Mexico's energy reform vital to steel sector health - Villacero

By Samuel Williams - Thursday, January 30, 2014

Mexico's energy reform is "fundamental" to the competitiveness of the country's steel sector, Roberto Márquez Hiriart, deputy director general of industrial business at Mexican steel company Villacero , told BNamericas.

The reform, which will open up the energy sector to greater private sector involvement, is "indispensable" for the steel industry which is "the main consumer of electricity in the country and buys the most expensive electricity in the world," Márquez said on the sidelines of the American Metal Market Mexico Steel Forum in Cancún.

"If we don't have competitive suppliers, it's difficult for us to compete," he said.

"As distributors we depend on steel mills, and if those mills don't have competitive costs and stand on an equal footing with overseas mills, it will be difficult for us to advance."

The reform, which supporters say will significantly lower energy costs, is "fundamental to the profitability" of large steel producers, which have invested more than US$5bn in Mexico in recent years, Márquez added, while the distribution sector has also made "significant" investments in the country.

Understanding the implications of secondary legislation will also be crucial to providing "certainty" in terms of future investment and to ensure the reform brings benefits "in the medium to long term," he said.

The reform is also expected to boost demand for steel products for construction of pipelines and equipment in the oil and gas sector, which is expected to grow as a result of the legislation.

Villacero, based in Monterrey in Nuevo León state, is involved in steel processing and distribution, as well as logistics and other services in the steel sector, according to information from the company website.