AHMSA, from the largest steel company in Latin America to a huge industrial corpse

MEXICO CITY (apro).- Not even the bankruptcy declaration of AHMSA will be able to rescue the kilometer-long industrial corpse that lies as a monument to ignominy after the systematic attack orchestrated by the federal government, which destroyed what was once the most important steel company in Latin America.

The damage is immense after the steel plant was completely shut down 20 months ago, when some of the key equipment – such as Blast Furnace 5 and the BOF – stopped working and became stuck, while the coking plant was rendered useless. Rehabilitating them entails a multi-million dollar expense that is scaring away potential investors.

And without mines, because at the beginning of May, MINOSA, which provided the iron for the production of pellets, essential in the steelmaking process, was declared bankrupt. With this bankruptcy, activity ended at the Hercules unit in Coahuila; La Perla, Chihuahua; and Cerro de Mercado, Durango.

And since the closure of MICARE, the metallurgical coal mines used to heat the blast furnaces, which operated in several municipalities in the Carbonífera Region, have also been excluded.

The Argentem Creek Partners group, which owns AHMSA, has been responsible for creating false expectations by spreading the idea that bankruptcy is the solution. With this, it is trying to start selling off the steel company and get it up and running with new owners.

While awaiting the bankruptcy ruling, Brazilian, Canadian and American investors have toured the steel complex, but initial interest is dimming in the face of the pitiful conditions in sight.

The only viable scenario is a mini steelworks based on electric blast furnace 6, with slabs that were previously manufactured by AHMSA and which would now have to be imported.

The looting by locals and foreigners has been immeasurable, coupled with the damage caused by the shutdown of the plant.

On August 4, the deadline for the steel company’s bankruptcy rescue ended. Three weeks after the deadline expired, Judge Ruth Haggi Huerta has not yet issued a declaration of bankruptcy.

The situation is complicated by the national strike that workers of the Judiciary began on August 19 in protest against the refusal to dialogue with the Executive and Legislative branches, in the face of the intention to reform the law so that judges and magistrates are elected by popular vote.

22 thousand jobs were lost

The impact, since the steelworks’ total shutdown in December 2022, has been devastating for the Centro, Carbonífera and semi-desert regions of Hércules in Ocampo, with 19 thousand unionized and trusted workers, who have stopped receiving their salaries since April 2023.

Previously, another three thousand MICARE workers lost their jobs following the cancellation of the coal contracts already signed by the Federal Electricity Commission (CFE), in June 2020, when the federal government’s attacks against the steel complex led by Alonso Ancira began.

From then on, anguish and desperation took hold of those who suddenly became unemployed – without having terminated their employment relationship – and in order to survive they began to sell some minor belongings and ended up auctioning off their furniture, returning cars to dealerships and even transferring their homes to migrate to other regions of the country, or crossing the border into the United States, even across the Rio Grande.

An unthinkable reality for those who were proud workers of a company that allowed them a comfortable lifestyle. The general parking lot of AHMSA was full of recent model cars owned by the workers, who also owned spacious homes and had enough income to pay for their children’s university studies in other cities.

An AHMSA worker earned an average of 20 thousand pesos per month. Until 2022, they received the equivalent of 54 days of bonuses, between 30 and 42 thousand pesos, and a juicy savings that the company doubled for them.

In this dramatic turn of events, workers can be seen “driving” on the streets, cleaning windshields, selling at “fleas”, serving at gas stations, cleaning yards, or becoming municipal police officers.

The general secretary of Section 147, Néstor Torres, currently works in a convenience store, alternating this with a few sales in itinerant markets and with his job as a musician, with fewer and fewer parties, since a large part of his contracts were with his fellow workers at the steel mill.

Others used their skills to start businesses, mainly in the food industry; and a large majority have already settled in another company, far from the income level they had at AHMSA, and have resigned themselves to salaries that at least allow them to survive in their city or far from their families.

Common and white-necked raptor

Since November 2022, when the CFE began to cut power in AHMSA, thieves turned the steel mill into their paradise: they extracted a series of materials, from scrap metal to sophisticated, high-value equipment.

With a significant reduction in security personnel due to non-payment and in total darkness, scrap dealers have dismantled the huge industrial corpse. They have counted on the apparent complicity of the security forces.

The pipeline, which carried iron ore concentrate from Hercules, Coahuila, to the Pelletizing Plant of Siderúrgica 1, lost 20 of its 300 kilometers of length. Thieves had the time and resources to use special cutting equipment, bulldozers to dig up the ore, and trucks to transport the heavy material.

Although on August 1 the State Police arrested two scrap metal dealers in Cuatrociénegas, they were released a few hours later thanks to a more skilled legal defense than the Public Prosecutor’s Office.

