Grupo Acerero announced works on a new project called "Beskar" that will integrate a new furnace and a mill to produce steel slab and plate with a capacity of 1 million metric tons (mt) per year, along with other satellite projects in the central state of San Luis Potosí.
The company will invest up to $400 million, one of the shareholders and members of the board of directors told SteelOrbis.
Currently, Grupo Acerero—not affiliated with Grupo Acerero del Norte (GAN), the main shareholders of the indebted steel company Altos Hornos de México (AHMSA)—has a liquid steel production capacity of 950,000 mt with an electric arc furnace (EAF) and a long products mill in the state capital of San Luis Potosí.
The board of directors of Grupo Acerero approved the investment and now they are working on the Beskar project, in the vicinity of their steel mill. The company has more than 25 years of operation.
“The approximate investment is $350 million to $400 million for the new steel mill and other satellite projects at the other steel mill,” said a member of the board of directors in a telephone interview.
"It is a furnace with the capacity to melt 1 million tons a year to produce slab and a mill to produce steel plate for the same volume (...) We will also be able to produce special steel, for this reason investment will be made in the necessary equipment . The new steel mill will be operating in 2025,” said the board member.
The board member explained that the expansion of Grupo Acerero will be funded with a part of the company's own resources and resources obtained through the issuance of debt in the stock markets. The proportion of the financing mix was not disclosed, although he said the company has already been rated "investment grade" by credit risk assessors.
The debt issuance was made because commercial banks are adamant about financial covenants. However, the Mexican Grupo Financiero Actinver supported them in the debt issuance.
Last year, the board member commented, Grupo Acerero sold 1.3 million mt of steel with a turnover of $1.0 billion. This year, he expects to maintain the same sales volume.
According to data from the Ministry of Economy, Grupo Acerero is the fifth largest rebar producer in Mexico.
In 2014, the company began the operation of its first steel mill, it had a capacity of 500,000 mt, which with investments has almost doubled it to 950,000 mt. With the new investment projects already approved, it will increase from the current 950,000 to 2.1 million mt in 2025.
The company currently imports slab from Europe, Latin America and local purchases in Mexico. Currently, the board member said that most of his production is for the local market, with very little export.
The board member said that Grupo Acerero will continue to invest to reach a production capacity of 4.0 million mt of liquid steel in the future. When they have that production capacity, they will consider selling part of the company's capital through an initial public offering (IPO) on the stock markets.