September 20, 2007 -- The Nemak subsidiary of industrial conglomerate Alfa SA de CV is embarking on a strategy of vertical integration in its aluminum automotive castings business by expanding its scrap processing and remelt capacity, beginning with a project at a facility in Monterrey, Mexico.
Alfa is a supplier of aluminum castings to the automotive industry.
IngenierÃa y Servicios Técnicos SA (Insertec), Vizcaya, Spain, a maker of industrial furnaces for aluminum foundries and recyclers, together with Altek-MDY LLC, Exton, Pa., which engineers scrap processing systems, has signed a contract to provide a rotary furnace to Nemak's Monterrey plant.
The project, valued at between $3 million and 4million, is the first of three phases that will ultimately expand the plant's melting capacity by 225,000 per year, according to an executive with the company.
The first Insertec furnace, which is to begin operations in 2008, will increase Monterrey's melting capacity by 66,000 pounds per year, with subsequent installations boosting the plant's capacity by a cumulative total of 132,000 pounds per year and finally 225,000 pounds per year, respectively, according to the Nemak executive.
He added that Nemak is seeking increased market share and new customers in addition to the vertical integration strategy of what he called the "New Nemak," which has 27 plants worldwide.
Nemak this year spent nearly $1 billion building its automotive castings business, which mainly supplies aluminum cylinder heads and engine blocks to the automotive sector.
In February, Nemak acquired the European automotive castings business of Norway's Norsk Hydro ASA as that company restructured its aluminum business to focus more on primary production. The deal included four facilities in Austria, Germany, Hungary and Sweden that together employ more than 2,200 people and produced the equivalent of about 6 million head castings in 2006, generating estimated revenue of $640 million.
Nemak, through parent Alfa, also acquired the North American operations of European fabricator TK Aluminum Ltd. for $496 million in the first quarter. The deal included facilities in the United States, Argentina, Brazil, Mexico and China.
The two acquisitions give Nemak an enhanced presence in the automotive casting business and the Hydro buy gives the growing Mexican player a European footprint.
Source: Metal Bulletin News Alert Service
