International steel and pipe producer Techint seeks to position itself as one of the main suppliers of steel for the automotive industry from its unit in Mexico. To achieve this objective, its subsidiary Ternium has investment projects for $6.8 billion in projects that span from 2023 to 2025.
“The new downstream lines in Pesqueria will enable us to offer new high value added products to our customers in the region. This will be the greenest and most technologically advanced automotive steel, product steel mill in the Americas. “It will be able to supply the full range of auto products from exposed grade to advanced high strength steel,” Ternium CEO Máximo Vedoya recently said.
The bulk of the investment is the Ternium Industrial Center, in the northern city of Pesquería, Nuevo León, located 32 miles east of the state capital, Monterrey. This steel complex began in 2010 and in 2013 it began operations with an investment of $1.2 billion. Subsequently, another investment of another $1.0 billion was announced for a new coil pickling line (push-pull) with a capacity of half a million metric tons and which is about to come into operation.
In June last year, Ternium announced the historic investment for a new steel mill of $3.2 billion for a steel mill of $2.2 billion to produce slabs and $1.0 billion for new production lines. That amount was updated to $3.5 billion due to inflationary effects and exchange rate parity of the euro against the dollar.
Regarding capital expenditures (CapEx), Vedoya explained to investors that last year, Ternium invested $2.5 billion in Mexico and Brazil, for this year the investment will be $1.8 billion and by 2025 the investment will be another $2.5 billion.
Pablo Brizzio, Chief Financial Officer, said that at the end of last year, “Ternium maintained a solid net cash position of $1.9 billion.”
Meanwhile, Vedoya said that “regarding our growth projects, we expect to integrate the first line of our downstream project in Pesqueria during the second half of this year with a startup of a 550,000 tons per year pickling line and the first lines of our service center.”
He added, “By the end of next year, we plan to start up the new galvanizing line followed shortly by the cold rolling mill. The ramp-up of all these new lines should enable us to gradually increase the added value of our shipment in Mexico.”
According to the International Organization of Motor Vehicle Manufacturers (OICA), Mexico is the seventh largest producer of vehicles in the world with 3.5 million units in 2022. Data from Inegi show that in 2023 3.78 million were manufactured.
In June of last year, US-based Tesla Inc. announced that it will invest $5.0 billion in Mexico to build its gigafactory in the northern city of Santa Catarina, a city located 39 miles east of the Ternium plant in Pesquería. According to the governor of Nuevo León, this year Tesla could begin vehicle production.
Data from the World Steel Association places Ternium's controller, Techint, as the best-positioned Latin American steel company in the list of the 50 companies with the largest steel production in the world, in #26 place. The other Latin American is Gerdau in position # 34.
On the American continent, the American steel company Cleveland-Cliffs is the best positioned at #22, followed by Techint, US Steel (#27), Gerdau and Steel Dynamics (#44).