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Altos Hornos de México (Ahmsa) announced its subsidiary Minera del Norte is laying off 2,400 workers after the Federal Electricity Commission (CFE) canceled a contract to purchase coal.


The firings will affect 2,000 workers at Minera del Norte’s Micare unit in Mexico and 400 workers in Dos Repúblicas Coal Partnership in Texas. Additionally, another 5,000 workers from different companies that supply goods and services will be affected, Ahmsa said in a statement, adding that the suspension of the contract with CFE will produce losses of $250mn.


The Micare unit extracts about 7mn mt of steam coal annually, which it sells to CFE’s José López Portillo and Carbón II coal-fired power plants in Mexico’s Coahuila state. The state produces 10pc of the country’s electricity, according to data from Ahmsa.


Ahmsa and CFE had a contract from 2019-2021, CFE said in a statement, during which time the steelmaker sold CFE 14.7mn mt. However, legal and constitutional hurdles hindered the continued purchase of coal and led to CFE terminating the contract, it said.


On June 9, Ahmsa initiated commercial bankruptcy proceedings for two of its subsidiaries because they lacked liquidity. The two subsidiaries, which are located in the northern state of Coahuila, are Minera del Norte, which produces iron ore and coal, and Corporativo Industrial Coahuila, which produces coal.


On June 18, Ahmsa announced a partnership with the Mexican long steel producer Villacero in a bid to resolve the former’s financial challenges. Under the partnership, Villacero will initially pay $300mn towards Ahmsa’s working capital to improve the steelmaker’s balance sheet.


Ahmsa is working at 60pc of its capacity, as demand for steel products slowly improves in the country. The company operated at 70pc of its capacity before the pandemic started.

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