Máximo Vedoya
CEO
Ternium México
/
View from the Top

Steel Behemoth Committed to Natural Gas Future

Tue, 09/15/2015 - 13:42

Q: How much of Ternium’s recent investments have been directed toward supporting the growing automotive industry in Mexico?

A: Ternium provides steel through strong production integration. Its mills cover the complete manufacturing process, from the extraction of iron ore to high added- value products. As a leading steel producer in Latin America, we manufacture and process a broad range of value-added steel products, including hot-rolled flat products, cold-rolled products, galvanized, pre-painted, welded pipes, bars and wire rods, as well as slit and cut-to- length offerings through our service centers.

Two years ago, the automotive industry represented 10% of Ternium’s business; today, that figure has reached 20%, showing significant growth for the company in this sector. Even though we have always been the main local supplier in the country, the industry was previously highly dependent on imported products. Nevertheless, our investments are now more focused on the automotive industry. For example, our new plant in Pesqueria required an investment of US$1.1 billion, and we are assigning US$100 million to our Churubusco plant in Monterrey in order to improve the quality of our products and expand our portfolio. This plant opening has enabled us to add new products that specifically target our automotive clients. We have a whole team dedicated to the automotive industry that is in charge of targeting all companies in the production chain.

Q: In 2014, Ternium announced its FB-540 steel and now it is presenting the new JIS-540 steel. What advantages do these materials offer, compared to conventional steel and other materials like aluminum?

A: These and many other products we are developing are designed to make steel lighter. We want to reduce the plate’s thickness, while making its structure stronger and increasing its reliability. FB-540 is for heavy vehicle rims and the JIS-540 is for chassis applications, but both of them have a structure that improves the product’s life cycle with a reduced weight. These are only two products of a wide portfolio of 110 products that we are currently certifying with companies. The feedback we have received from them has been amazing, and our sales in the automotive sector have radically increased over the last few years thanks to these certifications. Aluminum is a topic that is really hot right now. I think that steel has many advantages compared to aluminum, especially considering its environmental benefits. Aluminum production emissions are four times larger than steel production, even with international values. Therefore, if you want to use aluminum to reduce emissions, you must also consider the cost of production for this material. In the end, the emission reduction in the vehicle does not compensate the emissions produced during the manufacturing process.

Q: What strategies is Ternium implementing to reduce energy use and improve its environmental footprint?

A: The steel industry consumes large amounts of energy and operative costs are not cheap in Mexico. To combat this, we are constructing a natural gas-fired, combined cycle power plant in Pesqueria, which will produce about 15% less emissions than fuel oil based plants. With this investment, we are planning to power not only Pesqueria, but all our facilities in the country. In fact, in addition to this plant we are building a second thermoelectric facility with an investment of US$1 billion. This project is still in construction, and we have enough room for future expansions. In addition, Pesqueria is going to be one of the few industrial facilities in the world with a LEED industry certification. We are currently trying to replace every fossil fuel used in the plant with natural gas, which considerably reduces emissions and energy costs.

Q: What are Ternium’s expectations for its presence in Mexico’s automotive industry over the next few years?

A: Over the last four years, Ternium has invested almost US$3 billion, resulting in better production and more competitiveness, and we plan to continue with this strategy for as long as the automotive industry demands it. Through the state-of-the-art production lines at our plant in Pesqueria, we will keep producing high-end steel that is mainly aimed at the automotive industry, with annual processing capacity of 1.5 million tonnes of cold-rolled steel and 400,000 tonnes of galvanized steel. The increased utilization rates of these facilities, following their ramp-up during 2014, means we expect to achieve record shipment levels in 2015, nearing 10 million tonnes of finished steel products for the whole year.