ArcelorMittal stands by $1 billion Mexico pledge despite trade threats

MEXICO CITY - 3 March 2018: ArcelorMittal, the world’s largest steelmaker, has not changed its plan to invest $1 billion dollars in a new production line in Mexico, a spokesman said on Friday, despite uncertainty around terms of trade in North America.

Since ArecelorMittal announced the investment in September, talks initiated by U.S. President Donald Trump to renegotiate the North American Free Trade Agreement have bogged down, and Trump stirred fears of a global trade war on Thursday by announcing plans for steep tariffs on steel and aluminum imports.

Mexico’s steel chamber has called for immediate“equivalent and reciprocal tariffs on steel imports from the United States” if Trump follows through on his tariff plan next week as promised.

ArcelorMittal’s spokesman in Mexico said 80 percent of the steel the company produced in the country was destined for the local market, with the remaining 20 percent exported to the United States, Canada and other markets.

“In this context, we will keep working in the same way,” said Ricardo Bussey, the corporate affairs director for ArcelorMittal Mexico, adding that the investment would take place over three years.

The investment covers construction of a new hot strip mill, which upon completion in about three years will allow annual production of 2.5 million tonnes of flat rolled steel, the company said in September.

The new production will be for domestic, non-auto, general industry customers, the company said.

ArcelorMittal operates six facilities at three ports in Mexico.

The company’s main Mexican plant is in the west coast port city of Lazaro Cardenas. Bussey said he expected production this year would rise to 4.2 million tonnes from 3.8 million tonnes last year.

Mexico is a key production platform for the company. During the first half of 2017 ArcelorMittal produced nearly $12 billion of steel in North America while shipping about $11 billion from the three-country region linked by the 1994 NAFTA accord.

Mexican steelmaker Ternium also announced plans to build a new Mexican facility in September, with an investment of $1.1 billion. On Friday, Ternium said it could not immediately comment on its future plans.

ArcelorMittal said in a statement earlier on Friday that it was assessing the potential global impact of planned U.S. tariffs on steel imports, while saying governments were right to take a tough approach to unfair trade.