Grupo Fonderia, the controller of the steel company Grupo Acerero (GASA), could begin operational production tests in April because it currently has 70 percent progress in its new steel plant with an annual capacity of 650,000 mt of slabs at the plant. Mexican state of San Luis Potosí, which will require $150 million of investment.
“They are close to 70 percent complete. The idea is to have it in April 2025 (...) Obviously there is a testing period of three more months. We estimate that it will begin producing (commercially) starting in July of next year,” said Nathan Moussan, from the financial company that has been advising Grupo Fonderia for some years, KPitalia, in an interview with SteelOrbis.
In August of last year, SteelOrbis published that the investment for the new plant to produce slabs would be up to $400 million, considering a production capacity of one million mt. This represents an investment of $400,000/mt.
However, SteelOrbis also recently published that the new plant will have a capacity of 650,000 mt with an electric arc furnace (EAF) and a continuous caster for slabs. The investment will be $150 million. This represents an investment of $230,769/mt. This investment amount contrasts with other projects in Mexico.
For example, GASA's commercial rival in Mexico, Tyasa announced on May 13 an investment of $250 million for a special steel bar rolling mill (SBQ) with an annual capacity of 400,000 mt. This represents an investment of $625,000/mt in the mill alone.
In 2015, the Mexican company Simec announced that it would invest $600 million for a mini mill of 600,000 mt of SBQ in Apizaco, Tlaxcala. That investment at present value is $805 million, which represented an investment of $1.34 million per metric ton.
In September 2023, DeAcero announced that it would invest $1.0 billion in its fifth mini mill and purchase of machinery and equipment for its plants in the northern city of Saltillo, Coahuila, and in the central city of Celaya, Guanajuato. There was never a breakdown of the investment. SteelOrbis requested an interview, but there was never a response.
However, a recent publication by The Association for Iron & Steel Technology (AIST) mentioned that in November 2022, in celebration of its 70th anniversary, DeAcero said it would invest $590 million to increase its production capacity by one million tons. This investment, at present value, is equivalent to $621 million, which represents an investment of $621,386/mt.
“Why is it so different from what Simec invested at the time in Tlaxcala and what they have invested in other plants. The difference is that Simec used a turnkey project. That is, they build everything and in the end they only give the company the keys for you to start the operation,” says Moussan.
“The difference with the Beskar project is that Fernando Abaroa (chief operating officer of Grupo Fonderia) knows a lot about this topic. He set up the previous plant, he is the one who is doing all the engineering and technology. Everything is in-house. It is not an outsourcing process. This saves several million dollars,” said the financial advisor.
Moussan says that Fonderia, like any other steel company in the world, submitted its investment project to international competition and that the best option they found was with Baosteel.
Starting in 2025, GASA will manufacture its first 150,000 mt of slab, in 2026 production would be 400,000 mt, in 2027 it would be 560,000 mt and by 2028 it would reach 650,000 mt. According to the Beskar project schedule, seen by SteelOrbis.
It will not be until 2028 when Fonderia eliminates the import of slabs for the sale of sheet steel plates. This year, 335,000 mt will be imported, almost 40 percent more than in 2023. In 2025, with the first slab casts in Beskar, imports will decrease almost 20 percent to 270,000 mt, in 2026 imports will decrease by 64 percent to 96,000 mt and in 2027 it is expected to import only 15,000 mt.
Thus, Fonderia's financial margins will improve because they say that metal scrap is cheaper than slab. This will reflect the vertical integration of the company's supply chain, from the collection of the basic input of the electric arc furnace (metal scrap) to the sale of the finished steel plate.