After investing USD 1 billion, ArcelorMittal will increase its production in Mexico by 32.5%

After having invested USD 1 billion in Mexico, the steelmaker ArcelorMittal plans to increase its productive capacity by 32.5% from next year, to replace imports and serve the automotive industry, electrical appliances, and construction. The steelmaker will go from producing 4 million tons to 5.3 million hot rolls (rolled steel) and galvanized for the automotive industry, wire rod, rod, and slab, starting next May 2020.

However, the general director Victor Cairo of ArcelorMittal in Mexico said that they are disturbed by the new policies of the Mexican government since with the elimination of the figure of the Special Economic Zones, there is no certainty about the fiscal incentives, which contemplated an exemption from the ISR for 10 years.

"The incentive to develop the south-east of Mexico is a policy followed by the president (Andrés Manuel López) and we hope he will make decisions and the incentives he will give. We remain firm with the investment."

The steelmaker has to produce a hot roll from May 2020 at the plant that is being built in Lázaro Cárdenas, Michoacán, which carries a 68% advance of the project where USD 1 billion was invested.

"We hope to sit down with the Secretary of Economy to review the incentives that were promised and were part of making the investment decision. We want to continue investing in Mexico."

Within the framework of the Special Economic Zones scheme, the tax exemption for ISR was promised for 10 years, because it is an economic zone, where the steelmaker was seen as the anchor company of the economy.

In 2018, ArcelorMittal began its project to expand production capacity by almost 2 million tons, and currently, Mexico occupies 4% of its total turnover. The high-tech mill that will be built will allow production growth, which added to the strategy of solving the gas supply will help ArcelorMittal provide other industries in Mexico and replace the steel that comes from Japan, Korea, India, Turkey, Brazil, Russia, others.

With the Lázaro Cárdenas project, ArcelorMittal will generate value for the supplier chains, because the company is a slab producer, which is a semi-finished product, with which it is processed in rolled steel, with use of the automotive and household appliance sector, which is why that there will be a technified hot mill, which will be among the largest in the group.

Cairo will fight with the Ministry of Economy to raise the rate of the safeguard that Mexico applies to imports of steel from China or Russia, which is currently implemented at 15%, a quota that should be raised to 25%, similar to the measure 232 that The United States is instrumental against the steel of the rest of the world.

"It is important that they understand that the US wants protection in Mexico and that our country is not a bridge of triangulation."