Brazil Steel Institute

Development

The discover of gold in today's Minas Gerais state provided new stimulus to the steel industry. Forgeries were established to produce the iron implements to be used in the mines.

However, the same merchant practices which fostered the discovery of metals in our land held back the construction of a Brazilian steel industry. The colony was to be exploited to the maximum and trade only gold and agricultural products. Portugal even prohibited the construction of new forgeries and ordered the destruction of the existing ones.

This status changes when D. João VI came to the throne of Portugal. In 1795, new forgeries had their construction authorized. In 1808, the Portuguese royal family arrives in Rio de Janeiro, running scared of the invasion of Napoleon's troops of Portuguese land. Several steel companies were built since then.

In 1815, the Morro do Pilar mill, in Minas Gerais, was finished. In 1815, the Ipanema plant, in the outskirts of Sorocaba, starts production of cast iron. Other plants were open in Congonhas do Campo, Caeté and São Miguel de Piracicaba, all in Minas Gerais. Antes da abertura das fábricas locais, o ferro era exclusivamente importado de países europeus, especialmente da Suécia, da Alemanha e da Espanha.

After this promising start of the XIX Century, the production of iron came to fall. Competition with goods imported from England (favored by reduced importation taxes) was unfair and held back the development of Brazil’s steel industry. Furthermore, there was a shortage of manpower, since most of the workforce was absorbed by sugarcane – and later coffee - farms.

Even so, a milestone in the history of the Brazilian steel industry happened during this period: the foundation, in 1876, of the Ouro Preto Mining School, which would graduate Mining Engineers, Metallurgists and Geologists.

The early 1900's

The first decades of the 20th century showed advances for the Brazilian steel industry, fostered by the industrial boom verified between 1917 and 1930. The most important one was the creation of the Companhia Siderúrgica Mineira in the city of Sabará (MG). In 1921, the CSBM - Cia. Siderúrgica Belgo-Mineira was created as a result of the association of the Companhia Siderúrgica Mineira to the Belgium-Luxembourg industrial consortium ARBEd-Aciéres Réunies de Bubach-Eich-dudelange which, in 1922, associated to Belgium capitals and became the Companhia Siderúrgica Belgo-Mineira.

During the first 30 years of the century, Brazilian governments, more concerned about coffee, gave little attention to the growth of the country's industry. Steel was the exception: governmental decrees granted several tax benefits to iron and steel companies. At the time, the Brazilian output was of only 36 thousand tonnes of pig iron per year.

The 30's saw a great increase in the country's steel output, mainly due to the growth of Belgo-Mineira which, in 1937, opened the Monlevade plant, with initial capacity of 50 thousand tonnes of steel ingots per year. Still in the same year, the Barra Mansa steel company and the Companhia Metalúrgica de Barbará were founded. Even so, Brazil was still too dependent on imported steel.

Expansion

The permanent scenario of Brazilian dependence of imported steel products began to change in the 40s, upon Getúlio Vargas becoming President of Brazil. One of his goals was to promote the growth and nationalization of the country’s base industry.

One of the great examples of such effort was the opening, in 1946, of the National Steel Company (CSN) in the city of Volta Redonda, state of Rio de Janeiro, which started then producing metallurgic coke. In the same year, the blast furnaces and steelshop came into operation. Lamination started in 1948 and it marked the beginning of Brazilian self-sufficiency of steel and iron. Founded on funds from American financings and Governmental funds, the sector’s state-controlled giant was born to fill an economic blank.

A new cycle of growth for the Brazilian steel industry began in 1950, when the company was fully operational in all its lines. Brazilian crude steel output reached 788,000 tonnes and a time of continuous growth in the production of steel was beginning. Ten years late, production had tripled, and after another 10 years, in 1970, 5.5 million tonnes were delivered to the market.

Such supply stimulated the expansion of the economy, bringing new and increasing demands for the mills. Another consequence was the sharp increase of steel imports. This scenario originated, in 1971, the National Plan for the Steel Industry, aiming at triggering a new expansion cycle and quadrupling production. State-controlled companies held a larger responsibility in this target, since they accounted then for 70% of the country’s output ad held exclusivity in flat products. Part of the product was meant for exportation.

In 1973, the first steel-producing integrated mill using the direct reduction of iron ore based on natural gas, the Usina Siderúrgica da Bahia (Usiba), started its operations. In the same year, the Siderurgia Brasileira S.A (Siderbrás), was created. Ten years later, the Companhia Siderúrgica de Tubarão (CST) started operating. In 1986, Açominas started its operations in Ouro Branco (MG).

During the 80s, the domestic market was shrinking and the alternative was to turn to overseas markets. All of a sudden, Brazil went from large importer to exporter of steel, with no tradition in the business. But the crisis afflicting the Brazilian industry was worldwide. All over the globe, markets shut closed with importation-restrictive measures. At that time, terms such as voluntary restrictions, surtaxes, anti-dumping, compensatory rights and safeguards started to appear in the newspapers.

The 90's

The country's steel park began the 90's with 42 state and private companies, five of them coke-integrated, nine vegetable coal, two integrated for direct reduction and 27 semi-integrated, along with independent producers of pig iron and vegetable coal, totaling 120 blast furnaces. The establishment of these production units was concentrated mostly in the State of Minas Gerais and in the Rio-São Paulo axis, due to the proximity to regions plentiful of raw materials used for producing steel, or to locations with high consuming potential.

In the early 90's, it was obvious that the model of strong presence of the State in the economy had worn out. In 1991, the privatization process of the steel companies started. Two years later, in 1993, eight state companies, with a combined output of 19.5 million tonnes (70% of the country's total output), had been privatized.

Between 1994 and 2007, the steel companies invested US$ 21.5 billion, prioritizing the modernization and technological updating of the mills, reaching an installed capacity of 41 Mt.

The Present

Privatization brought significant capital into the sector, under the form of more diversity in shareholder compositions. Thus, many producers became part of industrial and/or financial groups, with interests in steelmaking unfolding towards co-related activities, or logistic support, aiming to achieve economy of scale and competitiveness.

Brazil’s steelmaking park today comprises 27 mills, controlled by eight business groups, namely: ArcelorMittal Brasil, Gerdau, CSN, Usiminas, SINOBRAS, V&M do Brasil, Villares Metals and Votorantim Siderurgia.

The production park is relatively new and is constantly undergoing technological updating. It is able to supply the all kinds of steel products to the market, as long as the production is economically justified.

• Learn more about Brazil’s steelmakers.
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