But white-collar plundering operates from within the administration: Argentem Creek Partners, which came with the task of rescuing the steel company, put a sale label on the company’s multi-million dollar assets, including Deportivo AHMSA, Rancho el Fresnillo in Frontera, and Antair SA de CV, which when it was operating provided maintenance to AHMSA’s airplanes, light aircraft, and helicopters.

Indian Kaylan Ghosh, who is part of the Argentem group, moved to live in the emblematic residence that Alonso Ancira lived in in Monclova, known as “Ancón del Río”, using a power plant in the face of the CFE power outage. And from there he began to exert pressure on executives to sell that property. The harassment was such that the director of Supplies of AHMSA, Gerardo García Castelán, resigned.

On August 8, it was revealed that the sale of “Ancón del Río” was made effective in a confidentiality agreement that did not reveal who the buyer was or the amount of gross profit for those who have not invested a single peso in the company.

On the morning of July 21, nine corporate vehicles were towed away from the Grupo Acerero del Norte parking lot. On August 21, the theft of nine tons of tin from AHMSA’s general warehouses, with a market value of almost five million pesos, was reported.

It also emerged that the “La Florida” Washing Plant located in Múzquiz, Coahuila, is the only unit that is operating, with some 200 workers, washing coal for other producers in the coal basin, whose profits are also not reported by the Argentem group, led by Daniel Chapman.

Deaths, divorces and migration

On May 1, Rogelio “Chinaco” Córdova died of a heart attack. He was popular among the workers. He worked in the Mechanical Maintenance Department of the Cold Rolling Mill. Known for his attitude at work and his good humor, his death was deeply regretted by family members and former colleagues at the plant.

On May 27, worker Pablo Contreras, who worked for decades in the Cold Rolling Mill Department, put an end to his life and the emotional burden that had kept him down for many months. He was originally from San Buenaventura, a town that was shocked by this outcome.

Jaime Ortiz Hernández, who worked for 37 years in the Coking Department of Steel Mill 2, passed away at the beginning of July. He was 57 years old and was originally from Castaños. The cancer that invaded him was added to the depression due to being left without a job that previously guaranteed him a good lifestyle, his relatives say.

On August 4, worker Mario Alberto Vázquez González, who worked at Blast Furnace 5, was added to this tragic list. He died of a heart attack while waiting for the long-awaited solution to the AHMSA crisis.

To date, there are around 25 deaths of unionized and trusted AHMSA workers, deaths accelerated by stress and anguish, after having been left without a decent source of employment, or without severance pay in the cases of those who had retired or were about to end their employment relationship.

In addition, there are countless divorces and separations. Conflicts over economic reasons are worsening the atmosphere in thousands of homes, with no money for the most essential things like food, much less for the small luxuries they had become accustomed to, and with young people having to abandon their university studies, especially those from abroad.

After a year and four months since their salaries were suspended, the vast majority have a means of subsistence. Hundreds left their families to cross the border with the United States and from there send remittances, thousands migrated to Monterrey, to the southeast of Coahuila and to other states, and the rest stayed in Monclova and the Central region in a job – formal or informal – that they hope will be temporary, some still with the hope of the rebirth of the steel mill.

Chronology of a fall

No one would believe that the arrest of Alonso Ancira at the airport in Mallorca, Spain, by Interpol agents would be the prediction of the end of AHMSA. In May 2019, he was arrested at the request of the Mexican government, based on the arrest warrant issued by the Attorney General’s Office (FGR) and the Financial Intelligence Unit (UIF), which linked him to the Odebrecht case.

In June 2019, the CFE unilaterally cancelled the already signed contracts for thermal coal that MICARE supplied to the José López Portillo and Carbón II thermoelectric plants, located in the municipality of Nava, Coahuila.

These contracts had been renewed for 27 years through public tenders.

This decision caused the dismissal of two thousand workers and employees in Mexico and 400 Mexicans living in Texas from the Dos Repúblicas company, ending up closing those units.

On February 3, 2021, and in violation of a provisional suspension order, the so-called “Steel King” was admitted to the North Prison in Mexico City, accused of money laundering (which was not proven) following a complaint filed by the head of the UIF, Santiago Nieto, in May 2019 for the alleged overpriced sale of Agronitrogenados to Pemex.

On April 19 of the same year, Ancira left prison after signing a reparation agreement for 216 million dollars with Pemex, which was conditioned by the Mexican authorities to regain his freedom, and which the magnate later described as extortion.

Attorney Mauricio Flores, who worked hand in hand with other litigants in the defense of Ancira, stated that the settlement agreement does not recognize the existence of an overcharge, it simply agreed to pay a certain amount to extinguish the criminal action, without that implying recognition of the facts.

