The Brazilian company Gerdau, the largest producer of long steel in the Americas, could soon be investing up to US $600 million to build a factory in Mexico. 

Already the owners of a steel mill in Hidalgo and two others in México state, Gerdau officials confirmed that the company has undertaken a cost-benefit analysis regarding construction of a new plant in Mexico.

If the company decides the project has commercial viability, Gerdau would begin building in 2025. The cost-benefit analysis will be finalized by the year’s end.

Manufacturing industry news site Cluster Industrial reported that the proposed plant would have the capacity to produce 600,000 tonnes of specialty steels per year. Speaking to reporters on Friday, Gerdau CEO Gustavo Werneck said that a steel mill of this size would require an investment of between US $500 million and $600 million.

Gerdau is also reviewing sites for the proposed steel mill. It is likely to be located in central Mexico, near the company’s three other plants.

Werneck told reporters that any new construction would adhere to the company’s sustainability principles, using state-of-the-art technology and its consumption of raw materials to minimize carbon emissions.

Gerdau — which claims to be the biggest recycling company in Latin America and says that 71% of its steel worldwide is produced from scrap metal — has a stated goal of reducing emissions by 0.82 tonnes of carbon per tonne of steel produced by 2031.

If the project goes forward, its production would target Mexico’s domestic market, primarily the auto industry. Werneck said Mexico’s attractiveness is bolstered by the cluster of important automakers in the country.

“Important players in the automotive industry, including current Gerdau customers, are expanding their operations to Mexico, which is becoming one of the most relevant countries in the production of automotive parts,” Werneck wrote in a Friday LinkedIn post.

According to Gerdau Vice President Rafael Japur, the Mexican market consumes 1.2 million tonnes of specialty steels per year, of which 70% is imported.

With reports from Cluster Industrial, El Economista and Expansión