Gerdau produces hydraulic forged steel bars and custom parts, but is gaining the expertise of JSW to cast and forge products for power generation, while Sumitomo will contribute its marketing and sales experience in the wind- and renewable energy fields.

Gerdau, Sumitomo, Japan Steel Works Linked in Forging Venture

Feb. 2, 2016
Brazilian project to produce wind-energy system components will start in 2017 Gerdau-Summit venture to employ 100 Overcoming steel’s global challenge Wind towers, blades, generator components

A partnership formed by Sumitomo Corporation and Japan Steel Works Ltd. with Gerdau S.A. will establish a joint venture to manufacture and market forgings for wind-power projects in Brazil, though the wider Latin American region is also in focus. The Gerdau-Summit venture is anticipated to begin manufacturing forged parts for wind-power projects in 2017.

Details about the structure and capitalization of the new company have not been released, nor has the location and capabilities of the forging operation. However, the partners’ announcement indicates they expect to employ 100 in the forging operation.

The impetus for the venture is the Brazilian government’s policy to increase that nation’s percentage of total electric power generated by wind-energy systems to 11% by 2024 (from 6% in 2015.) This is intended to address the anticipated demand for electricity in the country. 

To achieve that goal, the Brazilian government is offering to subsidize new wind-power generation projects, and also is promoting domestic manufacturing of the related systems and components. The Gerdau-Summit partners stated that their project is consistent with the country's energy policy, and that it will be “the center” of forged wind-energy components in the Mercosur (Argentina, Brazil, Bolivia, Chile, Columbia, Ecuador, Paraguay, Peru, Suriname, Uruguay, and Venezuela) free-trade zone.

Gerdau is the largest manufacturer of steel long products in Brazil, with capabilities that include hydraulic forging for bars, crankshafts, and other custom parts. (Its North American operations include 17 EAF steel mills producing various long products, as well as a network of steel scrap processors.)

"We're working to transform Gerdau into a more efficient and profitable company, given the current and future challenges of the global steel industry," stated Gerdau CEO Andre B. Gerdau Johannpeter.

He continued: "We're seeking to join forces with partners who have recognized experience in their industries in order to create new business opportunities. With Sumitomo Corporation and JSW, we will develop higher-value products for our clients, which will enable them to generate higher profit margins."

Sumitomo is the holding company that includes Sumitomo Heavy Industries, which among many other activities is a designer and builder of mechanical forging presses. The larger portfolio includes about 900 companies worldwide in manufacturing, transportation, construction, mining, chemicals, electronics, and other major business sectors.

Japan Steel Works is a manufacturer of large-dimension castings and forgings for industrial machinery, as well as power generation systems. It is widely recognized as one of the few manufacturers in the world capable of forging nuclear reactor vessel components. Among its other products are castings and forged components used to build forging presses, and the forged elements (turbines, blades, generators) of wind-power plants.