ArcelorMittal plans $1 billion Mexico investment by 2020

29 September 2017

ArcelorMittal , the world’s largest steelmaker, will invest $1 billion (0.75 billion pounds) in Mexico over the next three years, in part to boost its North American trade operations, the company said on Thursday.

Mexico is a key production platform for the company. During the first half of 2017 AreclorMittal produced nearly $12 billion of steel in North America while shipping about $11 billion from the three-country region linked by the 23-year-old North American Free Trade Agreement, which is currently being renegotiated.

“I am delighted to announce a $1 billion investment in Mexico over the next three years so we can meet Mexican demand for steel products, which is growing rapidly,” the company’s chairman and chief executive, Lakshmi Mittal, said at an event in southern Chiapas state attended by President Enrique Pena Nieto.

The event launched the government’s new special economic zones in southern Mexico, the country’s poorest region, in a bid to attract infrastructure investment.

Indian steel magnate Mittal said that “starting immediately” ArcelorMittal will modernize assets at the Pacific coast port of Lazaro Cardenas, one of Mexico’s busiest commercial hubs, as well as “downstream operations” aimed at meeting Mexican consumer demand.

Lazaro Cardenas is home to ArcelorMittal’s primary steelmaking operations in Mexico.

The investment covers construction of a new hot strip mill, which upon completion in about three years will allow production of 2.5 million tonnes of flat rolled steel.

“Coils from the new hot strip mill will be supplied to domestic, non-auto, general industry customers,” the company said in a statement.

The spending will also boost ArcelorMittal’s Mexican mining operations and will “support ArcelorMittal’s NAFTA operations by providing high-quality semi-finished steel slabs,” the company added.

There was no further detail on how the investment will boost trade within the NAFTA block, and the company’s press office did not immediately return an after-hours call for comment.

ArcelorMittal operates six facilities at three ports in Mexico.

ArcelorMittal currently produces about 4 million tonnes per year, but after the investment is completed, annual production is seen growing by about a third to reach 5.3 million tonnes.

In addition to flat rolled steel, the company expects to produce about 1.8 million tonnes of long steel and 1 million tonnes of semi-finished slaps, according to the statement.

In 2007, ArcelorMittal bought a $1.4 billion steel plant at Lazaro Cardenas, alongside another plant it already owned at the port.

Separately on Thursday, Mexican steelmaker Ternium announced plans to build new facilities in Mexico and Colombia.

Ternium’s Mexican plans include a new hot rolling mill with an investment of $1.1 billion. The facility’s annual production capacity will be 3.7 million tonnes and it is scheduled to be operational by the second half of 2020, Ternium said in a statement.

The plant will produce products for the auto sector as well as other industries including construction, energy and home appliances.