“The implementation of the USMCA trade agreement and recent trends of nearshoring manufacturing capacity in the steel value chain have made the USMCA region an attractive destination for continued investment,” said Ternium CEO Máximo Vedoya, announcing the company’s major investment plans in the USMCA region.
Ternium’s investment plans focus on two main areas: Integration of operations in the USMCA region with an upstream production capacity project, and building a wind farm in Argentina.
Upstream capacity project
The USMCA investments are to be seen in relation to Ternium’s new hot rolling mill built in Pesquería, Mexico, which started operations in 2021. What Ternium refers to as its upstream production capacity project encompasses the construction of a 2.6 million t/year electric (EAF) steelmaking shop, a 2.1 million t/year direct reduction (DRI) module and new slab production facilities, complemented by the construction of a port facility to support raw materials logistics. The additional slab production capacity will be used to complement the Pesqueríahot rolling operations.
Downstream capacity project
The downstream project previously announced by Ternium comprises a 550,000 t/year push-pull pickling line and new finishing lines, as well as a 1.6 million t/year cold rolling mill and a 600,000 t/year hot-dip galvanizing line to be built in Mexico.
Ternium has set itself ambitious start-up dates for the new facilities: mid-2024 for the pickling and finishing lines, end of 2025 for the cold rolling mill and the galvanizing line, and the first half of 2026 for the meltshop, the DRI plant and the port facility.
Ready to take the decarbonization challenge
“The new EAF-based steel shop will also accelerate Ternium’s progress toward achieving our previously disclosed 2030 decarbonization target and support our ongoing compliance with the USMCA’s ‘melted and poured’ requirement,” continued Mr. Vedoya. The new free trade agreement for USA, Mexico and Canada (USMCA), which replaces the former North America Free Trade Agreement (NAFTA), sets out the requirement that after July 2027 seventy percent of a vehicle’s steel must be melted and poured in North America.
Wind farm project in Argentina
Another major investment aims at increasing the share of the company’s renewable energy use in line with its decarbonization plan. Ternium Argentina will invest about USD 160 million in the construction of a new wind farm with a nominal power capacity of 72 MW. Ternium expects that, once operational during the second half of 2024, the wind farm will account for some 65 percent of the electricity purchased by its Argentine subsidiary on the electricity market.
Ternium has set itself the goal to reduce its scope 1 and 2 emissions at its steel production sites by 20 percent, compared to 2018. The wind farm will contribute to this objective by reducing the Argentine subsidiary’s CO2 emissions by 92,500 t/year.