Brazil's Usiminas sticks with plans to fire 4,000 at mill, union says

16 January 2016

Usinas Siderúrgicas de Minas Gerais SA, one of Brazil's largest producers of flat steel, upheld on Friday a plan to halt steel production at its Cubatão mill, which will mean dismissal of about 4,000 workers, union leaders said.

The STISMMMEC union, which represents steelmakers around Cubatão, said a meeting between workers, prosecutors and the company known as Usiminas did not yield any agreement. According to Florêncio Rezende de Sá, the union's president, the dismissals will take place through March 15. The union says that some 4,000 jobs will be lost.

In a statement, Usiminas said that 2,000 jobs directly related to the work at the plant would be cut, without saying how many indirect positions would be lost as part of the decision. The layoff plan presented to workers includes benefits that are in excess of those mandated by the law, the company added.

Usiminas, which is closing steel production activities in Cubatão but maintaining rolled-steel operations, has cited weak prices and poor demand in Brazil among the reasons behind the mill's shutdown.

The outlook for Brazil's steel industry this year looks "extremely challenging" and is shaping up to turn out to be worse than expected, JPMorgan analysts led by Rodolfo Angele said in a client note on Friday.

Non-voting shares of Usiminas shed 4.8 percent to 0.99 reais on Friday, touching the stock's lowest level since Oct. 2002.