With a US$1 billion investment in a new hot strip mill in Michoacán now bearing fruit, ArcelorMittal is making decisive moves to position itself as the leading player in Mexico’s steel market.
At one point in time, hyperloop trains and electric vehicles were part of a future that seemed far out of reach, but these innovations are now well within our grasp. Steel manufacturing giant ArcelorMittal is playing a critical role in making the dreams of yesteryear come true – with its Mexican operation an increasingly important part of the equation.
"Our product is going out to the whole world – it goes into cars, electric cars, appliances. We are in the construction market," ArcelorMittal Mexico CEO Victor Cairo tells The CEO Magazine. "I get a lot of satisfaction from the fact that we are in a company that puts all kinds of opportunities at our fingertips."
ArcelorMittal was formed in 2006 when Indian-owned Mittal Steel took over Luxembourg-based Arcelor. Its Mexican operation, ArcelorMittal Mexico, was formed in 2013 in recognition of the growing demand for steel in the region.
A new player in the steel market
Mexico has since become a key production platform for ArcelorMittal, with a sizeable US$1 billion investment that funded the creation of a new hot strip mill at its Lazaro Cardenas plant in Michoacán. Completed in December 2021, the mill allows production of 2.5 million metric tons of flat-rolled steel.
The new facility began commercial operations in January this year, upping the plant’s possible capacity to 5.3 million metric tons of finished steel per year, which consists of 2.5 million metric tons of flat-rolled steel, 1.8 million metric tons of long steel and one million metric tons of slabs.
"I get a lot of satisfaction from the fact that we are in a company that puts all kinds of opportunities at our fingertips."
This development represents a major milestone for Cairo who has headed up the Mexican operation as CEO since it was first established. He previously worked within the group as General Manager of Dofasco de Mexico, now known as ArcelorMittal Monterrey, Tubular, since 2000.
"I had to make the company grow," he says of the task he faced in the beginning.
"We expanded the number of mills, the number of cutting lines, we doubled the warehouses, all while still giving service to the steel industry and the automotive industry. The challenge we had was to understand the company and improve it."
A large part of that was convincing ArcelorMittal’s Executive Chair Lakshmi Mittal to invest in Mexico, which he subsequently did. "Mittal has a great appreciation for Mexico and supported us," Cairo notes. "The market was available and there was a need for an additional mill in Mexico. We were able to document this, sell it internally and justify it."
Rising to the challenge
For Cairo, leadership is about working closely with your teams, empowering them to make decisions and inspiring their commitment to the company and its vision.
"We always find ways to present challenges to our people so they commit to taking on those challenges and making them their own," he says.
"It’s a process of continuous improvement because doing the same thing all the time is boring. We all need something that develops us and makes us better people."
Focusing on the future
ArcelorMittal Mexico has swiftly become the largest producer of crude steel in Mexico. It currently produces four million metric tons each year and is targeting significant growth. "Our vision in the short-term is to reach 5.3 million metric tons of finished product that goes to the automotive construction industry, metal mechanics, general industry and distribution," Cairo explains.
The company’s medium to long-term focus is on finding ways to fully harness the power of its network of mines. "We have mines in Sonora, Sinaloa, Colima, Michoacán and we also have concessions in Guerrero, Oaxaca and in different states which are integrated with our main plant in Lazaro Cardenas," he explains. "Our focus is to integrate vertically, as we are doing, to look for areas of opportunity."
"We believe in Mexico and that its proximity to the United States and the capacity we have in Mexico will be an area of opportunity for the group in the medium and long-term."
In addition, ArcelorMittal Mexico is making a significant investment in its Las Truchas iron ore mine – 27 kilometers from its Lazaro Cardenas operation. As part of the revamp, it will construct a new iron ore concentrator along with the required infrastructure to transfer ore feed from the mine to the new facility. This will increase the processing capacity of Las Truchas to 2.3 million metric tons per year.
Its mine in Peña Colorada, near the town of Minatitlan – a 50/50 joint venture with Ternium – is also readying for expansion with an investment of US$200 million.
"We are constantly watching the market," Cairo stresses. "We that Mexico’s proximity to the United States and the capacity we have will be an area of opportunity for the group in the medium and long-term."
Although ArcelorMittal Mexico is still on the ‘start-up curve’, the recent US$1 billion investment has opened many doors for the company. "The market was calling for a new option in the steel market and we are going to continue growing together with our customers in order to be the best option in the market," Cairo insists.
"It is going to take time, but we are moving forward with that long-term vision to be the best option in Mexico for our customers."
A sustainable future
ArcelorMittal is aiming to become emission-free by 2050 – with a 30 percent reduction by 2030. It’s a process that is well underway in its plants in Canada, Germany and Spain, making the shift from blast furnace processes to electric alternatives.
"As a group, we are making very important investments in renewable energy," Cairo says. "We have the capacity to produce four million metric tons with an electric furnace, which is the cleanest of the steel processes, and we use gas and electricity."
Coal-burning blast furnaces are still part of the picture, but he stresses that ArcelorMittal is making it a priority to reduce its carbon footprint.