* Sale will allow Vale to focus on core mining businesses
* Thyssenkrupp will gain room for manoeuvre
* Vale will shed debts, share profits in event of sale (Adds Thyssenkrupp statement, context)
SAO PAULO/FRANKFURT, April 5 (Reuters) - Brazilian miner Vale SA has agreed to sell its 27 percent stake in the struggling CSA steel plant to Germany’s Thyssenkrupp for a token sum, the two parties said, confirming a Reuters report from Friday.
The move will allow Vale, the world’s largest iron ore producer, to focus on its core mining businesses. Thyssenkrupp will become the 100 percent owner and have a free hand to do what it likes with the loss-making plant in Rio de Janeiro state, which it tried and failed to sell in 2013.
“Thyssenkrupp will thus reduce complexity and risks and increase its room for manoeuvre for the further development of CSA,” the German steel-to-elevators group said in a statement.
Thyssenkrupp has repeatedly said that it ultimately plans to sell the plant. It said in 2013 that Vale’s stake and associated rights in CSA were the reason it could not sell it at that time.
In return for accepting a symbolic sale price, Vale will shed the heavy debts linked to the mill. It will also be entitled to a slice of earnings from any future sale by Thyssenkrupp for a period of time. It did not say how long.
Vale had wanted the future sale agreement to cover a 10-year period, a source told Reuters last week.
The CSA plant cost $10 billion to build and was Brazil’s most expensive ever foreign investment project.
Once considered a showpiece for Brazil’s steel industry, its production costs soared amid high inflation, currency volatility and a deep recession.
It reported 2.6 billion euros ($2.96 billion) in total liabilities at the end of the 2015 fiscal year.
The exit from CSA comes as Vale wrestles with the impact of slumping iron ore prices. Chief Executive Officer Murilo Ferreira said in February the firm is looking to sell about $10 billion of assets as it battles to reduce debt.
Thyssenkrupp said existing shareholder agreements and other operating contracts between Vale and CSA would be renegotiated or cancelled.
The plant, which has total production capacity of 5 million tonnes a year, exports slabs that are further processed at ThyssenKrupp’s sister plant in Alabama. ($1 = 0.8789 euros) (Reporting by Tatiana Bautzer and Guillermo Parra-Bernal in Sao Paulo and Georgina Prodhan in Frankfurt; Editing by Bernard Orr and Keith Weir)