(Recasts to add details, comments from analysts, sources throughout)
By Guillermo Parra-Bernal
SAO PAULO, Nov 24 (Reuters) - Brazil’s Cia Siderúrgica Nacional SA and its partners in the iron ore venture Namisa will merge their mining and logistics businesses to create a major ore exporter, ending a years-long rift due to a failed expansion plan.
The merger requires the approval of both the partners’ boards of directors by Dec. 12, CSN, as the company is known, said in a securities filing on Monday.
The terms of the agreement were not detailed in the filing.
A source who was familiar with the deal and requested anonymity said the terms of the pact could still be revised.
Namisa is 60 percent-owned by CSN, with the rest owned by a group led by Japan’s Itochu Corp, JFE Steel Corp , Nisshin Steel Co Ltd, Sumitomo Metal Industries Ltd, Kobe Steel Ltd and South Korea’s Posco .
Analysts said CSN may have been motivated to combine the units to avoid paying more than $3.01 billion in penalties to the group for missing previously agreed expansion goals for Namisa. Last year, CSN warned that the partnership could be dissolved if the group’s divergences couldn’t be resolved.
CSN’s main mining asset is the Casa de Pedra mine, which has some of Brazil’s largest and best-quality ore deposits.
“While we don’t know the economics of the new mining venture, we view the transaction as negative, as ultimately CSN is giving away a part of a valuable strategic asset which is the Casa de Pedra iron ore mine,” said Rodolfo Angele, a mining and steel analyst with JPMorgan Securities.
CSN shares jumped as much as 6.7 percent and the price on the company’s 2020 bond rose 1 cent on the dollar on Monday, as the deal relieved CSN from paying the penalty on the failed expansion plans.
The multinational group bought the stake in Namisa in December 2008, based on CSN’s pledge to boost Namisa’s output capacity to 33 million tonnes by 2015 and to build two pellet plants. However, so far, there has been no significant boost to Namisa’s output or shipment capacity.
Goldman Sachs Group Inc and law firm Barbosa, Mussnich & Aragão advised CSN on the deal, while Itaú BBA and law firm Machado Meyer worked with the group on the deal, another source noted.
$1 = 2.5353 Brazilian reais Editing by W Simon and Bernadette Baum