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Analysis

Pacific Hub for Mining Logistics Increasing Reach

Wed, 10/21/2015 - 08:38

The existence of a reliable supply chain, covering air, land and sea, is a natural component to any industry spanning the globe. To an industry as export-reliant as mining, supply chain reliability is almost as important as drilling or extraction. Mexico’s geographic position makes it a natural logistics platform but its infrastructure has often been criticized as lacking. Terminales Portuarias del Pacifico (TPP) is determined to break this image. As the first public bulk terminal on the Mexican Pacific Coast at the port of Lazaro Cardenas, TPP specializes in hosting large-draft vessels capable of transporting 100,000-150,000 tonnes of net cargo, making its port one of the few in North America able to berth vessels of this magnitude. This makes it an ideal location for TPP to provide much needed logistical solutions to the mining industry, particularly when it comes to exporting materials on capesize vessels.

TPP began operations in October 2012, and while its concession is managed by the Integral Port Administration (API) of Lazaro Cardenas, it has four shareholders: Grupo Mexicano de Desarrollo (GMD), Grupo Clisa, Transenergy, and Noble Group. Three of these have no relation to mining but Noble Group is a major supplier of iron ore and a trader of aluminum, copper, tin, zinc, lead, and nickel. This supervision by an important industry insider has proven useful as TPP has handled throughput contracts with mining companies such as ArcelorMittal, providing them with a secure pathway to external markets such as China, Japan, and South Korea. Eugenio Arriaga, Port Manager of TPP, confidently claims that the reliability of TPP’s terminals has contributed to the region’s mines expanding and receiving additional investment. Despite this promising backdrop, TPP remains in the initial stages of development and is busy growing its on-site facilities to handle a wide range of mining needs. It has seven hectares of open yards available to stockpile products such as zinc, iron ore, or copper, and has implemented measures to prevent cross-material contamination. Arriaga also explains that the terminal’s yards are equipped with front loaders, excavators, conveyor belts, and two fourth-generation Liebherr cranes that handle around 40,000-45,000 t/d. “This capacity has helped TPP set the highest standard for specialized bulk terminals in the world,” assures Arriaga. “As well as offering the highest performance record in the country, TPP allows mining companies to transfer their cargo directly into the yard, and then store it for up to 30 days before transporting it. Last year, the terminal managed a total of 3.6 million tonnes of material.” TPP primarily manages export cargo of iron ore, but also possesses high potential for solid fuels such as thermal and metallurgical coal, as well as petroleum coke. One of TPP’s shareholders, Transenergy, is a subsidiary of Mexican cement giant, CEMEX, and handles all of CEMEX’s trading, including vast amounts of petcoke. Backed by these important companies, in its first 15 months of existence, TPP broke the Mexican record for the biggest vessel loaded for export by loading 146,000 tonnes of iron ore destined for China. “We came up with the idea of a public terminal at the right time, since China is now demanding huge amounts of iron ore and base metals,” explains Arriaga. “Iron ore is our primary market, but the terminal also has the potential to transport steel products from areas like the southeast of the US.” This international reach is part of TPP’s marketing strategy. By promoting its services across NAFTA and Latin America, TPP expects to expand its trade with China, which needs around 800 million tonnes of iron ore a year. Although Mexico exports less iron ore than Brazil, its proximity to China makes it a far easier trading partner.

Arriaga points out that the terminal has sought to forge land transportation connections to provide mining companies with all-inclusive logistical support. The rail network of Kansas City Southern de México (KCSM) and a highway winding its way to Mexico City and Guadalajara are immediately accessible. “Goods coming through our terminal can reach the Laredo border crossing in just eight days,” comments Arriaga. “KCSM is very interested in TPP and in the port of Lazaro Cardenas. It is currently investing millions of dollars to expand the port’s railway infrastructure and ensure faster connections to Mexican cities for inbound and outbound goods.”

Arriaga points out that the terminal has sought to forge land transportation connections to provide mining companies with all-inclusive logistical support. The rail network of Kansas City Southern de México (KCSM) and a highway winding its way to Mexico City and Guadalajara are immediately accessible. “Goods coming through our terminal can reach the Laredo border crossing in just eight days,” comments Arriaga. “KCSM is very interested in TPP and in the port of Lazaro Cardenas. It is currently investing millions of dollars to expand the port’s railway infrastructure and ensure faster connections to Mexican cities for inbound and outbound goods.”