Davis Index: Market Intelligence for the Global Metals and Recycled Materials Markets

Grupo Acerero del Norte (GAN), a subsidiary of Mexican steelmaker Altos Hornos de México (Ahmsa), will continue negotiations to develop a partnership with the longs steelmaker Grupo Villacero to recapitalize Ahmsa.


The potential partnership would be subject to approval by the Mexican Federal Economic Competition Commission (Cofece), Ahmsa said in a statement to the Mexican stock exchange in late November.


Ahmsa would seek to sell 45pc of its shares to Villacero, according to media reports. However, a source close to the deal told Davis Index on Nov 30 that the exact percentage of shares that the beleaguered steelmaker would eventually sell will only be known once the negotiations are concluded.


Villacero and Ahmsa began negotiation to develop a potential partnership to capitalize the latter on June 18. Since then, Ahmsa continues operating at 35pc of its capacity, the source said without disclosing further details. The company was working at 60pc of its capacity in June when demand for steel products began improving following the COVID-19 related lockdowns.


Ahmsa recently lost more than a third of its share capital, which, according to the Mexican Law of Mercantiles Societies, could cause the dissolution of the company. The steelmaker noted in its Q3 2020 earnings report on Oct 28 that it would be looking for financing options and capitalization alternatives to avoid dissolution and strengthen its financial situation.


Mexico, the second-largest crude steel producer in Latin America, increased its crude steel output by 1.1pc to 1.47mn mt in October from 1.45mn mt produced in the same month of 2019.



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