Kevon Felmine

Cheap Chi­nese steel has dri­ven glob­al prices down and may be the rea­son be­hind Arcelor­Mit­tal's shut down and re­trench­ment of 800 work­ers.

That is the view of En­er­gy Cham­ber CEO Dr Thack­wray Dri­ver who said glob­al prices have nosed dived be­cause Chi­na has changed from steel pro­duc­tion main­ly for do­mes­tic use to ex­port­ing to the in­ter­na­tion­al mar­ket.

Dri­ver was com­ment­ing on the lay off of 600 work­ers by Arcelor Mit­tal on Mon­day, just months af­ter the com­pa­ny sent home some 200 work­ers from it steel plant at the Point Lisas In­dus­tri­al Es­tate. The In­di­an-based multi­na­tion­al com­pa­ny, the world's lead­ing steel and min­ing com­pa­ny with a pres­ence in 60 coun­tries, said it has scaled down its T&T op­er­a­tions due to an over-sup­ply of steel in the glob­al mar­ket and a de­crease in or­ders of it di­rect re­duced iron (DRI) and steel prod­ucts.

Speak­ing to the Guardian at an En­er­gy Cham­ber break­fast sem­i­nar at Cara Suites Ho­tel and Con­fer­ence Cen­tre, Clax­ton Bay yes­ter­day, Dri­ver said in­creased ex­ports of cheap steel from Chi­na has re­sult­ed in steel plants around the world are clos­ing down.

"Ob­vi­ous­ly for Arcelor­Mit­tal, they have stopped pro­duc­tion in Trinidad so we have no rev­enue com­ing in," he said.

Chi­na pro­duces al­most half of the world's steel and buys more than two-thirds of its seaborne iron ore. As the coun­try goes through eco­nom­ic de­cline, which has slowed con­struc­tion, steel mak­ers there have stepped up ex­ports to com­pen­sate for the short­fall.

Bloomberg re­port­ed yes­ter­day that "steel ex­ports by Chi­na had ex­ceed­ed 100 mil­lion met­ric tons for the first time as iron ore im­ports in­creased amid a shut­ter­ing of high-cost do­mes­tic sup­ply."

Dri­ver said plants that are sur­viv­ing glob­al­ly are those with the high­est pro­duc­tiv­i­ty lev­els and low­est pro­duc­tion costs. While T&T's pro­duc­tion costs are gen­er­al­ly low be­cause of cheap elec­tric­i­ty, the short­age of gas to the plant has af­fect­ed their out­put.

With Arcelor­Mit­tal fac­ing a pos­si­ble clo­sure of its T&T op­er­a­tions, he said, there will be less Gov­ern­ment rev­enue and for­eign cur­ren­cy com­ing in.

"Trinidad will be­come one of the lo­ca­tions which they look to close. If we're not com­pet­i­tive, peo­ple are not go­ing to go on pro­duc­ing and in­vest­ing in Trinidad."

The Arcelor­Mit­tal fa­cil­i­ty in T&T pro­duces hot-bri­quet­ted iron (HBI) used as a feed ma­te­r­i­al in steel pro­duc­tion. The plant at Point Lisas, which was built in 1996 and be­gan op­er­a­tions in 1999, has the ca­pa­bil­i­ty of pro­duc­ing 550,000 tons of HBI an­nu­al­ly.