R$ 1.1 Billion Investment Will Be Made By Usiminas for Repairs at Its Ipatinga Plant, Coking Plant 2

Written by Roberta Souza

Published on 26/08/2022 at 17:07

Foto: reprodução www.usiminas.com

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Besides Allocating Investments For Its Plant 2, Usiminas Is Planning Investments For Coqueria 3, Also In Ipatinga

Usiminas reported on Thursday, 25, that the Board of Directors approved investments in the company’s blast furnace plant. The emergency and definitive repairs of Coqueria 2 at the Ipatinga plant will cost R$ 1.1 billion. Of this total, R$ 57 million will be invested by the end of this year, R$ 97 million next year, and the remaining investment of R$ 951 million will be allocated between 2024 and 2026.

Another investment from the total sum, according to Usiminas, is the investment for supplementation of R$ 633 million for the renovation of Blast Furnace No. 3, also at the Ipatinga plant, justified mainly by inflationary effects on all costs involved in the project originally approved in 2019. The current cost of renovating plant 3 is now R$ 2.72 billion, distributed as R$ 619 million until 2021, R$ 650 million in 2022, R$ 1.2 million in 2023, and R$ 252 million between 2024 and 2025.

Usiminas maintains its expectation of investments in the plants for the year 2022 at R$ 2.05 billion and states that the estimated investments for 2023 amount to R$ 2.4 billion.

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Usiminas Shares Drop With Investment In Ipatinga Plant

Usiminas shares dropped by more than 6% after the company announced an investment higher than expected for the renovation of Coqueria 2 at its Ipatinga plant. The sector was expecting expenditures around R$ 500 million, the additional R$ 600 million investment is equivalent to nearly 5% of Usiminas’ market cap, notes analyst Daniel Sasson from Itaú BBA.

In this sense, with the total spending, Usiminas is practically building a new coqueria, according to a buyside analyst. Usiminas had already indicated to the sector the need for repairs in the coqueria in the second quarter.

Usiminas also estimated R$ 633 million for the renovation of Coqueria 3 at the same plant due to the impact of inflation on project costs approved in 2019. The updated cost of this renovation has now risen to R$ 2.7 billion.

“This blast furnace is very old, and to continue operating, the company needs to renovate it. Regarding Coqueria 2, the issue is similar, but until recently, this repair need was not mapped by the market,” said a manager.

The company maintained its estimate of investment of R$ 2.05 billion for 2022 and is estimating an investment of R$ 2.4 billion for the year 2023. In the renovation of the coqueria, the largest part of the spending, R$ 951 million, will be concentrated between 2024 and 2026. For Coqueria 2, the highest spending forecast is in 2023, at R$ 1.2 billion.

According to Thiago Lofiego from Bradesco BBI, the magnitude of the investment for the renovation of the coqueria was not a very pleasant surprise.

Thiago predicts that the estimated investment for Usiminas will rise from R$ 2.1 billion to R$ 2.5 billion in 2023 and from R$ 1.3 billion to R$ 1.9 billion in 2024. Despite the negative repercussions, Usiminas is achieving excellent results, having closed the second quarter with a net cash of R$ 455 million, and this additional investment should not affect the company’s balance sheet in the coming years.

R$ 1.1 Billion Investment Will Be Made By Usiminas for Repairs at Its Ipatinga Plant, Coking Plant 2

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R$ 1.1 Billion Investment Will Be Made By Usiminas for Repairs at Its Ipatinga Plant, Coking Plant 2

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