Global Steel Trade; Structural Problems and Future Solutions

79. World Bank–Korea, 12.
80. Seong Min Yoo, “Corporate Restructuring in Korea: Policy Issues Before and During the Crisis,” Joint U.S.-
Korea Academic Studies, Volume 9, 1999, Korea and the Asian Economic Crisis: One Year Later, 169. [Hereinafter
Yoo, Corporate Restructuring]
81. Organization for Economic Cooperation and Development, Asia and the Global Crisis-The Industrial
Dimension (Paris, 1999), 75.
82. Id.
83. Yoo, Corporate Restructuring, 169–170.
84. OECD-Korea, 130.
85. Yoo, Corporate Restructuring, 170.
86. OECD-Korea, 130.
87. Id. The top 5 chaebols are involved in a separate restructuring scheme, called “Big Deals” which consist
principally of mergers and acquisitions among affiliates of the top 5 to promote core competencies . These deals
address key industries such as oil refining, petrochemicals, semiconductors, aerospace, power generation,
shipbuilding and the auto industry (steel industry is not covered).
88. Id.
89. Id.
90. Dollar value based on September 1999 Federal Reserve exchange rate of $1 = W1201.
91. World Bank-Korea, 11.
92. Bloomberg, Brazil Antitrust Agency to Probe CSN, Usiminas, Cosipa, May 9, 2000.
93. Michael Kepp, “Brazil bank willing to finance steel consolidation,” American Metal Market, September. 2,
1999, 3.
94. Geoff Dyer, “Baton passes on in Brazil: Winning CVRD auction puts Steinbruch family in the ascendancy,”
Financial Times, June 26, 1997, 41; “DCR Assessment Finds The Brazilian Steel Industry Poised for Change” PRN
Newswire, May 11, 1999.
95. Joseph J. Innace, “Brazil: World class steelmaking, global growing pains,” American Metal Market, June 23,
1998.
96. Id.
97. Rumors of other mergers include current speculation that a few large steel producing groups will be formed.
One group may contain slab-producer CST, stainless steel producer Acesita, and two of Brazil’s major flat steel
producers, Usiminas and Cosipa. A second group may contain Brazil’s largest flat steel producer, CSN, and Gerdau (a
conglomerate of primarily non-integrated, non-flat steel producers). Competing rumors indicate that Usiminas would
join the CSN group instead and that Gerdau may instead merge with Açominas, predominately a steel billets producer,
to form a large non-flat steel producing block. A merger of Usiminas and CSN would also involve Usiminas-controlled
steel producer, Cosipa. However, a Brazilian steel market research report indicates that a merger of Usiminas/Cosipa
and CSN would be highly unlikely due to inefficiencies that may be created from such a merger and opposition from
Usiminas’s clients.
Other widely circulated industry rumors suggest that Previ and CVRD will sell their ownership interests in CSN.
Additionally, the Vicunha Group would sell its substantial holdings in both CVRD and CSN. These moves would help
to disentangle CSN and CVRD and eliminate possible conflicts of interest.
See CMA-Brazil. See also “DCR Assessment Finds The Brazilian Steel Industry Poised for Change” PRN
Newswire, May 11, 1999.
98. CMA-Brazil, sec. 2.4, question 2. In Brazil, U.S. officials were told that it would not be feasible for Usiminas to
let Cosipa go bankrupt in light of its location in Sao Paolo, where steel buying and jobs are focused. If Usiminas had
let Cosipa go bankrupt, another producer would have purchased Cosipa and Usiminas would have lost a large share
of its market. Trip Report; see also CMA-Brazil, sec. 2.4, question 11.
99. Innace.
100. U.S. Department of State, 1997 Country Reports On Economic Policy and Trade Practices: Brazil, 4.
101. Id.
102. Foreign exporters to Brazil prefer to ship larger volumes, and the ports are set up to handle a minimum of 20
ton containers. Therefore, small shipments are rare, if not impossible. From Industry Trader interviews by Department
of Commerce officials, December, 1999, Sao Paulo, Brazil.
103. From Industry Trader interviews by Department of Commerce officials, December, 1999, Sao Paulo, Brazil.
104. International Monetary Fund. Letter of Intent Policy Memorandum and Request for Financial Support from
the IMF, November 13, 1998.
Notes 227