Pig iron mills in the state of Minas Gerais, Brazil are operating at 45 percent of their production capacity, according to media reports.
After firing 37,500 workers since 2009, the region’s pig iron industry struggles to recover from the 2009 financial crises. “We’re suffering the consequences of everything that started in 2008. And the country’s economy isn’t facing favorable prospects, which are penalizing the sector,” Fausto Cancado, president at the iron union of the state of Minas Gerais, Sindifer-MG, said.
“Today, we have about 45 percent of our installed [production] capacity working. That’s bad for us, because every time one interrupts production, naturally, there are layoffs,” he said.
The executive said production volumes have been “balanced” in the past three years in terms of volume, despite being at low levels, which are close to half the state’s pig iron production capacity.
According to Cancado, the Brazilian government has canceled some incentives for the industrial sector, which helped the local pig iron sector to deepen its difficulties. As an example, the executive cited the reimbursement of the Reintegra tax, a tax credit program aimed to boost exports, which fell from 3 percent to 1 percent.
Cancado said that a higher US dollar currency, which generally improves exports, also impacts domestic costs, as domestic iron ore prices are heavily dependent on the US dollar price for the commodity.
The Sindifer-MG executive estimated that only 46 of the state’s 102 blast furnaces are currently operating.