At the end of May of that year, Altos Hornos de México announced in a statement that the Ministry of Finance had frozen its bank accounts, which it described as an “arbitrary act that violated all rights” that affected the steel company’s operational continuity.

The strangulation of AHMSA, founded in 1942, was from all sides. The UIF was unable to prove the accusation of money laundering, but this caused the blocking of credits to invest in the operation of the steel company, while it made titanic efforts to comply with the payment – ​​in parts – of the 216 million dollars to Pemex.

Amidst these difficulties, in November 2021 it made a payment to the state-owned company for 50 million dollars, in 2022 it settled 54 million dollars and was unable to cover the remaining 112 million dollars, which had a deadline of November 30, 2023, with the company already paralyzed and without money to pay the workers.

AHMSA decided to file for bankruptcy in May 2023. Through this legal procedure, it sought to reach payment agreements with its creditors, to whom it owes more than 600 million dollars.

At the end of June 2023, a rescue plan for AHMSA was announced, with new owners after Alonso Ancira and his family resigned from the steel company’s shares. The reactivation would be carried out by the Argentem group, in an attempt to cover the debts and resume operations.

The restructuring plan was submitted to the federal government and was expected to be implemented as soon as possible. But it was ignored for weeks, despite statements by President Andrés Manuel López Obrador, who assured that it would help attract investors.

On March 11, 2024, Ancira revealed that the SAT had demanded that Altos Hornos de México pay tax credits of 60 billion pesos, equivalent to three billion dollars corresponding to the 2017 and 2018 fiscal years. The businessman described these demands as absurd. He argued that if the company had generated these taxes, it would not be insolvent.

Forty-eight hours later, the Board of Directors of Kickapoo Capital informed Argentem Creek Partners that, following a recent evaluation, it was withdrawing its non-binding proposal to participate in the restructuring process of Altos Hornos de México. China Steel Corporation subsequently also renounced its intention to recapitalize the steelmaker.

On November 20 and 21, 2023, representatives of the Kickapoo Tribe and China Steel Corporation visited Altos Hornos de México, but ultimately decided to back away from the reactivation project.

The judge who blocked the rescue

Then came the attack on the legal flank. The strategic defense of AHMSA’s lawyers came up against the bankruptcy judge, Saúl Martínez Lira, who made his own contribution to prevent a rescue scenario for the steel company with new owners.

The judge began by blocking the AHMSA shareholders’ meeting, scheduled for December 21, 2023. With this decision, he prevented the change in the Board of Directors, with the definitive departure of Alonso Ancira, and the injection of a credit of 600 million dollars.

A decision that went against the AHMSA workers and the Mexican financial system itself, despite the support of major creditors such as Pemex, the Ministry of Finance and Cargill, whose representatives met with the judge on December 11.

Martínez Lira is the same Judge who declared MINOSA bankrupt, along with the iron mines that supplied raw materials to the steelmaking process, despite having obtained the approval of 91% of the creditors for the payment proposal within the Commercial Bankruptcy.

The judge argued that the agreement was rejected because “it did not have the signatures on the margin”, a decision described as absurd by the creditors’ lawyer, Héctor Garza Martínez, who pointed out that it is impossible for 60 or 70 claimants to sign on a single page on the margin, since there is not enough space. This unilateral position invalidated the agreement.

Presidential rhetoric

On his last tour of the Carbonífera Region, on June 14, President López Obrador, with AHMSA already in free fall, assured: “There are already conditions to rescue Altos Hornos de México,” and boasted that “it will come to boost the economy of the Centro and Carbonífera regions.”

And with his usual rhetoric he said that “the one who does not get in the way helps a lot,” referring to the fact that Alonso Ancira handed over the shares of the steel company, which allowed the problem to be “unraveled.”

There he said he was confident that Claudia Sheinbaum, his successor, would follow up promptly to recover the source of employment, without making concrete commitments and without translating words into actions.

At the end of his six-year term – which was devastating for the two regions mentioned – the López Obrador government leaves behind an insurmountable catastrophe, with the company in ruins, which at its peak, in 2016, reached a record production of 4.5 million tons of steel, but had a nominal capacity of 6.5 million tons of liquid steel.

The disagreements between López Obrador and Ancira include the promotional tour for the 2018 elections, the former being a candidate for the Presidency of the Republic, in which he asked the “King of Steel” for financing for his campaign, and although the then leader of AHMSA did not say no, he did not sponsor him either.

With the extinction of AHMSA, everyone loses: Alonso Ancira, the largest steel company in Mexico; the workers, the best-paid source of employment; the creditors, the return on investment; and the Central, Carbonífera, semi-desert and part of the Northern regions, a balanced economy.

Within a month, the president will have completed his term, and these regions will face years to recover from the devastation caused to a company that managed to survive for 82 years and was destroyed in just one six-year term.