Colombian steelmakers condition construction of new flat steel plant on adoption of trade defenses

In a letter to Luis Carlos Reyes, Colombia’s minister of Commerce, Industry and Tourism, obtained by Fastmarkets, the steelmakers confirmed their willingness to collaborate with the government on a technical feasibility study of the project, but highlighted the necessity of reducing dependence on imports and strengthening the local industry.

“Without these measures, no current or future initiative will be viable,” industry representatives said, reiterating the urgency of adopting requested safeguards and other trade defense measures, such as reviewing tariffs under the National Development Plan.

The document was signed by representatives of steelmakers Acerías PazdelRío, Ternium, Siderúrgica de Occidente (Sidoc), Grupo Siderúrgico Reyna and Diaco Colombia, as well as by Daniel Rey Suárez, executive director of the Colombian Committee of Steel Producers, linked with the National Business Association of Colombia (ANDI).

A source from the Colombian steel industry with a close relationship with the government stressed that the minister understood the content of the letter. According to the source, the support of the local steel industry was considered essential for the new industry project, and therefore there was a signal from the government that, once the feasibility study was official, immediate measures would be taken to impose the requested trade defense.

“The preservation of existing investments and the promotion of new ones require decisive government support to combat unfair trade practices,” the industry representatives wrote in the letter. “These practices seriously jeopardize the survival of a sector that generates 50,000 direct and indirect jobs in various regions, and is a key player in the construction and infrastructure cluster, which is crucial for the country’s economic recovery.”

Álvaro Pardo, president of the National Mining Agency (ANM), emphasized the government’s new approach to mining under President Gustavo Petro.

“From the letter released on September 6, I understand that the Minister of Commerce and Industry, Dr. Reyes, is already resuming the initiative he had previously mentioned to us, stating that the construction of this steel plant would be considered a very important project for the national economy,” Pardo said.

Government priorities, steel industry collaboration

The project – the first flat steel plant in Colombia – was introduced by the National Mining Agency as a measure to reduce dependence on imports and generate job opportunities. But industry representatives had already highlighted to Fastmarkets the urgent need for trade defense measures, mainly against long steel products, which currently are the only products of local factories.

In the September 6 letter, the steelmakers emphasized that clear signals, such as trade defense mechanisms, are necessary to attract investors.

In March 2024, Colombian steelmakers asked the government to apply anti-dumping measures to curb the excessive imports of low-carbon wire rod from countries with which Colombia does not have trade agreements, with an emphasis on China.

The companies also requested safeguards for imports of steel bars from Peru.

In an exclusive interview with Fastmarkets, ANM’s president said that the administration is committed to using Colombia’s mineral resources, not merely for export, but to generate local industry, support infrastructure projects and promote energy transition initiatives.

“We believe that we can use our minerals to generate industry in the country, to support energy transition processes, development and infrastructure construction,” Pardo said. “To achieve this, we have built five productive chains that will allow us to add value to our minerals, generate jobs, generate taxes, generate royalties and generate development. These are the chains for copper, silicon, phosphates, metallurgical coal (coke) and steel, which we still need to work on improving.”

The project for a new flat steel plant is seen as a crucial step to ensure the future of the steel sector in Colombia, aligning with the government’s goals of boosting local production and reducing reliance on imported inputs, particularly in the context of the Ecominerales project initiatives.

Ecominerales is an industrial and commercial state-owned company, presented to the Colombian government as a draft bill, which aims to promote a new mining policy in the country with greater efficiency, profitability, productivity and sustainability. The project also proposes that the state and the private sector work together to promote territorial security.

“We have metallurgical coal in a considerable amount in the country, we have companies already dedicated to the extraction of that coal, we have other companies that already produce coke in the country and we have companies that produce steel,” Pardo said. “But we do not have a flat steel mill; that is what is missing for our chain.”

The steelmakers also stressed their readiness to continue working alongside the government to develop solutions that benefit the national sector.

“We are convinced that this agreement will be a solid foundation for building a stronger and more competitive steel sector,” their letter concluded.

The letter highlighted that the technical study, which is expected to take at least 12 months, must assess the availability of raw materials (such as coal, energy and iron ore), local and international demand analyses, logistical assessments for the new plant, production processes, costs and environmental impacts.

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