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Chile’s sole steel mill has said it will shut down in the face of competition from cheap Chinese imports, in a blow to the country’s government, which had imposed tariffs on China earlier this year in a bid to save it.
Chilean steelmaker CAP, which runs the Huachipato mill in Chile’s central Bio Bio region, said on Wednesday that it would shutter its steel operations “indefinitely” by September, blaming an influx of imports from China for more than $500mn in losses over the past two years.
Chilean officials consider Huachipato, a big supplier of steel materials to Chile’s massive copper mining industry, to be strategically important. The plant employs roughly 20,000 people, directly and indirectly, in Bio Bio.
“This is a very devastating decision for the Bio Bio region, and the country knows that we as a government have made a great effort to reverse it,” economy minister Nicolás Grau said on Wednesday.
China is Chile’s main trading partner, accounting for almost 40 per cent of its exports — one of the largest shares among Latin American countries.
Governments across Latin America and Asia have complained of a surge in cheap exports in many sectors from China over the past two years as the world’s second-largest economy struggles with weaker domestic demand.
Latin American steel industry group Alacero said the region imported a record 10mn tonnes of Chinese steel in 2023 — a 44 per cent increase from 2022.
Huachipato temporarily suspended operations in March, citing the impact from Chinese imports. Chile’s government later slapped temporary duties of 34 per cent on steel balls from China and 25 per cent on the bars used to make them for six months. Officials said they could be extended pending the results of an ongoing anti-dumping investigation by Chile’s Anti-Price Distortion Commission.
In June China’s ambassador in Santiago told Chilean media that the tariffs had “harmed the legitimate interests of Chinese steel companies” and “damaged the economic and commercial relationship” between the two countries.
But CAP, which also mines iron ore in Chile, said on Wednesday that market conditions had meant it was unable to increase steel prices despite the tariffs, “making it economically unviable to continue with the steel business in Chile in its current form”.
Grau labelled the decision to shut the plant as “irresponsible”, blaming CAP and local steel ball manufacturer Molycop for failing “to reach an agreement on sales and pricing that they could have done given the new market conditions generated by the tariffs”.
He added that the government would “continue making all [possible] efforts to reverse this decision”.
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Publish date : 2024-08-07 07:48:00
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