Mexican Simec Steel Group doubles investment in Brazil

RIO DE JANEIRO, BRAZIL – The company plans to invest US$300 million in its plant located in Pindamonhangaba (SP) to increase its annual production from 500,000 to 1 million tons by 2023.

Confident in the increased demand for steel in Brazil in the real estate construction sector and infrastructure works in the coming years, Mexican steel group Simec, which has been operating in the country since 2015, announced a plan to invest US$300 million (R$1.56 billion) to expand.

The amount will be spent on doubling its plant located in Pindamonhangaba, São Paulo interior.

Simec’s steel mill in Vale do Paraíba, which began commercial operations exactly 6 years ago, produces rebars, in coils and bars, and is also capable of producing wire rod for industrial purposes.

Currently, the plant has a yearly production capacity of 500,000 tons of crude steel. This will increase to 1 million tons once the new line is ready. When announcing its decision to the Pindamonhangaba City Hall, the group stated that the expansion will generate 750 new jobs after the works are completed, which is expected by the middle of the second semester of 2023. Some 3,000 temporary jobs are expected to be created during construction.

To double its size, the plant will add a new electric furnace (capable of producing 500,000 tons of billets per year) and a new rolling mill with a similar capacity for end products.

To feed the new furnace, Simec will also double the plant’s capacity to recycle steel and iron scrap – from 625,000 to 1.25 million tons per year.

The Mexican group’s strategy, 3rd in this segment in Brazil – behind ArcelorMittal and Gerdau – is to be ready for the increase in long steel consumption in the coming years, according to sources. The company chose not not to comment at the moment.

Last year and in 2021, with the increase of real estate launches, and also of self-building – investment in reforms and home expansions, driven by greater use of homes during the Covid-19 pandemic – steel consumption has grown, especially from July, leading steel mills to operate at full capacity.

The site of the current plant already relies on advanced infrastructure, such as land, power substation, water mains, and a base for new warehouses. This allows the work to be completed in up to 28 months. A new project would require 36 months.

The Simec group reached 3rd place in the long steel market – with about 8% of sales – 3 years ago, when it purchased two production units from ArcelorMittal: one in Cariacia (ES) and the other in Itaúna (MG). The sale was a requirement of the Administrative Council for Economic Defense (CADE) to approve ArcelorMittal’s purchase of Votorantim Siderurgia.

With the two acquisitions, Simec is now able to annually produce 1.1 million tons of crude steel (billets) and 900,000 tons of rolled products – bars, rebars (straight and coiled), light, medium and heavy sections, and wire rod.

After installing the new line in Pindamonhangaba and completing the mill’s expansion in the state of Espírito Santo, the group will increase its output of crude steel to 1.8 million tons per year.

In Cariacica, next to Vitória, it will increase its furnace capacity from 600,000 to 800,000 tons per year, as well as modernize the current section (light, medium and heavy) and bar rolling mill to 35,000 tons per month. The investment amounts to US$50 (R$260) million. A new rolling mill is to be installed in the future for specialty steel.

Leader in the specialty steel industry in North America, Simec was founded in 1969 in the Mexican state of Guadalajara. It is controlled by a local family group headed by Rufino Vigil, who frequently travels to Brazil to visit operations. The group runs 8 plants in Mexico, 7 in the USA, 1 in Canada, and 3 in Brazil.

The company decided to settle in Brazil in 2011. It acquired the area to build the plant in Pindamonhangaba, which cost US$300 million at the time – between 2012 and 2015.

In the Brazilian market, with its 3 mills, it sells in the Southeast, South, Midwest and part of the Northeast, competing with ArcelorMittal, Gerdau, Sinobras, Aço Verde Brasil and CSN (long steel).

The group has not yet released its 2020 financial statement with revenues in Brazil. In 2019, it reached R$1.8 billion.

Source: Valor