ArcelorMittal to expand Mexican mill complex

Luxembourg-based ArcelorMittal has announced a $1 billion, three-year investment program at its Lázaro Cárdenas steelmaking complex in Mexico. The company says the investments will be focused on the mill’s downstream capabilities, plus “sustaining the competitiveness” of ArcelorMittal’s mining operations and “modernizing its existing asset base.”

The main investment will be the construction of a new hot strip mill. Construction will take approximately three years and, upon completion, will enable ArcelorMittal Mexico to produce about 2.5 million metric tons per year of flat-rolled steel. Coils from the new hot strip mill will be supplied to domestic, non-auto, general industry customers, says ArcelorMittal. The company says further investments will be made at Lázaro Cárdenas “to improve the quality and productivity of the asset base, with additional investment in the group's Mexican mining operations.”

The investments have been designed to enable ArcelorMittal Mexico to meet the anticipated increased demand requirements from domestic customers and to “realize in full ArcelorMittal Mexico's productive capacity of 5.3 million metric tons and significantly enhance the proportion of higher-value added products in its product mix, in-line with the company’s Action 2020 strategic plan,” the company comments.

The announcement follows confirmation that the Mexican government has established five Special Economic Zones (SEZs) in southern Mexico to attract infrastructure investment in areas considered to be of undeveloped economic potential. Lázaro Cárdenas, home to ArcelorMittal Mexico's primary steelmaking operations, was named as an SEZ.

“In order to make investment decisions of the scale we have announced today, we need both a favorable investment environment and confidence in long-term domestic growth prospects,” says Lakshmi Mittal, chairman and CEO of ArcelorMittal. “I therefore warmly welcome the confirmation of the Special Economic Zones by the Mexican government, which establishes a positive regulatory investment framework aimed at facilitating economic and infrastructure development in the south of the country. Our investment program is aligned with the Mexican government’s objectives, and will enable us to benefit from the anticipated increased demand for higher-added value steel products from domestic Mexican customers. It reinforces our long-standing presence in Mexico, will support the creation of approximately 800 new jobs and play an important role in bolstering economic activity in the region.”

Adds Victor Cairo, CEO of ArcelorMittal Mexico, “Construction of the new hot strip mill, alongside the other projects in our investment program that are geared toward enhancing the efficiency and quality of our operations, will enable us to optimize our asset base and increase the proportion of finished steel products for our domestic customers.”

ArcelorMittal Mexico currently produces about 4 million metric tons of steel per year. Following completion of the investment program, production could grow to about 5.3 million metric tons per year, with the proportion of finished steel for the domestic Mexican market significantly expanded. Flat-rolled steel production would total about 2.5 million metric tons, long steel about 1.8 million metric tons, with the remaining 1 million metric tons made up of semi-finished slabs.

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Lazaro Cardenas is Mexico’s largest steel mill and slab exporter. On its website, ArcelorMittal refers to the site as “the only dedicated slab producer in the world using the DRI-EAF (direct reduced iron-electric arc furnace) continuous casting method for its entire production.” While the four EAF production lines are fed with some scrap, the facility uses DRI as its primary metallic input for steelmaking.