Chile’s largest steelmaker closes; loses to Chinese steel

Santiago. Chile’s largest steelmaker, Huachipato, shut down its furnace early Monday to end 74 years of operations, hit by fierce competition from imported steel from China.

“It was a fitting and emblematic end to an entire era in the history of Chilean steel and it is a testament to the fact that our workers never gave up,” said Jean Paul Sauré, general manager of Huachipato, confirming the shutdown of Blast Furnace Two, where the process for making non-recycled steel began. The casting process, the process by which steel is solidified and cooled, also stopped working.

The president of the Dos Fernando Orellana union said that “It is a dark and sad day for all the workers of Huachipato.”

The closure affects 2,700 workers – both direct and contractors associated with the steel company – and another 20,000 people who are linked to this company, one of the main economic engines of the city of Talcahuano, Biobío Region (500 km south of Santiago).

Founded in 1950, the company decided to close down, overwhelmed by competition from Chinese steel, which is flooding the world markets and arriving in Chile at a 40 percent lower price.

Huachipato tried to survive by demanding surcharges on Chinese imports, which were imposed by an Anti-Distortion Commission that last April confirmed “unfair” Asian competition.

But the measure was not enough to address the $700 million in losses accumulated since 2019.

“This is a difficult and sad time for everyone. The conditions of the global steel market force us to make this difficult decision, and we are convinced that we did everything possible to avoid it, even enduring huge losses for many years,” said the company manager.

Huachipato produced 800,000 tons of steel a year and supplied mainly the mining industry. It was the only plant that produced non-recycled steel in the country.

Over the past two decades, China has increased its share of the global steel market from 15 percent to 54 percent, according to the Latin American Steel Association.

In Latin America, imports grew by a record 44 percent in 2023, exceeding 10 million tons.

Degree Plan

On Monday, the government presented a 32-point plan aimed at repairing the damage and boosting the economy of the region, seeking to rehire those laid off, accelerating public and private investment and recovering national steel production.

Known as the “Grau Plan” after the Minister of Economy, Nicolás Grau, who headed the team responsible for its development, it aims to mitigate the immediate impact of the closure of the steel plant and recover the productive sector in the short and medium term.

However, various stakeholders have criticised the lack of concrete financial measures and the abundance of generalisations without practical expression.