Gerdau to end steel production at Divinopolis plant

Gerdau has decided to end steel production at its Divinopolis plant in Minas Gerais, citing a loss of competitiveness caused by high iron ore costs, rising steel imports and unfavorable export market conditions.

The company said the plant has faced pressure from the lack of iron ore supply at competitive costs, increasing its production expenses. The situation has been further aggravated by growing steel imports into Brazil and weak conditions in international markets, which have historically been important for the unit's operations.

The decision forms part of Gerdau's strategy to optimize its operations in Brazil by concentrating steel production at more competitive, efficient and technologically advanced assets.

According to the Divinopolis municipal government, the closure will directly affect around 1,000 Gerdau employees and third-party workers. The facility is estimated to account for up to 15pct of the municipality's tax revenue.

Gerdau said it is considering transferring some affected employees to other units and will provide technical training and workshops to support their transition to new employment opportunities.

The Divinopolis facility produces long steel products, including rebar and merchant bars. Before the closure, the integrated plant had crude steel production capacity of around 570,000-600,000 tons per year and rolled products capacity of approximately 460,000 tons per year.

Founded in 1901, Gerdau is one of the Americas' leading steel producers, with operations across seven countries in the region. The company produces long, special and flat steel products for the construction, automotive, agriculture, energy and industrial sectors and operates an extensive network of steelmaking and recycling facilities.