Armco

completed

Headquartered in the city of Sao Paulo, Armco do Brasil S.A (Armco or the company) is a mid-sized manufacturer of steel products, such as coated and re-rolled steel; low-, medium- and high-carbon steel alloys; galvanized and stainless steel. In 1900, The American Rolling Mill Company was founded in the USA, establishing a commercial office in Rio de Janeiro in 1913. In 1993, all subsidiaries outside the US were sold, including the Brazilian units. In that year, through a management buy-out operation, Armco do Brasil S.A. became 100%-owned by its key managers. Armco is owned by Mr. Gilberto Fedi, Mr. Levon Kessadjikian, and Mr. Roberto Gallo, who are all well-reputed in the Brazilian business community. Armco’s headquarters and principal site is in Vila Prudente, near Sao Paulo city. The company also operates two smaller service center sites in São Bernardo do Campo and a steel service center plant in the free trade zone of Manaus, providing metal parts for the motorcycle industries in the region.Armco produces: - high strength low alloy steel (used for auto parts, items for passive safety, and parts for bicycles, motorcycles and tubes); - flat wire (umbrella frame stock, lumbar supports, flexible hoses and furniture hinge spring); - high speed steel (jigsaws, hacksaws, power saws, circular saws, pump vanes, tissue cutting knives and textile knives); - high carbon (springs, horn diaphragms, bicycle, agricultural and industrial chains, shoe reinforcement / toe caps, tire scraper blades and machetes among others); - high carbon hardened & tempered (measuring tapes, hacksaws, springs, elevator contact strips, knives and other); - stainless steel (turbine buckets, industrial knives, dental equipment, hinges, electronic contacts, flexible cables, electrical appliances and hypodermic needles); - pre-coated, steel mill (auto parts, electric components, automotive industry, white goods panels and fuel tanks), - pre coated, cold rolled (electro-electronic components, hardware, home appliances, alkaline batteries, automotive components, decorative parts and tubing); and - low carbon (auto parts, electronic components, coins, broom handles, bicycle and motorcycle parts). The company exports 5 to 7% of its output to Latin America, USA, Mexico, Australia, Iran, Thailand, South Africa, and Western Europe. The company has the capacity to export more, however the currency value situation in Brazil hasn’t been favorable.The project consists of the installation of a new plant at the edge of Jacareí, about 80km from Sao Paulo city. The new plant will modernize and upgrade Armco’s production capabilities, most notably giving it capacity to process 20kg/mm steel coils whereas it is currently has capacity for only 10kg/mm coils. The project will be implemented in 2008-2009 and is estimated to cost $68 million equivalent. The primary investments include: - 31 ha of land, - civil works and erection of about 55,000m2 of production and warehouse facilities, - acquisition and installation of state of the art equipment; and - renovating existing equipment. IFC is considering extending a loan of approximately $25 million to support the project.