CAP, the largest Chilean steel and iron ore producer, said Tuesday it has indefinitely postponed plans to invest US$2.2 billion to double its steel production capacity because of the global economic recession.
CAP's General Manager, Jaime Charles, informed the attendees at the Latin American Reuters Investment Forum in Santiago, Chile that the investment would be postponed. However, Mr. Charles assured the audience that even though the firm has been operating at 60 percent capacity and saw a 75 percent year-over-year drop in profits in Q1, it has a solid financial position to weather the effects of the global economic crisis. Furthermore, he foresees an increase in production in the second half of the year as the company believes that it touched bottom during the first quarter of 2009.
Last year, CAP's iron ore production reached 7.7 million mt, and the firm predicts a year-over-year output increase of 0.8 million mt this year. However, CAP's $1.5 billion investment plans to expand its iron ore production capacity from 8.5 to 15 million mt now are expected to be completed by 2016 instead of 2014 as was previously planned.