Tuesday, June 25, 2024

Steel producer ArcelorMittal renews CFE contract worth US $2.7B

ArcelorMittal, the world’s second largest steel producer, has renewed a contract with the state-owned Federal Electricity Commission (CFE) to be supplied with natural gas for 10 years.

The Mexican division of the Luxembourg-based corporation announced the US $2.7 billion deal on Wednesday.

The firm operates in several Mexican states, including Michoacán, Guanajuato and Sonora.(ArcelorMittal)

“This agreement consolidates a fundamental alliance for the operational continuity and competitiveness of ArcelorMittal México, the largest consumer of natural gas in the country,” the company said in a statement.

The steelmaker has plants in Lázaro Cárdenas, Michoacán; Celaya, Guanajuato; and Ciudad Obregón, Sonora.

Under the contract renewed on Wednesday, the CFE will supply the Lázaro Cárdenas plant with natural gas from Waha, Texas, ArcelorMittal said.

The company makes steel rods, slabs, bar stock and wire in the Michoacán port city, and has a port concession there to import and export goods.

The Lazaro Cárdenas plant is an important import and export hub for the company. (ArcelorMittal)

The steelmaker “shipped 2.5 million metric tons of steel out of its North America segment in the third quarter,” Reuters reported.

ArcelorMittal México CEO Victor M. Cairo said that the renewal of the natural gas contract “represents a significant milestone in our relationship with CFEnergía,” a subsidiary of the Federal Electricity Commission.

Miguel Santiago Reyes, general director of CFEnergía, said that the “strategic alliance” with ArcelorMittal “strengthens our commitment with the sustainable growth of Mexican industry.”

“The supply of natural gas is a fundamental pillar of competitiveness and economic development, and we’re proud of collaborating with ArcelorMittal México,” he said.

The CFE signed contracts with several U.S. suppliers of natural gas during the 2012-18 government led by former president Enrique Peña Nieto due to a fall in the production of that fuel by Pemex, the state oil company.

President López Obrador has described the quantities of natural gas the CFE committed to buy from the U.S. as “excessive” and some of its contracts are the subject of arbitration proceedings as the state-owned energy company refused to pay higher prices during the 2021 Texas power crisis.

With reports from ExpansiónMilenio, Reuters and El País

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