Steel Mills
AHMSA investors plan for staggered restart beginning in September
Written by Laura Miller
April 5, 2024
AHMSA’s new investors, Argentem Creek Partners, have plans for a potential staggered restart of operations at the Mexican steelmaker.
On March 21, AHMSA said it presented documents intended to allow for its exit from the bankruptcy process, including a restructuring plan, to a Mexican court.
Argentem’s action plan calls for “a staggered restart of operations starting in September with the electric furnace, lamination equipment, and the subsequent addition of blast furnace six,” according to news posted on the company’s website this week. The posted article is of an April 3 Infonor interview with John Abbott, a member of AHMSA’s board of directors.
Abbott said the plan’s second stage would see BF6 restarted by the end of this year, with an anticipated production level of 200,000 metric tons per month.
With the EAF and BF6 running, AHMSA would be operating at 55% of capacity, according to Abbott.
“We estimate that we will reach 100% utilization once we can make the planned investments of USD$1.7 billion … which is estimated to be achieved by mid-2027,” Abbott said.
However, this is all “assuming that the restructuring plan is approved, and the investors confirm their participation.”
US-based investment fund Argentem aims to invest ~$2.2 billion to reactivate AHMSA’s steel mills and mines and to replace and install new equipment “to return the company to the operational state in which it was before this crisis.”
That $1.7 billion Abbott mentioned would be used to pay financial liabilities, including government debt, secured creditors, and worker settlements.
Argentem “would not be making this level of investment if they did not have a very optimistic vision for the future of the company,” Abbott said.
The government of Mexico wants AHMSA reactivated by private investment, according to Abbott. It “has been very clear that it is not going to rescue the company,” but is supportive of Argentem’s recapitalization and restart proposal, he said.
Since AHMSA ceased operations in December 2022, many of its assets have fallen into a state of disrepair.
Abbott noted that some essential assets “have been lost or severely damaged,” including “both cokers and blast furnace five.”
A railway connecting the Hercules iron ore mine with the steel mills was also seriously damaged, and ~29 kilometers of pipeline were stolen. Abbott said AHMSA doesn’t know the status of that mine, but that it is flooded and has been pillaged.
“An analysis will have to be carried out on the costs and times to replace damaged equipment and what has been stolen,” he noted.
Laura Miller
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