Mexican industry players warned of the economic risk for Mexico regarding the bankruptcy of steel giant Altos Hornos de México (AHMSA) due to its insolvency problems. The problems were intensified by the power cut by the state-owned Federal Electricity Commission (CFE), and around 17,000 jobs are at risk in Coahuila, the eighth largest economy in the country.
Fernando Turner, president of Katcon, an auto parts company with factories in Mexico, the United States, Germany, Poland, India, China, and South Korea, said that it is “unjustifiable that it does not intervene in the rescue of the source largest employer in Coahuila 'solely because of phobias against its shareholders,” according to the local newspaper El Siglo de Durango.
AHMSA, like the state oil company Pemex, is technically bankrupt, with liabilities exceeding assets, according to public information reviewed by SteelOrbis.
Mexican President Andrés Manuel López (AMLO) warned that the federal government will not support AHMSA.
"We are recommending that new partners enter, that they invest and that the company not be ruined," said the president last Friday.
As of September, AHMSA's assets totaled $2.13 billion and its liabilities $2.76 billion. The technical bankruptcy is for $624 million.
Separately, Raul Flores Gonzalez, former president and current advisor of the Mexican Chamber of the Construction Industry (CMIC) criticized the inflexibility of the CFE when cutting off the supply of electricity to AHMSA.
It was an “apparent intention to affect and cause the paralysis of the industry to prevent its production and economically strangle” AHMSA.
The Zocalo newspaper published that the CFE took 10 days to reconnect electricity to steel mills 1 and 2 of the company, after paying the debt of 127 million pesos ($6.3 million).
SteelOrbis asked the CFE, since December 5, for information on the reconnection of electricity, however the state company managed by Manuel Bartlett did not respond.
The newspaper La Voz published, quoting the local leader of the cargo businessmen, CANACAR, Gerardo Bortoni, said that due to the illiquidity of the carriers, the distribution of steel is stranded.