the three continents to take a final position on this question," he added.

Smith denied that there had been a crack in CSA coking unit, which had delayed construction.

"I affirm that there have been no cracks in any coking unit. This information is without foundation," said Smith.

Smith also said he didn't see the necessary conditions in the short term to build a rolling mill at the CSA complex.

Located at Santa Cruz, 80 kilometers (49.6 miles) west of Rio de Janeiro City, the plant's output will be shipped via its own deep-water terminal.

Vale's iron ore will supply the mill via an existing railroad line.

- By John Kolodziejski, Dow Jones Newswires; 55-21-2586-6086; John.Kolodziejski@dowjones.com