Press: Petrobras says Ceará Steel project not viable

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Thursday, May 24, 2007

The Ceará Steel slab project to be installed in northern Brazil's Ceará state is not viable, local press quoted Brazilian federal energy company Petrobras (NYSE: PBR) CEO José Sérgio Gabrielli as saying.

Gabrielli reportedly questioned how Ceará would produce steel slabs with no raw material resources, market or technology. The project has been earmarked to receive subsidized natural gas from Petrobras.

Brazil's steel sector is against the proposed subsidies for the mill, fearing restrictions on exports brought on by non-observance of World Trade Organization rules.

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But a federal court in Rio de Janeiro denied an injunction requested by the country's steel institute IBS to prevent the project from receiving the subsidized natural gas from Petrobras.

Ceará Steel is a JV between South Korean steelmaker Dongkuk Steel, Italian metal industry supplier Danieli Steel and Brazilian mining and metals group CVRD (NYSE: RIO).