Japan's Nippon Steel, the world's second-largest steelmaker, plans to spend 500 billion to 600 billion yen (US$5 to US$6 billion) to build a steel factory in Brazil, the Nikkei business daily reported on Tuesday.
It would be the first integrated mill to be built by a Japanese steelmaker overseas and comes amid stronger-than-expected demand for steel from North America, Europe and developing countries, as well as spiraling prices of raw materials.
Seeking to narrow the gap with industry leader ArcelorMittal, Nippon Steel has been in talks with its Brazilian affiliate Usiminas about building a new blast furnace in 2010 to 2011 but has yet to comment on the size of its investment.
"We are discussing a plan to build an integrated steel mill in Brazil but no details have been decided," said a Nippon Steel spokesman, who declined to be identified.
The Nikkei newspaper said Nippon Steel would build the mill through a joint venture with Usiminas, with Nippon Steel taking a controlling stake in the project.
The first blast furnace would be constructed for a little less than 300 billion yen with an annual output of 3 million tons, the Nikkei said. A second furnace would be added as early as 2010, doubling output to 6 million tons, it said.
Usiminas may make a formal announcement about building the mill this week and the two firms are expected to hammer out details by May, the paper added.