Argentina’s Gas and Power Cuts Affect Industrial Production

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Researched by Industrial Info Resources (Sugar Land, Texas). Output of Argentina’s largest steel producer, Acindar, which is controlled by Brazilian steelmaker Belgo-Mineira is being affected by natural gas and power cuts applied by Argentina’s government.

As a result of low investment in new power production and Argentina’s economic expansion during the last four years, energy supplies in the country have failed to keep up with surging demand, exacerbating shortages. Argentinean President Nestor Kirchner’s government asked 4,000 companies to curtail electricity use and at the same time applied gas restrictions to approximately 900 businesses.

According to Acindar’s representatives gas and power shortages have forced the company to stop running the direct reduced iron facilities and to stop using the electric furnaces from 4:00pm to midnight. The company lost 27,000 tons in 2006 and has lost 34,000 so far this year. For the first half of 2007, Acindar reported a net profit of $41.4 million, which represents a 42.6% decrease when compared to the $72 million profit in 2006.

Argentina’s chemical and petrochemical producers lost $100 million in sales since last month energy cuts slowed production. Moreover, South America’s French fry supplier, Florenceville, New Brunswick-based McCain (Buenos Aires, Argentina) had to stop mashed-potato flake production as a consequence of power shutdowns and restrictions, reflecting a 40% cut in its total output during the past two months.

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