ArcelorMittal

The ArcelorMittal plant at Point Lisas Industrial Estate on Monday. —Photo: Dexter Philip

CHRISTOPHER Kelshall, the liquidator of the ArcelorMittal company on the Point Lisas Industrial Estate, is making a third attempt to sell the iron and steel-manufacturing assets, which were mothballed in March 2016.

T&T’s largest non-energy, manufacturing exporter, Luxemburg-based ArcelorMittal decided to close its operations at Point Lisas on March 11 2016, throwing its direct workforce of 644 into unemployment, causing the National Gas Company, WASA, PLIPDECO and T&TEC to forego hundreds of million in fees and tariffs and leading to almost US$800 million in estimated export earnings lost over three years, according to four Central Bank economists.

The iron and steel facility, which was acquired by current ArcelorMittal chairman and CEO, Lakshmi Mittal, in 1994 for US$70 million, cost T&T over US$1 billion in investment dollars to commission and operate between 1980 and 1985, according to former finance minister, Wendell Mottley, in his book Trinidad and Tobago Industrial Policy 1959 to 2008.

Six local and international companies responded to Kelshall’s third request for expressions of interest in the assets of the iron and steel facility, including the Luxemburg-based owner of the assets, ArcelorMittal, and Nu-Iron, the Point Lisas-based subsidiary of the US steel giant Nucor Corporation.

Neither Arcelor nor Nu-Iron eventually submitted bids, sources close to the process told Express Business.

The liquidator has received, and is considering, three bids, including one from Aeternus Steel Company, a local company incorporated in March 2019. A joint venture of Aeternus Steel and the Dubai-based Cassia Group, was named the preferred bidder in the 2019 sales process, which ended without any company being selected.

Asked to provide an update of the liquidation and pension processes, Kelshall on Friday said in an email: “I am in the process of evaluating bids received from several local and overseas bidders for the plant, to determine a preferred bidder. The process is at an advanced stage and delicate at this time. I expect a determination to be made within the next month.”

Questioned about the sale of the assets, Steel Workers Union president, Timothy Bailey said the union welcomed the possibility as its entire membership from the steel industry were deprived of their separation benefits.

“We have seen what has happened to the former workers and are supportive of any initiative that allows the opportunity for employment. We believe that considering our economic situation currently as a country. The need for stimulating the economy with new and sustainable investment where sustainable employment coupled with the possible availability of foreign exchange should be taken in consideration by the Government and liquidator. This should be the deal breaker when any decision is made on choosing a entity,” said Bailey

Given the price of electricity and issues over the availability of natural gas, the reopening is likely to be of ArcelorMittal’s two Direct Reduce Iron (DRI) plants only (See list of assets sidebar).

A Point Lisas source said a successful reopening of the DRI facility requires clarity on the supply of natural gas, a competitive electricity rate and the expeditious grant of the Foreign Investor’s Licence. The issue of the Foreign Investor’s Licence has been promoted to significance because of the perception that the Ministry of Finance took too long to consider the licence for the preferred bidder of the 2019 attempt.

Forex earnings

A Point Lisas source said a successful reopening of the DRI facility requires clarity on the supply of natural gas, clarity on the price of natural gas, a competitive electricity rate and the expeditious grant of the Foreign Investor’s Licence. The issue of the Foreign Investor’s Licence has been promoted to significance because of the perception that the Ministry of Finance took too long to consider the licence for the preferred bidder of the 2019 attempt.

In a January 2020 working paper, entitled ‘Impact of the closure of a large foreign direct investment: The case of ArcelorMittal in T&T,’ four Central Bank economists estimated that the potential annual export earnings foregone by the domestic economy amounted to US$259.2 million over the three years 2016, 2017 and 2018.

The export earnings contribution of the DRI plant alone would have been US$146.3 million, according to the Central Bank economists, Ashley, Lauren Sonnylal, Kester Thompson and Reshma Mahabir.

The economists also projected that if ArcelorMittal remained in operation, non-energy export earnings would have increased, resulting in a smaller current account deficit of US$748.2 million in 2016 compared to US$979.5 million.

“The current account surplus would have further improved in 2017 and 2018 to US$1,495.2 million and US$2,260.5 million compared to US$1,236.1 million and US$1,190.7 million, respectively,” stated the Central Bank economists.

They counter-balanced the positive impact on T&T’s export earnings by noting that “improvements to the current account from higher export earnings may have been offset by the repayment of ArcelorMittal debt to external parties.”

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