Ternium S.A. (NYSE:TX) Q4 2022 Earnings Call Transcript

Alfonso Salazar: Thank you and good morning, everyone. And the questions, that I have the first one is regarding the location of the new plant that you are building the new . Yes, just wanted to know what are the considerations for the location that they do you need to have to keep in mind. Does it have to do with water availability, energy – a clean energy availability, your carbon goals because Pesquería looks to me like a good fit, but don’t know if you can give some color on what is – what are you considering for the location. The second question is just a clarification about Ternium Brazil. So if I understood you correctly, you will be with this new slab facility. You will be basically neutral on your slab needs even if the margin you would be bagging a small amounts for some plant or selling some for, you’ll see mean another end users, is it correct?

Maximo Vedoya: Yes, thank you Alfonso. I think the second part, you are correct. We are being – we are going to be almost hedged, I think. But, yes, mainly, yes, but as I said, we are go probably going to sell to . I think it’s a very reasonable and very logistic — from a logistic point-of-view, it’s makes a lot of sense and so we are going to continue buying probably slabs in the market as Ternium, but we are going to be almost hedged. To the location, yes, Pesquería could be or one of the possibilities, clearly. But as I said, we are discussing and the exact location to be honest, we are going to disclose it soon. I mean, there’s still some things, we are analyzing. I hope I tried to answer the question, Alfonso.

Alfonso Salazar: Yes, just to clarify, we know there were some problems with water scarcity in the region of in the State of Nuevo León. Energy is not really a problem at this point, but it could be in the future and clean energy availability is also a concern of many that invest in Mexico, so, I just want to understand this — those are kind of consideration that you have.

Maximo Vedoya: Well yes, and no. I mean to be honest, water for our Pesquería plant. It’s not a problem. As you know, all the – I mean, from a water standpoint of view, Pesquería plant is the — Pesquería plant with the increase in the downstream facilities and the electrical plant, we had all of that consumes water from the disposal facility that is close to Pesquería. So we are not consuming clean water and so it’s very, very efficient from a water point of view and the plant is prepared to grow. So although it’s a concern in the north of the country, the water part is not a concern for Pesquería at all because of the sustainability, we felt the plant and we are consuming all, I don’t know how you said it in English, the black waters.

Yes I think sewage waters. And so we don’t have any problem with water. Energy, which is a big concern in Mexico. I think it’s not a concern in the north of the country. The north of the country has more energy supply that energy consumption. So it shouldn’t be another problem. I think that our decision is based on discussing alternative we have and to disclose the location pretty soon.

Alfonso Salazar: Okay, that’s really helpful. Thank you, Maximo.

Operator: Your next question comes from the line of Alex Hacking from Citi. Your line is open.

Alex Hacking: Good morning, and thanks for the call. I just have a few follow-ups. I guess mostly on the projects. So with the DRI, would Ternium be consuming all of that DRI at the new EAF facility or would you be selling some of that to third parties?