MEXICO CITY (Reuters) – Steelmaker Ternium is considering building a new $2.2 billion steel production plant near its current Pesqueria site in northern Mexico, the company’s chief executive said Wednesday, though a final decision has not yet been made.
“We will disclose the location pretty soon,” Chief Executive Maximo Vedoya said in a call with analysts, adding the plant would be in the “USMCA region”, referring to the region covered by a trade pact between the United States, Mexico and Canada.
Ternium announced the investment Tuesday, specifying it would include an electric arc furnace-based steel mill and a direct reduced iron module with capacity of 2.6 million tonnes and 2.1 million tonnes a year, respectively.
The steelmaker had previously mentioned plans to build such a plant to comply with upcoming regulations for automakers under the USMCA trade pact.
The treaty will require at least 70% of the steel used in cars to be “melted and poured” in the region once the stipulation goes into effect in 2027. The plant is expected to be completed in the first half of 2026, Ternium said.
Current demand for steel in Mexico from automakers is around 2 million tonnes a year, but is growing, Vedoya said.
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The executive also said Ternium expects to benefit from the “nearshoring” trend in Mexico in coming years, with multinational companies choosing to relocate production closer to their final markets.
While Ternium is seeing steel demand from construction for these firms’ sites in Mexico currently, it will increase “in a couple of years when all the production facilities are running,” Vedoya said.
(Reporting by Kylie Madry and Aida Pelaez-Fernandez; Editing by Sarah Morland and Sharon Singleton)