Vallourec and Sumitomo Metals have signed the JV agreement defining the ownership structure of the joint venture company (the Company) that will build and operate the premium seamless pipe plant in Brazil as previously announced on 28 March 2007. Main terms of the agreement include: Vallourec has a 56% majority interest in the Company and Sumitomo Metals has a 44% interest. The interest reflects the respective steel and pipe output allocation of the new plant; the Company will be named Vallourec & Sumitomo Tubos do Brasil Ltda; the Management Committee will be chaired by Otavio Sanabio, with equal representation of Vallourec and Sumitomo; and the total investment is estimated at USD 1.6 billion. As is customary in joint venture agreements, each party to the joint venture will have the option to acquire the other party’s interest in the event of a change of control of the latter. This new integrated steel works and seamless pipe mill to be erected in the State of Minas Gerais will have an annual capacity of 1,000,000tns of steel in the form of round billets, of which 700,000tns will be required to feed the new seamless pipe plant. The balance (i.e. 300,000 tonnes) will be used by Vallourec to reduce its external steel supply.
