Automotive industry, recycling the big opportunities for Mexico's aluminum sector
Industrial aluminum companies in Mexico see business opportunities thanks to the growth of the automotive industry, but also in recycling, an essential activity given that as the country has no bauxite and is not a primary producer of the metal.
The positive performance of the manufacturing sector in the first half of the year was a boost to the aluminum industry, but the expansion of the automotive sector – which grew almost 12% year-on-year, was certainly good for domestic aluminum companies, the president of Mexico's national aluminum industry chamber (Canalum), Julio César Martínez, said in a webinar hosted by the Canadian Chamber of Commerce in Mexico (CanChamMx).
"The big opportunity right now is in the manufacturing industry in general, but especially the automotive industry, in the production chains, to link up with this industry that is growing," said Martínez.
He added that in the field of aluminum injection for automotive parts, for example, brands are arriving from a wide variety of countries such as China, Italy, Germany and Spain, bringing injection machines, ovens and other specialized equipment for the industry.
Data from the country's statistics agency Inegi show that foreign sales by the manufacturing industry grew 6.8% year-on-year in July, with automotive exports the standout, surging 35.7%, the biggest rise for six months.
However, although the Mexican manufacturing sector is expected to slow in the second half of the year due to international pressures, Canalum believes that FDI will still continue to rise, driven by the nearshoring phenomenon.
More and more consultancies are also spending time seeking possible new investors, even from other sectors, to whom the aluminum industry can be attractive for the delivery of turnkey projects, said Martínez.
“There are consultants who try to deliver a complete turnkey project – from the start they help you establish yourself in a new industrial park and, by the way, new parks are opening every day and demand continues to grow,” he said.
"They help you find the right industrial park, then they help you with the installation or purchase and selection of the right equipment, with the engineering, start-up and hiring of specialized staff," he added.
RECYCLING
The Canalum president also underlined that recycling is definitely an area of business that cannot be neglected in Mexico since the country is not a primary aluminum producer.
The bauxite ore from which aluminum is obtained is found mainly in Australia, China, Africa and Brazil, he pointed out, saying that North America is "very deficient" in aluminum production to meet consumption.
“Since we don't have primary aluminum, recycling in Mexico is essential. There are lots of companies that are already engaged in this, but higher, more significant investments are needed [and] greater specialization and more modernization of equipment in Mexico to recycle it more efficiently,” he said.
“There's a huge area of opportunity there because plants will still use the raw material and it requires initial preparation to be able to use it. These are some of the important examples of the business opportunities that exist at the moment."
According to Canalum data, the Mexican aluminum sector produces 2.5Mt/y and generates revenues of US$18bn. Last year, the industry's production increased by around 15%, and is expecting growth of 18% and 20% for 2023 and 2024, respectively.
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