LIMA, Peru (AP) -- Brazilian steel company Gerdau S.A. will invest US$1.4 billion in its Peruvian subsidiary, an effort to transform Peru into a regional steel powerhouse that can profit from Brazil's building boom.
The investment will boost yearly production at Gerdau's Siderperu unit more than sixfold to 3 million metric tons by 2013, enabling it to increase exports across Latin America and ultimately to Asia, Gerdau CEO Andre Gerdau Johannpeter said Monday.
Gerdau, Latin America's biggest steelmaker last year, acquired an 83-percent stake in Siderperu for US$203 million in 2006. The unit now produces 450,000 metric tons of steel annually at its main complex in the coastal fishing town of Chimbote -- about 17 percent of Gerdau's yearly output.
The expansion also will enable Siderperu to meet Peru's entire domestic steel demand. Today, Peru must import half the steel it needs, Johannpeter said.
The additional steel exports could eventually help close Peru's trade deficit with Brazil, said Jorge d'Escragnolle Taunay, Brazil's ambassador in Lima. Trade between the neighboring nations reached US$2.2 billion last year, he said.
Gerdau -- which started as a nail company in 1901 and now operates in 10 Latin American countries as well as India, Spain, Canada and the U.S. -- has already pledged US$122 million to improve environmental standards at the Siderperu plant.
Siderperu's workforce is expected to double to 4,250, and 4,000 temporary construction jobs will be created as well.
Gerdau shares rose 0.7 percent to 30.55 reals (US$19.09) in Monday afternoon trading on Brazil's Bovespa exchange in Sao Paulo. The company's U.S.-traded shares were not moving in New York, where markets were closed for the U.S. Labor Day holiday.
Associated Press writers Alan Clendenning and Michael Astor contributed to this report from Sao Paulo.