Brazil’s CSN unlikely to join Usiminas board -report

* Usiminas denies contacts with rivals for merger -report

* Brumer says CSN board seat bid unlikely to succeed

* CSN is Usiminas’ biggest rival in Brazil flat steels

SAO PAULO, (Reuters) – The controlling shareholders of Brazilian steelmaker Usiminas are unlikely to give a board seat to rival CSN , which has been increasing its stake in the former through a series of stock purchases, O Estado de S. Paulo said Sunday.

Usiminas Chief Executive Wilson Brumer told Estado in an interview that “he sees no reason” why CSN CEO Benjamin Steinbruch should join the board of embattled Usiminas. Brumer also told Estado that Usiminas is not in talks with rivals about a possible combination.

“I see that situation as a peculiar one — a competitor sitting on our board of directors,” Brumer told Estado. “If that happens, we would have to adjust to the new reality.”

“But I see no reason why the controlling shareholders (of Usiminas) should welcome him (Steinbruch) as a new member of the bloc,” he added.

Brumer’s interview comes amid the worst crisis for the Brazilian steel mills in years, caused mainly by a strengthening currency, a flurry of cheap imports and rising raw materials costs.

The crisis has been further aggravated by growing opposition among some industry players to CSN’s aggressive expansion plans into steel and cement — the latter thwarted in the past by bitter rivals and Usiminas shareholders Votorantim and Camargo Correa.

CSN hinted last month that it wanted to enter Usiminas’ controlling bloc, formed by Nippon Steel , Camargo Correa, Votorantim, and Usiminas’ employee pension fund. By raising its voting stake in the company, CSN assures that it will be treated equally as majority shareholders in the event of a change of control in Usiminas.

Sao Paulo-based CSN raised its holdings of Usiminas’ voting stock to 9.45 percent of the total, according to a regulatory filing in April. CSN also owned around 5 percent of Usiminas’ nonvoting shares at the end of the first quarter.

Calls made by Reuters to CSN spokesmen in Sao Paulo and Volta Redonda, where Brazil’s most profitable steelmaker has a mill compound, seeking comment on the Estado report were not answered. A spokeswoman for Usiminas in Belo Horizonte, where the company is based, did not answer calls to her mobile phone seeking comment.

CSN’s stock purchases could be relevant from an operational standpoint if both companies were to combine, Brumer told Estado. From a strategic point of view, CSN and Usiminas have too many overlaps, he told the newspaper.

Local media has reported that Porto Alegre-based Gerdau , also Brazil’s largest steelmaker, was in talks to acquire the combined 13 percent stake that Votorantim and Camargo Correa have in Usiminas. Gerdau have said repeatedly the reports were unfounded.

A combination of Usiminas’ operations with those of Gerdau’s Acominas could generate cost savings, Brumer said.