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

Maximo Vedoya: Yes.

Alex Hacking: Okay.

Maximo Vedoya: We are all consuming the DRI.

Alex Hacking: What technology is that going to be based on, will it be the technology, that you’re very familiar with?

Maximo Vedoya: And most likely. I mean, there are two technology . Clearly, we have in all our plants, probably it’s not decided. But of course, is what we intend to do.

Alex Hacking: Okay. And then finally, are there any steel quality implications from shifting from very high quality Brazilian slabs, to slabs made in an EAF? In particular for your automotive supply chain, exposed auto body sheet are you fully comfortable that you can replicate your current tolerances and quality?

Maximo Vedoya: Yes, the answer is, yes, of course, it’s a different technology. But we have to go that road for several reasons. First, we have to be USMCA melted and pour compliance. We are not going to make a blast furnace in Mexico or anywhere, to be honest. So we worked hard all last year to see the technology and to see exactly how this steel shop will be to produce the same quality that the Brazilian slabs operation produces. And the secondary steel shop will be probably the same as that we have in Brazil. So we are comfortable although we are working very hard that the quality will be the same.

Alex Hacking: Okay, thanks. And then just back on the raw material side. I assume that outside of the DRI and you would also be using some prime scrap in the mix, is that a correct assumption?

Maximo Vedoya: Yes, probably the mixed — depends of course of the steel, the quality of the steel and the facilities prepared to produce with more DRI or with less DRI depending again in the steel quality, but roughly on a general mixed, it’s going to be 65% DRI, and 35% scrap.

Alex Hacking: Okay, perfect. Thank you for the clarifications.

Operator: And there are no further questions at this time. I will turn the call back over to Ternium’s CEO, Maximo Vedoya for some closing remarks.

Maximo Vedoya: Okay, thank you all very much for your interest in our call today for your very good questions. And as usual, please contact us if you have any comments or any additional questions. If not, we’ll talk next conference call. Thank you very much, and goodbye.

Operator: This concludes today’s conference call. Thank you for your participation. You may now disconnect.