Grupo Acerero (GASA) adjusted the investment that will be allocated to the construction of a new furnace and a mill to produce slabs and later plates with an annual capacity of 650,000 metric tons (mt) to $150 million. In August 2023, SteelOrbis published that the investment for the project called “Beskar” would be between $350 million to $400 million, according to an interview with one of its shareholders.
“The slab represents approximately 85.3 percent of the total production cost of the plate. Considering the above, Grupo Fonderia (controller of GASA) decided to invest in the construction of a new steel mill for the production of slab, with which the plate margin will be positively impacted,” says a company report for investors.
“The cost of the project: a total investment of $150 million, mainly divided into three large areas, civil works, steelworks and continuous slab casting,” the company reported.
SteelOrbis asked the company's financiers for comment on the reduction in investment. In addition, it was requested to know if the contract signed in March of last year between GASA and the Chinese company Baosteel Engineering, which would be the builder of the Beskar project, remains active. At the moment, there was no response.
He also reported that it will be a vertical integration of the supply chain, from the metal scrap input to the finished plate. There will be "savings in working capital and improvement in margins because scrap is cheaper than slab”.
Last year, the company purchased 32.0 percent of the slab required for its plate production in the Mexican market and 68.0 percent in the international market, mainly from Brazil, Vietnam and Europe.
Also, the purchase of metal scrap represents approximately 75.0 percent of the production cost of the long steel business. They currently have collection centers in San Luis Potosí, Guadalajara and Silao.
The company says that in the domestic market it has a 20.5 percent market share in the flat steel business, with 11.3 percent in the rebar market and 6.9 percent in the wire rod market.
In 2023, of the 959,312 mt sold, 47.2 percent was rebar and 33.5 percent was plate. In addition, almost 20 percent was wire rod and drawn steel.
Last year, GASA was the fifth largest producer of rebar in Mexico (including imports). The leader was ArcelorMittal with 18.9 percent, followed by Ternium with 18.5 percent, DeAcero with 16.8 percent, Simec with 11.8 percent, GESA with 11.6 percent, Gerdau Corsa with 8.1 percent, Tyasa with 6.1 percent, Suacero with 5.7 percent. 2.5 percent for other participants.
The company reported that Mexico is the largest consumer (apparent consumption) of slabs with 8.0 million mt, above the 6.3 million mt of the United States and 237,800 mt of Brazil.
Grupo Fonderia (controller of GASA) is preparing to enter the securities market through the issuance of two debt securities for MXN 1,500 million, about $88 million at today's exchange rate.
“The issuer (Grupo Fonderia) will use part of the resources obtained from emissions under this program to carry out the construction and start-up of a new steel mill for the production of slabs,” the company reported.