Chile’s biggest steel plant said on Wednesday it had suspended operations because it could not sustain itself financially, despite new tariffs on Chinese steel aimed at protecting local production.
The Chilean government has described the Huachipato plant’s decision as “irresponsible”, with at least 2,700 workers directly affected and 20,000 jobs indirectly linked to the plant.
The company’s board said the decision to “indefinitely suspend” operations was made because it was impossible to price its steel competitively in the face of “intensification of Chinese dumping,” even with the tariffs in place.
The decision came after the finance ministry in April imposed provisional duties on Chinese imports of steel bars and balls of 24.9% and 33.5% respectively.
Both products are key inputs in copper production, in which Chile is the world leader.
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“Almost four months after the measure was implemented, market behavior made it impossible to correct the imbalances and transfer these tariffs to price,” the company said in a statement.
Huachipato’s board concluded that the implementation of surcharges would not be enough to create structural changes in the market to ensure the economic viability of the steel industry in its current form.
The suspension of steelmaking operations will be phased in, with the process completed by September, the company said.
Huachipato, located in Talcahuano, about 310 miles (500 kilometers) south of Santiago, had earlier suspended operations in March, requiring new tariffs on Chinese steel to continue operating.
Over the past two decades, China has increased its share of the global steel market from 15 percent to 54 percent, according to the Latin American Steel Association (Alacero).
Source: AFP