The Mexican company Distribuidora de Metales y Cartones, better known as Dimeca, is a few days away from starting the operation of a unique monster in Mexico, a mill with the capacity to crush 70 metric tons (mt) per hour of metal scrap, something like 200 vehicle per minute. The new plant is in the northern city of Ramos Arizpe, Coahuila, company founder Ricardo de la Peña told SteelOrbis.
With 30 years in the market, Dimeca has 15 warehouse yards, all equipped with machinery to process ferrous and non-ferrous metals. Currently its processing capacity is between 980,000 metric tons (mt) and more than a million mt per year.
Canacero says that 10 million mt of scrap are consumed per year. Analysts say that more than 12 million mt are consumed and of them, 8.0 percent is exported and 25 percent is imported.
The project from the purchase announcement to the operation required 21 months (from October 2022). For security reasons in Mexico, De la Peña requested not to talk about investment amounts, but said that his company will have the largest processing plant in Mexico.
Given the size of Dimeca and that metal scrap is a fundamental input in the decarbonization route not only in Mexico, but in the world, and therefore the processor could be an object of desire for large global investors. However, De la Peña says that he will not sell the company because he also has major expansion projects. He says that Dimeca “reinvests 80 to 90 percent of the net profit because there are always very aggressive growth plans”.
In a pleasant tone, the businessman with family roots in the metal scrap business says that Dimeca's strategy is to “open one or two yards per year, equipped with crushing machinery. It currently has six yards in Coahuila, four in Saltillo (eight miles from the DeAcero steel plant), one in Monclova (the home of AHMSA) that doubled its production capacity, and one in Torreón. In Nuevo León, the company has three in Monterrey. In Guanajuato it has two yards, in Silao (city where a General Motors plant is located) and Salamanca (city where Mazda has a production plant). And the next plans are León, Guanajuato, Aguascalientes (the home of Nissan), another one in Guadalajara, one more in Apodaca, Nuevo León and Puebla, the home of the Volkswagen automotive plant.
With the new plant, De la Peña says that no one in Mexico will have the capacity to process that level, which will have a purity like that needed by steel mills for their clients in the automotive industry.
The new machinery will have separation lines for ferrous and non-ferrous materials. According to his estimates, there will be a recovery of between 400 and 450 mt per month of zorba (mixture of metals).
In the interview, De la Peña made a quick calculation and estimated that the increase in capacity of all the steel mills in Mexico that have made public their increased production will require between 1.0 and 1.5 million mt of metal scrap.
To determine the price of this high quality scrap, many factors must be considered but it could range between MXN 7,300/mt and MXN 7,500/mt (between $390/mt and 401/mt, at today's exchange rate: 18.72 pesos per dollar).
The businessman spoke out in favor of the free market, that is, he is against some countries that, considering metal scrap as a strategic input, prohibited its export. The ban could create some downward pressure on steelmakers.
Although he said that the sale of Dimeca is not in his plans, he does have the purchase of assets in the United States on his radar. The purchase will not be for the moment, but an area of interest is the border strip, although he said that it could go further to the center.
Regarding the reference prices for scrap metal published by various specialized media, they are reference prices for buying from a supplier that has four or five trucks per month.
He said that Dimeca is in the ISO 9000 certification process. Regarding the processing capacity, he said that its own scrap is between 47,000 mt and 48,000 mt, but he said that they also process material for some steel mills with a monthly volume of between 35,000 mt and 38,000 mt.
In a period of five years, De la Peña expects Dimeca to process 750,000 mt of its own scrap, that is, almost 60 percent more than current levels. The plan is to grow 10 percent in production capacity each year.
Currently, he serves about 110 contracts with industrial plants to purchase scrap, which represents approximately 65 percent of his own total. Domestic scrap (collected by small scrap dealers on the streets) represents 35 percent of the volume itself processed.
“I am convinced that there are many business opportunities coming and Dimeca is very well positioned. It is a company that turns 30 this year and we will continue working to capitalize on growth opportunities. Although I am not looking for any joint ventures, nor functions, much less acquisitions (in Mexico)”, but in the United States in the medium term, the businessman concluded.