Two officials at Brazilian mining giant Vale SA said last week that the company has informally resumed talks with China's biggest steelmaker Baosteel Group on a possible partnership to develop a US$6 billion steelworks project in Espirito Santo state in southeast Brazil.

"They are just corridor-level talks at the moment, not formal negotiations," one of the officials said, asking not to be named, according to Wall Street Journal. "But Baosteel's still in the running."

After failing to secure approval from Brazil's environmental authorities in early 2009, Vale and Baosteel canceled a steel mill project planned for Espirito Santo state. State authorities said that the project would create a drain on local water resources and create too much air pollution.

Vale has since redesigned the project on a smaller scale, cutting capacity in half to five million tons of steel a year. The project will be located at Anchieta on the Espirito Santo coast.

I just found this...

http://www.hbs.edu/faculty/Pages/item.aspx?num=41344

Abstract

What is Baosteel, a top Chinese steelmaker, doing in Brazil? The company is responding to the Chinese government's "go global" policy and to the possible rise in iron ore input costs. But steel mills are complex, capital-intensive projects, and Brazil is an emerging market that poses manifold risks to foreign investors. Vale do Rio Doce, Baosteel's prospective partner, is an iron miner with little experience in steelmaking. Baosteel must evaluate whether it is choosing the right company, and site for its first overseas greenfield investment.

And now I find this = DELAYED(?)

http://www.thestandard.com.hk/breaking_news_d...p?id=10585

Baosteel may delay US$4b Vale slab venture

(12-05 12:31)

Baosteel Group, China's largest steelmaker, said construction of a US$4 billion (HK$31.2 billion) steel-slab venture with Cia. Vale do Rio Doce in Brazil may be delayed by six to nine months because the government wants it relocated.

The state government wants to move the venture 80 kilometers south of the original site at Anchieta, Brazil for environmental reasons, said Liu An, Baosteels head of the project.

Baosteel, which had planned to start building next September, is studying the proposal, he said.

Baosteel wants to build its first steel plant outside of China to take advantage of raw materials available in Brazil, reducing transport costs by as much as a third.