Techint Group, the steel and energy conglomerate controlled by billionaire Paolo Rocca, plans to invest $1 billion to build a natural gas-fired power plant in Mexico as the country seeks to end a monopoly on electricity sales.
Techint’s steel unit Ternium SA (TX:US), steel-pipes supplier Tenaris SA (TEN) and energy company Tecpetrol International SA agreed to jointly build the plant in northern Mexico’s Nuevo Leon state, the companies said in a statement distributed by Marketwired. The venture, which will generate between 850 and 900 megawatts to supply electricity to the group’s plants in the country, will be owned 48 percent by Ternium, 30 percent by Tecpetrol and 22 percent by Tenaris.
The project seeks to take advantage of Mexico’s efforts to open up its energy sector, Rocca, who serves as chairman at Ternium and Tenaris, said in the statement. Under current law, energy generated by the plant would have to be sold exclusively through state-owned utility CFE. Under President Enrique Pena Nieto’s proposal, Techint’s plant will be able to sell its electricity directly to buyers.
Tenaris is the biggest manufacturer of seamless steel tubes for the oil industry and Ternium is Latin America’s largest steel producer after Gerdau SA.
The plant’s construction “contributes to the long-term competitive position” of Ternium’s industrial activities and will strengthen Mexico’s electricity system, Rocca said.
Ternium rose 0.1 percent to $24.55 at 2:55 p.m. in New York, while Tenaris fell 1.4 percent to $46.69.
The power plant will be partially funded by debt and is expected to be operational in the fourth quarter of 2016, the companies said. Construction of the plant will not begin until approved by Mexico’s energy and environmental regulatory authorities, they added.
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