CFE Calificados, a subsidiary of state-owned utility company Comisión Federal de Electricidad (CFE), revealed that it has signed a US$ 1 billion power supply contract with steelmaker ArcelorMittal, the largest energy consumer in Mexico.
The Mexican company will supply energy, power and associated products to the ArcelorMittal plant located in Lazaro Cardenas, Michoacan, in the Pacific Coast, equivalent to 600 MegaWatts (MW), making it the largest contract in Mexico’s power wholesale market, under the modality of qualified supply, detailed the state company in a statement.
The figure of qualified users, which emerged from the energy reform, allows to trade power from the Mexican Wholesale Electricity Market to companies with high consumption, as is the case of the steel or cement industries.
The Lazaro Cardenas plant in Michoacán has the necessary technologies to manufacture various types of ultra-low carbon steel, micro alloy steel, high carbon steel, and bitter gas resistant steel, among others.
“After two years of analysis, ArcelorMittal determined that the generation that CFE Qualifiers offer is the most efficient and competitive in the market,” said Katya Somohano, CFE Qualified General Director.
“It took us a year to find the price. It was a challenge for the Qualified team to be able to structure the offer,” revealed Somohano in an interview to Forbes Mexico.
The electricity supplied by the subsidiary will come from two technologies, 80% of combined cycle plants and 20% of wind, approximately.
Before the energy reform, this type of contracts only existed in the short term in the face of the uncertainty caused by the fluctuation of prices in the international energy market.
However, it is now possible to make long-term contracts with guarantee prices for companies such as ArcelorMittal, whose deal will cover a period of 5 years only in its first phase.