Colombian Steel Company Searching for Options

An investment proposal by Japan's Kobe Steel to bail out troubled Colombian steelmaker Paz del Rio could take up to two years to be up and running.

In the meantime, the Colombian company is looking at teaming up with another Colombian company, Hornasa, to share continuous casting facilities.

Another option is to operate Paz el Rio's electric furnace, but that would depend on market conditions and the availability of scrap, volumes of which have fallen sharply on the world market.

According to a spokesman for Paz del Rio, until a couple of years ago the United States was supplying 12 million tons per year of scrap metal, but today this figure has dropped to 6 million tons. The European Union is still placing 30 million tons on the market annually, he said.

Another short-term option is to buy steel slabs and thereby cut casting costs, but this would require rethinking the Kobe Steel investment plan.

The Kobe proposal involves new technology, as Paz del Rio is currently the only steel mill in Latin America not to have ladle and continuous casting systems. The resulting reduction in pollution will allow the Asian company to compensate for its own carbon emissions under the Kyoto protocol.

The Japanese company has just finished its third review phase of Paz del Rio, which dealt with problems related to mining, coking and sintering, as well as blast furnace and rolling processes. Business News Americas