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Venezuela restarts HBI production under new development plan

 

 

 

- Five HBI producers back on track
- No trades yet reported
- US sanctions weigh on trade decision

Adriana Carvalho  / Platts

DUBAI
Petroleumworld 09 24 2021

Venezuela announced the gradual reactivation of its metals industry, following almost a year inactivity, in a move headed by the working class, later embraced by the federal government under the country's 2022-2024 economic development plan.

National production of iron ore, hot-briquetted-iron (HBI) and steel have been hampered for years amid continued disruptions to raw material supplies, insufficient operating funds, insufficient supplies of gas and energy, and an economic crisis.

Venezuela's five HBI producers, Orinoco Iron, Venprecar, BriqVen, Comsigua and Ferrominera were put back into operations throughout September, according to sources close to the government.

They have a combined installed capacity of 6.9 million mt/year but were producing at less than 10% of that in the past three years, with most of them inactive.

Orinoco Iron, the largest producer in Venezuela, was designed to produce 2.2 million mt/year of HBI. Briqven has capacity for 1.5 million mt/year, Comsigua's capacity is close to 1.3 million mt/year, while Venprecar, the smallest of the five HBI producers in Venezuela, has capacity for around 900,000 mt/year.

FMO is able to make 1 million mt/y of HBI. It has also an installed capacity of 3.3 million mt/year of pellets, with plans to double capacity.

It's still unknown the current output rates at the HBI plants, and whether the government will be supportive in providing the essential inputs for the operations.

Venezuela was formerly the world's largest exporter of HBI. In 2017, it exported just over 1 million mt, compared with about 7 million mt in 2008.

A source at one the HBI producers said the country is ready to resurface in the international market by offering high quality material.

Nevertheless, it's been months without trades reported in respect to Venezuelan HBI.

The imposition of US sanctions against Venezuela's oil sector in 2019 has pressured the economy into further depression and chased those dealing with its industries away.

About 229,000 mt of HBI was said to be available at Palua port, "although it might be old-inventoried material or from cancelled shipments," another source said.

"The big issue is that the banks do not want to have any wire transfers if it says Venezuela... with the [US] sanctions the risks are too great for the small fee they get," he added.

Steel production alive

Production at the state-owned integrated long steel maker Sidor was said to be currently at a rate of 750 mt/day of crude steel, which would represent 22,500 mt/month. It has capacity to produce 4.5 million mt/year of crude steel.

In 2020, it produced only 17,000 mt of crude steel, compared to zero in 2019, according to government data. In 2007, Sidor produced its high mark at 4.3 million mt of production after 10 years under Techint management.

On Sept. 21 the state-owned steelworks Complejo Siderurgico Nacional, or CSN, announced through its Twitter account that production rates would be raised at its 500,000 mt/year Casima steel billet plant.

The mill was reactivated at the beginning of the year, following a four-year outage. In the first quarter of 2021, the company said production totaled 29,000 mt.

Import offers of Venezuelan steel products were recently reported by Colombian players, which corroborates the narrative that Venezuela is looking to reenter the international market.

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