In a significant move to strengthen its position in the steel market, Ternium, the Mexican branch of the Latin American steel giant Techint, has announced an ambitious investment of $8 billion. This investment is aimed at bolstering steel production in Mexico and countering the challenges posed by the influx of cheap steel from China. Máximo Vedoya, CEO of Ternium Mexico, emphasized the need for robust strategies to address this "Chinese steel threat" during a recent business forum hosted by Bloomberg in Monterrey.
Vedoya articulated the stark reality of competition in the global steel market, stating, "No company in the world can compete with the Chinese state." His remarks highlight the urgency for countries in Latin America to take action in order to safeguard their domestic industries. The commitment of Ternium to invest in Mexico reflects not only a response to current market conditions but also a long-term strategy to enhance the competitive edge of local production.
The $8 billion investment will fund several projects, including the construction of a new steel mill with an annual production capacity of 2.6 million metric tons of slab steel. This facility is particularly noteworthy as it will be the first in the world to utilize a combination of electric arc furnace technology and direct reduction iron processes specifically designed to meet the needs of the automotive industry. This innovative approach aims to produce high-quality steel while minimizing environmental impact.
Originally, Ternium's investment plan was set at $6.8 billion. However, in August, the company informed both the outgoing president and the newly elected Claudia Sheinbaum about their decision to increase this figure to $8 billion. This escalation underscores Ternium's confidence in the Mexican market and its commitment to driving growth within the region's steel sector.
Vedoya also addressed the importance of establishing clear rules and guidelines for private investment in infrastructure and energy. He argued that the Mexican government must define where it wants the private sector to operate and where it does not. This clarity is essential to attract investment in key areas such as power generation and infrastructure, which are critical for supporting the burgeoning demand for steel.
In addition to the steel mill, Vedoya emphasized the need for improvements in transportation infrastructure, including highways and railways, to facilitate steel exports and enhance trade routes to the United States. He highlighted that better border crossing points are vital for ensuring the efficient movement of goods, ultimately benefiting the entire supply chain.
