Mexico’s Plan to Revive AHMSA Amid Financial Crisis
In a move aimed at addressing the financial collapse of Altos Hornos de México, the Mexican government, led by President Claudia Sheinbaum, is collaborating with various cabinet members to find a solution for the giant steel company, which has been in insolvency since early 2023. AHMSA, one of the largest steel producers in Mexico, has been paralyzed by financial distress, leading to concerns about the fate of its employees and the continuation of steel production in the country.
A Government-Backed Rescue Effort
During a press conference, President Sheinbaum disclosed that a team from the Ministry of Labor and the Ministry of Finance SHCP has been working on identifying different rescue options for AHMSA. The primary objective, according to Sheinbaum, is to secure jobs for the company’s workforce, which is crucial to the local economy. The president noted that significant progress is being made and expressed hope that a favorable outcome would be announced soon.
“We are looking at different options. Our objective is obviously to recover jobs,” Sheinbaum stated, emphasizing that restoring employment is the government’s key priority. While the specifics of the rescue plan are still being finalized, the government is exploring alternatives to reactivating steel production at AHMSA. This could potentially involve transitioning to a new employment generation project if reactivating steel operations proves unfeasible.
A Comprehensive Labor Justice Plan
In response to concerns about the well-being of workers, Sheinbaum reassured the public that the government would implement a labor justice plan. The initiative aims to provide workers with the necessary financial support, ensuring that families can meet their basic needs during the challenging period. "We are working on a labor justice plan so that families can have the bare minimum," Sheinbaum explained.
While the Ministry of Labor and the Ministry of Finance have not disclosed specific details about the plan, both have indicated that further information will be provided once the strategy is finalized. The uncertainty surrounding the details has caused some speculation, but the government’s focus remains on securing a solution that supports the workers of AHMSA.
The Bankruptcy and Asset Appraisal Process
AHMSA, which is facing bankruptcy proceedings, issued a press release outlining its ongoing efforts to assess the company’s assets. The steelmaker stated that the asset appraisal process, which is a key part of the bankruptcy proceedings, is expected to be completed by March 2025. Following this, AHMSA will begin the process of selling its assets in a public auction.
The company has confirmed that the assets will be sold free from liabilities, including labor-related obligations and financial debts. This means that potential buyers will be acquiring the physical assets of AHMSA without inheriting the company’s outstanding financial or worker-related obligations. This step is crucial for attracting new investors or buyers willing to purchase the assets and possibly revive steel production at the plant.
AHMSA’s Steel Production Capacity and Workforce
AHMSA is an integrated steel company with its own mining complexes and an annual steel production capacity of 5.5 million metric tons. The company’s production capabilities make it a significant player in the Mexican steel market. However, its financial troubles have severely impacted its operations, leading to the halt of steel production.
As of 2022, AHMSA employed over 13,900 people, with a split of 5,874 employees and 7,986 workers. The potential collapse of such a large workforce raises concerns about the social and economic impact on the region. Consequently, the Mexican government is keen to ensure that the workers are supported through this difficult period, while also working toward the potential reactivation of steel production.
The Road Ahead: Public Auction and Potential Revival
Looking forward, the next major step in the recovery process will involve the public auction of AHMSA’s assets, scheduled for later in 2025. This will be a pivotal moment in the company’s future, as it will determine whether the company’s physical assets can be repurposed under new ownership or management.
The potential reactivation of steel production at AHMSA will depend on the interests of the auction participants and the feasibility of resuming full operations. Given the significant demand for steel and the importance of AHMSA in the regional steel market, it is hoped that a strategic buyer will step forward to restore operations.
At the same time, the Mexican government is committed to minimizing the impact on workers, ensuring that they have access to necessary resources during this period of uncertainty. The labor justice plan is expected to be a critical component of this process, with details being finalized in the coming months.
The situation at AHMSA underscores the challenges faced by large industrial enterprises in Mexico and the broader steel industry, as they navigate financial crises while balancing the need for economic stability and labor protections. The outcome of this situation could have far-reaching implications for the future of steel production and employment in Mexico.
